Beyond Financial Strategy: Indonesia’s Status-Seeking Through Sovereign Green Sukuk

Abstract

Indonesia’s decision to issue the world’s first sovereign green sukuk in 2018 raises a fundamental question: why did Indonesia choose to pioneer it? This paper argues that Indonesia’s decision was driven by identity and a quest for international recognition, rather than solely by financial calculations. Using constructivism and status-seeking theory, this paper employs an interpretive case study to analyze how Indonesia utilized sovereign green sukuk as an instrument of status-seeking. The findings indicate that Indonesia pursued status from a position of limited recognition, deliberately institutionalized its green sukuk program before issuance, and simultaneously sought recognition from both the Islamic finance community and Western climate governance circles. Eight consecutive issuances totaling US$7.7 billion—without a single conventional sovereign green bond—confirm this identity-based strategy. This case demonstrates that a middle power can pursue status through policy innovation in niche areas, rather than through military or economic dominance.