Unique may be an overused word nowadays, but the Global Ethical Finance Forum (GEFF) which took place in Edinburgh at the start of this month, September 2015,  for once justifies the description.  The gathering in Scotland’s capital, organised by Dubai-based MEGA Events and supported by the Scottish Government and the Islamic Finance Council UK (IFC), represented the first such event in Europe and saw an attendance of around 250 delegates from across the globe.

The subtitle of the conference, “Growing the global ethical finance industry through collaboration and convergence”, hints at the main thrust of the discussions, namely how the ethical finance and investment industry can be strengthened and developed by increased collaboration and mutual awareness between the socially responsible investment movement on the one hand and Islamic finance on the other.  A number of the GEFF sessions were expressly built around the convergences (or lack of them) between these two areas, with topics covered including comparative approaches to positive screening between Islamic finance and other areas of the ethical investment industry, the role of regulators and standard setting bodies in increasing connections between Islamic finance and other areas of the ethical sector; and exploring parallels and differences between sukuk and green bonds.

The panel discussion in which I took part personally focused on the question of how Islamic and other forms of responsible investment products could be “taken mainstream” without diluting their basic values.  Chaired by Ulrika Hasselgren, CEO of Ethix SRI Advisors, the panel also featured Abdulla Mohammed Al Awar, CEO of the Dubai Islamic Economy Development Centre, Fergus Moffatt, Head of Public Policy at UKSIF and Scott Murray of Virtuo Wealth Management.  There was general consensus among the panel members that the presently fragmented state of the ethical finance world was a major stumbling block in seeking to expand its reach.  One aspect of the discussion centred on the question whether it would be practicable to establish fundamental standards which would be accepted across the industry as a whole; related issues raised included whether ethical products could be effectively rated, and if so how an “ethical ratings agency” might emerge, or whether it might even be possible to establish an “ethical finance kite-mark” for the benefit of retail product customers.  There was general acceptance that given the very wide-ranging origins of ethical investment, from Islamic and other faith-based products to those looking to environmental or social outcomes, it would be challenging to formulate an approach which could apply across the board (and indeed to identify who might provide this).  One area of agreement however was that there was still considerable work to be done in achieving sufficient clarity and transparency in investor-facing documentation.  There was consensus too that in seeking to widen the investment base for ethical products there was a constant need to guard against deleting core values with the effect of reducing the ethical element to a mere veneer or box-ticking exercise – as one panel member put it, while the boxes do still need to be ticked there must be real substance behind them.

The GEFF was book-ended by significant contributions from two eminent representatives of the world of Islamic finance.  The opening keynote speech was delivered by Dr Zeti Akhtar Aziz, Governor of Bank Negara, Malaysia who delivered a broad ranging review of the role of Islamic finance within the wider financial world and in particular the contribution its fundamental principles allow it to make to financial stability and to widening financial inclusion within emerging economies.  She also emphasised the importance of education within the sector, citing Malaysia’s role in establishing INCEIF, the global university of Islamic finance.  The closing session of the conference took the form of an extended interview with HRH Muhammad Sanusi II, Emir of Kano, former Governor of the Central Bank of Nigeria.  HRH Sanusi spoke powerfully about his role in combating corruption within the financial sector in his country and in enabling the Islamic finance industry within it during a particularly febrile period for community relations.

In conclusion it is worth mentioning that Scotland was a particularly apt destination for the inaugural GEFF.  Historically it has contributed perhaps more than any other country to the development of ethical finance – in addition to being the birthplace of Adam Smith (himself a powerful proponent of the ethical aspects of economics), Scotland was the cradle of the mutual insurance industry, from the foundation of Scottish Widows in 1815 onwards.  It was in early 19th century Scotland also that the Rev Henry Duncan laid the foundations of what was to become the savings bank movement, and it is a striking fact that when the first Islamic bank in the modern sense was established in Egypt in the 1960s those involved drew expressly on the experience of the Scottish savings bank movement.  As Omar Shaikh of the IFC teasingly suggested in his remarks at the conference opening, perhaps in addition to its many inventions in the fields of engineering and science from the steam engine onwards Scotland can also claim to have had a hand in the establishment of Islamic finance!


Graham Burnside

Advisory Board Member, Islamic Finance Council UK

Consultant, Shepherd and Wedderburn LLP


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