Abstract:
All economic activity occurs in the natural, physical world. It requires materials and human resources.
The economic activities always generate material residuals, which enter the environment as waste or
polluting emissions. The Earth, being a finite planet, has limited resources to meet unlimited needs
and wants of humans, and all of this, without effecting the environment. In other words, human needs
should not be realized at the expense of natural resources. A fundamental question economists have to
answer is how to mitigate the effects of financial economic activities on the environment. Financing,
that everyday practical subject and discipline of our lives, has been described as the study of how,
why, and where individuals, groups and organizations make decisions about the financing of valuable
resources in a prudent manner. This is because the environment is the platform for all human
activities. Human activities affect the environment and the environment in turn, affects humans. The
human and his environment are, therefore, inextricably related. It is obvious today that our planet is
slowly but surely going from bad to worse where our environment is concerned. Global warming has
become more evident than ever, leading to drought, famine, floods, misery, and even the spread of
diseases. There are a number of reasons which cause global environmental crises but the most obvious
cause above all is the overproduction of the non-essentials of people, as well as producing what is
harmful to humans. This has a negative impact on the achievement of Sustainable Development
Objectives, and its economic implications call for a new environmentally friendly financial system as
an alternative to the traditional one. The solution to this crisis begins with a scientific assessment of
which economic activities impact on the environment the most. The findings of this paper offer a
detailed problem description and analysis of the causation of environmental pressures and hence
provides knowledge required for reducing environmental impacts through Islamic financial system.
