Islamic finance can play a pivotal role in driving climate resilience, particularly in the Organisation of Islamic Cooperation (OIC) countries, Bank Negara Malaysia’s Deputy Governor Adnan Zaylani said at the launch of a joint report by the World Bank and Islamic Development Bank.
“Scaling Islamic finance will hinge on our ability to mobilise private capital effectively and at speed,” he said, highlighting the investment gap facing climate-vulnerable regions in the OIC, where funding for low-carbon strategies can reach more than 5% of GDP in low-income members.
The report underlines that only 3% of companies securing private equity or venture capital funding for clean and climate technologies between 2017 and 2024 came from OIC countries, representing just 0.5% of global investment.
“This is a missed opportunity,” Zaylani added, stressing the need to foster innovation ecosystems in renewable energy, green manufacturing, climate-smart agriculture and other areas.
Takaful, or Shariah-compliant insurance, was also flagged as a key tool.
“Developing takaful as a risk transfer mechanism to encourage climate-resilient investments is essential,” he said, noting gaps in technical expertise and infrastructure among operators.
Malaysia has rolled out its first climate-focused takaful programme for paddy farmers, providing RM16.2 million in compensation to over 6,300 farmers affected by natural disasters as of March 2025.
Zaylani also pointed to Malaysia’s achievements in Islamic green finance, including issuing over US$13.4 billion in green and sustainability sukuk, and channelling more than US$11 billion through the Value-Based Intermediation initiative.
“The Maqasid al-Shariah, which seeks to preserve life, intellect, future generations, and the environment, provides a powerful moral framework for climate action,” he said.
He called for continued innovation and risk-sharing financing structures, noting that even small pilots or prototypes can create transformative impact.
“We must work towards a future where Shariah-compliant transition finance becomes the norm,” Zaylani said.
The report and speech underline Malaysia’s position as a leader in aligning Islamic finance with global climate goals, while encouraging other OIC countries to scale their efforts.
