The Role of Sustainable Investment Management in Islamic Financial System Strategies and Challenges Amidst Global Economic Uncertainty

Abstract

Sustainable investment management in the Islamic financial system is becoming increasingly important amid global economic uncertainty triggered by financial crises, market volatility, and changes in monetary policy. The Islamic financial system based on the principles of fairness, transparency, and sustainability faces challenges in maintaining stability and investment growth. With the increasing demand for ethical and ESG-based investment instruments (Environmental, Social, and Governance), strengthening Islamic investment strategies is an urgent need to improve its competitiveness in the global market. This study aims to analyze the role of sustainable investment management in the Islamic financial system, explore the main challenges faced, and propose strategies that can increase the resilience of Islamic investment in the face of global economic uncertainty. This study uses a qualitative method with a library research approach to collect and analyze data from various academic journals, books, and research reports related to sharia investment and sustainability. Thematic analysis techniques are used to identify key patterns in Islamic investment management and how they can adapt to global economic dynamics. The results of the study show that sustainable investment management in Islamic finance has great potential in creating long-term stability, especially through instruments such as green sukuk and real asset-based investments. However, the main challenges faced are the limitations of sharia investment instruments, the lack of harmonization of regulations between countries, and the low level of sharia financial literacy among investors. Therefore, a portfolio diversification strategy, strengthening regulations, and the use of digital technology are needed to increase efficiency and transparency in sharia investment.