Digital Waqf Ecosystems and the Institutional Coordination of Climate Finance
##plugins.themes.EpsilonTheme.article.main##
Hazik Mohamed*
Climate finance plays a critical role in supporting the transition to a low-carbon, climate-resilient economy. However, persistent financing gaps, fragmented governance, and limited institutional coordination continue to constrain the mobilization and effective allocation of resources for climate mitigation and adaptation. Islamic social finance, particularly waqf, has attracted growing attention as a complementary mechanism for promoting sustainable development. This study proposes a Digital Waqf Ecosystem (DWE), an integrated conceptual framework linking waqf institutions, digital governance, and climate finance to enhance transparency, accountability, and institutional coordination. The study adopts a conceptual research design, synthesizing literature on climate finance, Islamic social finance, digital governance, and institutional theory to develop the proposed framework. To examine its internal consistency under uncertainty, the study employs Monte Carlo simulation as an exploratory technique, evaluating interactions among digital governance, institutional trust, ethical capital mobilization, catalytic climate finance, and climate impact efficiency across alternative governance scenarios. The simulation results suggest that stronger digital governance improves institutional trust, mobilizes ethical capital, enhances integration with climate finance mechanisms, and produces consistent climate impact outcomes. While exploratory rather than predictive, the findings demonstrate the potential of digitally governed waqf institutions to strengthen institutional coordination within sustainable finance ecosystems. The study contributes to the literature by developing an integrated institutional framework that connects Islamic social finance, digital governance, and climate finance within a unified governance architecture. The findings offer practical insights for policymakers, waqf institutions, Islamic financial institutions, and development organizations seeking to strengthen governance and improve the effectiveness of climate finance initiatives.
Ali, S. N., & Oseni, U. A. (2021). Waqf Development and Innovation. Routledge. https://doi.org/10.4324/9781003158073
Arner, D. W., Zetzsche, D. A., Buckley, R. P., & Barberis, J. N. (2017). Fintech and Regtech: Enabling Innovation While Preserving Financial Stability. Northwestern Journal of International Law & Business, 37(3), 371–413. https://doi.org/10.2139/ssrn.3211708
Berg, F., Kölbel, J. F., & Rigobon, R. (2022). Aggregate Confusion: The Divergence of ESG Ratings. Review of Finance, 26(6), 1315–1344. https://doi.org/10.1093/rof/rfac033
Casino, F., Dasaklis, T. K., & Patsakis, C. (2019). A systematic literature review of blockchain-based applications: Current status, classification and open issues. Telematics and Informatics, 36, 55–81. https://doi.org/10.1016/j.tele.2018.11.006
Çizakça, M. (2011). Islamic Capitalism and Finance. Edward Elgar Publishing. https://doi.org/10.4337/9780857931481
Glasserman, P. (2004). Monte Carlo Methods in Financial Engineering. Springer.
IPCC. (2023). Climate Change 2023: Synthesis Report (Full Volume) Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. https://doi.org/10.59327/IPCC/AR6-9789291691647
Jaakkola, E. (2020). Designing conceptual articles: four approaches. AMS Review, 10(1–2), 18–26. https://doi.org/10.1007/s13162-020-00161-0
Kahf, M. (2003). The Role of Waqf in Improving the Ummah Welfare. International Seminar on Waqf as a Private Legal Body. https://monzer.kahf.com/papers/english/ROLE_OF_WAQF_IN_THE_WELFARE_OF_THE_UMMAH.pdf
Mohsin, M. I. A., Dafterdar, H., Cizakca, M., Alhabshi, S. O., Razak, S. H. A., Sadr, S. K., Anwar, T., & Obaidullah, M. (2016). Financing the Development of Old Waqf Properties. Palgrave Macmillan.
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge university press.
OECD. (2021). Making blended finance work for sustainable development. Organisation for Economic Co-Operation and Development (OECD). https://doi.org/10.1787/52138dbb-en
OECD. (2023). Global Outlook on Financing for Sustainable Development 2023. Organisation for Economic Co-operation and Development. https://www.oecd.org/en/publications/global-outlook-on-financing-for-sustainable-development-2023_fcbe6ce9-en.html
Songwe, V., Stern, N., Bhattacharya, A., Soubeyran, E., Macquarie, R., Kyriakopoulou, D., & Tanaka, J. (2022). Finance for climate action: scaling up investment for climate and development. Grantham Research Institute.
UNEP. (2023). Adaptation Gap Report 2023. United Nations Environment Programme (UNEP). https://www.unep.org/resources/adaptation-gap-report-2023
