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Combining Blockchain and SRI Sukuk in Achieving SDGs
Rifka Mustafida, Najim Nur Fauziah, Zahra Nabila Kurnia

IIUM Institute of Islamic Banking and Finance


Abstract

The ultimate objective of shariah is to protect the well-being of people and nature, which lies in the safeguarding of these five fundamental objectives through the promotion of social justice. These objectives have great resemblance to the United Nations- Sustainable Development Goals (SDGs). In order to solve the specific and social issue, a new developed innovative Islamic financial instrument, Socially Responsible Investment (SRI) Sukuk might be used. SRI Sukuk is a viable solution to address global needs for green and other forms of sustainable and responsible financing. SRI sukuk has been issued by several countries to finance green and society development project. However, it is also clear that it is customarily issued by powerful institutions and government agencies, therefore sukuk become very costly in terms of issuances and it has not taken the opportunity to compete with the far larger and well-developed conventional global debt market. Smart sukuk structure using blockchain technology could be significant to improve the efficiency of the issuance process (such as time of market) and also widen both the issuer and investor base. This paper aims to explore the potential of Smart SRI sukuk and propose scheme in attempt to achieve SDGs. This paper reviews the benefit, opportunity, cost and risk of Smart SRI sukuk to discern the possibility of issuing that feature. The first smart SRI sukuk is issued by Blossom. It is Mudharaba facility to finance SMEs in Indonesia. Several Sharia contracts like istisna, ijarah and wakalah have potential to be implemented as well. Smart SRI sukuk has potential to support SDGs. Ethical, equitable, social and sustainable investments concept of SRI sukuk are relevant in achieving SDGs. Implementation smart contract for sukuk will robust sukuk issuance for all sustainable and responsible projects. In the other side, a regulatory framework and infrastructure is a must to promote this feature.

Keywords: Smart SRI Sukuk, Blockchain, SDGs

Topic: Islamic Finance and Banking

Link: https://ifory.id/abstract/eaW43fxQvHF2

Conference: THE 4th ANNUAL ISLAMIC FINANCE CONFERENCE (AIFC 2019)

Plain Format | Corresponding Author (Rifka Mustafida)

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