Jakarta, 17 March 2025 - The United Nations Development Programme (UNDP) Indonesia, Badan Amil Zakat Nasional (BAZNAS), and Bank Syariah Indonesia, convened a Focus Group Discussion (FGD) to develop the Green Zakat Framework. This FGD aimed to embed sustainability principles into zakat practices, transforming it into a powerful tool for environmental preservation, climate resilience, and poverty alleviation. The FGD gathered key stakeholders from Islamic finance, including zakat institutions, sharia banks, regulators, academics, and NGOs, to provide strategic insights and refine the Green Zakat Framework to ensure its upcoming practical implementation. 

With Indonesia facing a USD 1.7 trillion financing gap for achieving the Sustainable Development Goals (SDGs) and requiring an additional USD 24 billion annually for its emissions reduction targets, Islamic finance offers an untapped opportunity to support the country’s transition to a low-carbon economy. According to BAZNAS, Indonesia's annual zakat potential is estimated at Rp327 trillion, approximately $21 billion USD, representing 75% of the country's social protection budget. This substantial financial resource underscores the critical role of zakat in strengthening social welfare and economic resilience.

“Zakat has long been known as a pillar of social solidarity as it gathers people to help provide essential support for those in need. While its main mission is poverty alleviation, zakat can also immensely contribute to environmental, climate, and the sustainability agenda, thus making poverty reduction efforts sustainable. Through this framework, we aim to ensure that zakat can contribute to climate action and social resilience in an inclusive and transformative way, adding its value and expanding its impact to local communities,” said Nila Murti, Head of Financing for Development of UNDP Indonesia. 

The event outlined how the zakat ecosystem can be integrated with sustainability, social, and governance (ESG) aspects and implemented at the subnational level. This ensures alignment with both the broader Islamic financing ecosystem and local zakat management structures. 

“BAZNAS has always supported sustainable initiatives, including the concept of Green Zakat. We have implemented various programs that align with environmentally friendly principles, such as PLTMH (Micro Hydropower Plants), eco fashion with natural batik, and integrated farming with an organic approach. Through this program, zakat is expected to have a significant role in supporting environmental welfare, in line with Islamic teachings on the responsibility to preserve nature. Our support for Green Zakat is a continued step in our commitment to providing greater benefits to both the community and the environment,” said Budi Setiawan, Head of  BAZNAS’ CSR Division Representing the Head of Collection of BAZNAS. 

The FGD underscored that mainstreaming green zakat financing at both national and subnational levels requires a stronger integration of ESG principles within the zakat distribution ecosystem. Participants emphasized the need for enhanced institutional readiness and strategic implementation to ensure sustainability is not merely a concept but a fundamental framework guiding fund allocation. This approach will enable zakat to be effectively directed toward impactful green projects, reinforcing its role in fostering environmental and social resilience.

As an Islamic bank, BSI allocates 2.5% of its income as corporate zakat. This zakat is distributed to support social activities and contribute to the achievement of SDGs. In 2024, BSI distributed IDR232 billion ($15 million) in zakat, making it the most significant corporate zakat channeled by any bank. Together with BAZNAS, BSI has launched the Green Zakat initiative during the World Zakat and Waqf Forum 2024 in the margin of Indonesia Sharia economic Forum.

"Regarding the concept of Green Zakat, BSI has been exploring the utilization of zakat funds as an innovative new funding potential to support social and environmental programs related to climate change in accordance with sharia compliance principles. This spirit creates holistic ESG value creation and further strengthens the alignment and uniqueness between sharia principles and sustainable finance," explained Bob Tyasika Ananta, Vice President Director of Bank Syariah Indonesia.

Bob also emphasized that the effort to develop the Green Zakat Framework is becoming increasingly important as sustainable finance becomes part of the government's Asta Cita. The goal is to strengthen the alignment of harmonious life with the environment, nature, and culture, and to promote national independence through green and blue economy.

By fostering collaboration across sectors, UNDP, BAZNAS, and Bank Syariah Indonesia aim to develop a practical, Sharia-compliant framework that strengthens zakat’s contribution to sustainability and Indonesia’s climate resilience efforts. Looking forward, the framework is envisioned as a foundational tool for integrating sustainability into zakat management, not just within Indonesia but as a model with global applicability.(*)



Contact Information: 

Nila Murti, Head of Financing for Development (nila.murti@undp.org)
Nabilla Rahmani, Head of Communications (nabilla.rahmani@undp.org)