Redirecting Islamic philanthropy towards sustainability projects can help Pakistan achieve long-term climate goals

In an era defined by the pressing challenges of climate change and environmental degradation, sustainable development and climate finance have become global priorities. According to the Climate Policy Initiative’s Climate Finance Report 2023, average annual climate finance flows reached close to $1.3 trillion in 2022, and the demand for climate finance is expected to rise dramatically over the next decades, estimated at $9tr annually by 2030.
To address these challenges, new approaches are being developed to harness resources and mobilise financial capital in ways that align with long-term sustainability goals. One such approach is the integration of Islamic financial principles, especially the concept of Waqf, charitable donations (Sadaqah), and Zakat, into modern climate finance frameworks.
A particularly innovative solution is the concept of “Green Waqf.”
This form of Islamic endowment is specifically focused on addressing environmental concerns, contributing to sustainability projects, and fostering climate resilience. By combining Islamic philanthropy with modern sustainability initiatives, Green Waqf offers a way to not only protect the environment but also ensure that financial flows are directed toward long-term, climate-friendly projects.
Waqf is a powerful financial mechanism in which the principal assets are preserved in perpetuity, while the returns generated from these assets are used for philanthropic or public welfare purposes.
The most distinctive feature of Waqf is its perpetual nature. Unlike one-time donations, donors dedicate assets, whether land, cash, or other valuable resources, to be used for the public good, with the stipulation that the core capital itself remains intact while the returns are utilised to fund ongoing initiatives. This feature makes Waqf an ideal tool for financing long-term projects with sustainable impacts.
Green Waqf is a contemporary adaptation of the traditional Waqf model, designed to focus specifically on environmental sustainability. In a Green Waqf, the endowment is directed toward projects that promote environmental preservation, combat climate change, and contribute to sustainable development.
These projects can include a wide range of initiatives, such as reforestation and afforestation efforts; conservation of biodiversity and ecosystems; development of renewable energy sources; sustainable agricultural practices; provision of clean water and sanitation; urban greening; and the development of eco-friendly infrastructure.
In terms of climate finance, there is often a significant financing gap in developing countries, which are most vulnerable to climate impacts but have limited financial resources to address them. This is where Green Waqf can play a pivotal role. By establishing endowments specifically aimed at funding climate-related projects, Green Waqf can provide a sustainable, long-term financing mechanism for environmental initiatives.
By harnessing the power of Waqf and integrating other Islamic social finance instruments such as Zakat, and Sadaqah with climate action strategies new solutions can be developed to fund and support projects that address both social and environmental challenges.
While traditionally used for poverty alleviation, Zakat can be directed toward projects that enhance climate resilience. For example, Zakat funds could be used to support individuals and communities so they can invest in improving access to clean water, support sustainable agricultural practices, or develop climate-resilient infrastructure.
Given that climate change disproportionately affects the poor, directing Zakat toward climate adaptation efforts can achieve both social and environmental benefits.
Similarly, Sadaqah can be used to support a wide range of environmental projects, from local tree-planting initiatives to larger-scale efforts such as conserving wetlands or investing in renewable energy. This flexibility makes Sadaqah a powerful tool for mobilising grassroots efforts to promote environmental sustainability.
While the application of Waqf to environmental causes is still relatively new, several notable examples have emerged globally, showcasing how Waqf is being used to support sustainability and climate finance initiatives. The United Nations Development Programme and Badan Wakaf Indonesia have also recently published the Green Waqf Framework, which suggests a four-stage model for the Green Waqf initiative.
Currently, Turkey is implementing agricultural Waqf projects to support sustainable farming practices. These initiatives use Waqf land to cultivate crops using organic farming techniques that protect the environment while also contributing to food security. The profits generated from the sale of these crops are reinvested into the community, funding social welfare projects such as education and healthcare.
As part of the climate action plan, Indonesia has proposed several Green Waqf initiatives, including reforestation and forest management projects aimed at combating deforestation. Additionally, the Indonesian Waqf Board is exploring the potential of using Waqf assets to develop renewable energy infrastructure and sustainable water management systems.
Furthermore, Malaysia has also initiated projects that leverage Waqf funds for environmental sustainability. Waqf assets have been used to plant trees, preserve wetlands, and manage forests. Qatar has also established a Green Waqf Fund to channel endowment assets toward renewable energy projects, energy-efficient infrastructure, and water conservation initiatives.
Through strategic integration of Waqf with Islamic social finance instruments like Zakat and Sadaqah, Muslim communities can contribute meaningfully to the global fight against climate change and environmental degradation.
The writer is the Director of the IBA Centre of Excellence in Islamic Finance.
Email: [email protected]
Published in Dawn, The Business and Finance Weekly, October 21th, 2024