Objective - This study investigates the role of Islamic finance and green investment in promoting sustainable development in the Gulf Cooperation Council (GCC) countries. Grounded in Shariah principles such as risk-sharing and ethical investment, Islamic finance provides a viable framework for supporting environmental transformation.

Methodology/Technique – The GCC region provides a relevant context given its strong Islamic financial systems, hydrocarbon dependence, and sustainability-oriented national strategies. Using panel data from 2005 to 2022, the study employs a dynamic panel model estimated through the Generalized Method of Moments (GMM) to examine the effects of Islamic finance and green investment on CO₂ emissions per capita and renewable energy consumption, while controlling for GDP per capita, trade openness, and institutional quality.

Findings – The findings indicate that Islamic finance and green investment significantly reduce emissions while promoting renewable energy adoption.

Novelty – This study contributes to the literature by jointly examining their roles in shaping both environmental quality and energy transition in GCC countries, an area that remains underexplored.

Type of Paper - Empirical

Keywords: Islamic finance, GCC, green investment, sustainability, SDGs, GMM estimation

JEL Classification: G21, Q43, Q56, O13

URI: https://gatrenterprise.com/GATRJournals/JFBR/vol10.4_2.html

DOI: https://doi.org/10.35609/jfbr.2026.10.4(2)

Pages 14 – 29