The moderating role of green innovation in the effect of SRI sukuk and ESG practices on organizational performance

Abstract

Sustainable and Responsible Investment (SRI) Sukuk has emerged as a significant Islamic financial instrument that supports sustainable development while adhering to Shariah principles. As part of the broader green finance movement, SRI Sukuk is designed to finance projects that generate positive environmental and social impacts, such as renewable energy, sustainable infrastructure, and energy-efficient developments. This study examines the impact of SRI Sukuk on the performance of Bank Rakyat, focusing on both financial and non-financial dimensions. The analysis explores how participation in SRI Sukuk initiatives contributes to revenue growth, portfolio diversification, risk management, corporate reputation, and alignment with Environmental, Social, and Governance (ESG) objectives. The study also highlights the challenges associated with implementing SRI Sukuk, including regulatory compliance, reporting requirements, and limited investor awareness. Drawing upon Stakeholder Theory and the Triple Bottom Line framework, the study suggest that SRI Sukuk can enhance Bank Rakyat's long-term sustainability and competitiveness by promoting responsible financing practices and supporting national sustainable development goals. The framework proposes green finance through SRI Sukuk not only strengthens financial performance but also improves stakeholder trust and institutional resilience. Therefore, SRI Sukuk represents a strategic opportunity for Bank Rakyat to create a large scale of impact to environmental and social well-being.