Sustainable Development Goals in Islamic and Conventional Banking: A Systematic Review And Comparative Analysis

Abstract

The article is a systematic review on how Sustainable Development Goals (SDGs) are integrated in Islamic and conventional banking industries and summarizes 20 confirmed sources published in 202025. The review evaluates the role of the two types of banking models in sustainable development, comparing the strategies and performance results and congruence with the environmental, social, and governance (ESG) standards. It is observed that Islamic banking exhibits higher inherent compatibility with sustainability concepts with Shariah-compliant models of ethical investment, risk-sharing, and asset-backed finance, and conventional banking is higher in penetrating the market and scaling green finance programs. In both sectors, the review concludes that sustainable banking practices have a positive influence on financial performance, albeit of different magnitude depending on the region, and regulatory environment. To policy makers and practitioners, the data confirms the auxiliary nature of both banking models in the delivery of SDG targets, with Islamic banking offering special ethical instruments on environmental financing and conventional banking offering the infrastructure on which increasing sustainable investments may be scaled. The article contains two extensive tables: Table 1 contains all of the sources verified with the bibliographic data and a note of verification; Table 2 summarizes the comparative results of Islamic and conventional banking settings. This review helps in the realization of how divergent financial architectures can be brought to meet sustainable development goals and also offers practical recommendations as to the way forward of integrated methods of SDG financing.

Keywords: Islamic banking, conventional banking, Sustainable Development Goals, green finance, comparative analysis.