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International Journal of Islamic Economics and Business Sustainability (IJIEBS)

Toward Green Hajj Finance: ESG Alignment in the Investment Strategy of Indonesia’s Hajj Fund Management

Abstract

Purpose – This study assesses how far Environmental, Social, and Governance (ESG) values are integrated into the investment strategy of Indonesia’s Hajj Financial Management Agency (BPKH), and how an ESG approach can be strengthened while remaining consistent with Sharia principles and maqasid al-shariah.

Design/methodology/approach – A qualitative content analysis is conducted on BPKH annual reports, audited financial statements, and public disclosures from 2020–2023. The study proposes an Islamic-ESG coding framework that operationalizes environmental responsibility, social impact, Sharia compliance, and governance integrity within public fund investment decisions.

Findings – Governance dominates BPKH disclosures (around 60% of coded statements), emphasizing transparency, accountability, internal control, and risk management. Sharia and social elements each contribute roughly 20%, reflecting compliance screening and commitments to socio-economic development. Environmental issues are marginal (around 3%), indicating that climate and ecological considerations are rarely articulated explicitly. Despite the absence of an explicit ESG label, several ESG-aligned practices appear implicitly, especially in governance reforms and development-oriented placements.

Implications – Practically, BPKH can deepen the environmental pillar through dedicated green instruments (e.g., green sukuk), explicit portfolio-level environmental criteria, and standardized ESG reporting to improve comparability and stakeholder oversight. Conceptually, embedding maqasid al-shariah into ESG provides a coherent bridge between Islamic financial ethics and global sustainability standards, clarifying what “responsible” means in Sharia-compliant public finance.

Originality/value – The study advances green public finance by offering a tailored Islamic-ESG assessment lens and positioning Hajj fund governance as a promising model for sustainable, ethical management of large-scale Muslim public savings. In Indonesia and beyond.

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