ISLAMIC FINANCE AND ENVIRONMENTAL SUSTAINABILITY IN NIGERIA: A SYSTEMATIC ANALYTICAL APPROACH

Nigeria faces increasing climate challenges all of which threaten sustainable development and human security. As conventional finance has been inefficient in mobilizing adequate resources for climate action, Islamic finance emerges as a potential alternative. This study examines the role of Islamic finance in addressing climate change and promoting environmental sustainability in Nigeria. This paper adopts a qualitative literature review to examine the role of Islamic finance in addressing climate change and promoting environmental sustainability in Nigeria. The review identifies three central findings. First, although the theoretical foundations of Islamic finance, align strongly with environmental stewardship, practical application in Nigeria remains limited. Sovereign Sukuk issuances have supported infrastructure, yet without an explicit green orientation. Second, innovative instruments such as Green Sukuk, Ijarah (leasing) and Waqf (endowments) hold significant promise for financing renewable energy, reforestation and clean water initiatives, but remain underutilized and under-researched in the Nigerian context. Third, institutional and policy barriers, including the absence of a dedicated green finance framework, constrain the growth of Islamic environmental finance. The study concludes that unlocking the potential of Islamic finance for climate action in Nigeria will require regulatory reforms, strong governance and strategic incentives to foster innovation and attract sustainable investment.