Abstract:

The industrialization that began with the industrial revolution has affected all countries in the world. With industrialization, the search for resources has accelerated and has started a competition between countries. In the industrialization process, only the production factor was focused on, but the depletion and the loss of natural resources were not taken into account. The industrialization race and linear economy are the underlying reasons for the rapid depletion of natural resources. In 1966, American economist Kenneth E. Boulding first mentioned the circular economy concept in his study. The circular economy is an extremely important area for economies that are in severe scarcity in terms of resources. The circular economy, which has great potential for the sustainability and efficient use of limited resources, has an important place in the realization of development goals. The circular economy is also important for sustainability and development. The changeover to circular economy facilitates the achievement of the goals set out in the United Nations Development Program regarding ecological balance. The linear economy process, which starts with the purchase of raw materials, continues with the design and construction of the product. The manufactured product is offered for consumer use and ends when the consumer becomes waste after use. Besides consuming scarce resources at an alarming rate, large amounts of waste are generated in the linear economy process. Contrary to the linear economy, the circular economy is a production process in which production is made using less raw materials and energy. In the circular economy process, the production process repeats itself in a cycle. The circular economy process starts with the use of wastes rather than the purchase of raw materials. Afterward, the process continues with the product design for the use of waste, the production of the product, the consumption of the product, and the waste. The circular production process constantly repeats the same cycle. The issue of preserving ecological balance and preventing waste is the intersection point of Islam religion and the circular economy. Islamic religion includes rules that regulate the daily life of believers such as protecting the environment and not wasting resources. These issues are discussed in verses about waste and the protection of ecological balance. Green Sukuk, which has launched to protect the ecological balance among Islamic financial products, is a product that appeals to all investors. Green Sukuk is designed to protect sustainability, adapt to climate change, and finance environmentally friendly projects. Green Sukuk is closely related to project finance that will eliminate climate change, global warming, fossil fuel consumption, and other environmental problems. Considering the types of Sukuk, Green Sukuk complies with the Istisna Sukuk based on the production of non-existent products, Ijarah Sukuk based on leasing, and Musharaka Sukuk based on partnership. This study, it was tried to answer the question "How are the concepts of Islamic finance and circular economy tackle in the literature?” This study was designed based on the study of Rusydiana (2019). Studies in which the concepts of "Circular Economy" and "Islamic Finance" are included in the Scopus, Web of Science, Science Direct Indexes have been examined. When the data obtained from the indexes are examined, 56.570 studies have been conducted between 2010 and 2021, using the concept of circular economy as a keyword. 5.667 of these studies have been done in the field of economics, econometrics, and finance. The number of studies in which the concepts of circular economy and Islamic finance are used together is 7. Various suggestions for financing circular economy projects within the scope of Islamic finance are presented in the reviewed studies. These suggestions are that financing with the hybrid finance model, financing SMEs with the hybrid finance model, establishing contracts based on long-term risk-sharing principle, and readjustment reporting standards according to the circular economy system was made. As a result, it has been concluded that the studies that deal with the concepts of Islamic finance and circular economy, which are closely related to each other in terms of their purposes, are insufficient. In the literature, there are very few studies in which the concept of Islamic finance and circular economy are used together. There is a serious gap in this case in the literature. With this study, the deficiency in the literature was tried to be stated.

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