Abstract
Islamic banking is increasingly recognized as a vital contributor to global climate action, leveraging its ethical principles and innovative instruments to finance sustainable projects. Methodologies such as Environmental Impact Assessments (EIAs) and Social Return on Investment (SROI) help measure the impact of Islamic financing on climate action outcomes. Despite its potential, challenges persist in incorporating Shariah-focused, impact-based risk management frameworks. To address these issues, structured training programs, collaborative efforts among Shariah scholars, and policy interventions are recommended. This study highlights the need for future research on technology-driven solutions and the long-term impact of Islamic financing on climate mitigation efforts.