ADVANCING ETHICAL STEWARDSHIP: A GREEN AI FRAMEWORK FOR OPTIMIZING SUSTAINABLE INVESTMENTS IN ISLAMIC FINANCIAL SYSTEMS

Abstract

This paper explores the integration of Green Artificial Intelligence (AI)—AI designed for energy efficiency and minimal environmental impact—with Islamic finance to advance sustainable resource management. Islamic finance, grounded in ethical principles such as justice, risk-sharing, and the prohibition of riba (interest), manages over $3.5 trillion in global assets as of 2024 [1]. However, its potential to address environmental sustainability remains underexplored. Green AI offers a solution by optimizing resource allocation in sectors critical to Muslim-majority economies, such as agriculture and renewable energy, while aligning with Maqasid al-Shariah (objectives of Islamic law), including hifz al-bi'ah (environmental preservation). Using a mixed-methods approach with case studies from the Middle East and Southeast Asia, we propose a novel framework that embeds Green AI into Sharia-compliant financial tools, demonstrating potential carbon emission reductions of up to 30% in optimized sukuk portfolios. This research contributes to theory by extending Maqasid al-Shariah to ecological stewardship, to practice by providing actionable AI models for Islamic banks, and to policy by recommending regulatory incentives for Green AI adoption. Our findings pave the way for mobilizing sustainable investments, bridging ethical finance with environmental sustainability.