UKIFC to host Global Islamic Finance and the SDGs Series 2022
Global Islamic Finance and the SDGs Series (19, 20, 21 September)
UKIFC in partnership with United Nations, GEFI, Refinitiv and IsDB is organising a virtual global summit on Islamic finance and the SDGs, to coincide with the UN General Assembly 2022 and taking place on 19, 20 and 21 September. Click here to sign up now, or click here to find out more.
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The SDGs and Islamic finance: 5 publications to read
By Mohammad Hashimi
The sustainable development goals (SDGs) represent the global development agenda and need mobilization of capital from a variety of sources including Islamic finance. Here are five publications in on Islamic finance and SDG that those interested in the topic should read.
1. Innovation in Islamic Finance: Green Sukuk for SDGs
Innovation in Islamic Finance: Green Sukuk for SDGs, The Islamic Finance Council UK, 40 pages, 2021
The report, commissioned by UNDP Indonesia, explores the role of green sukuk in the context of climate change and the green economy. Indonesia has issued the world's first sovereign green sukuk in 2018 and the world’s first retail green sukuk in 2019. The report highlights the opportunity for Islamic finance industry to play a major role in achieving the UN SDG. The report suggests green sukuk could bridge the gap of funding towards sustainability and provides several recommendations for the development of the green sukuk market.
It finds that “green sukuk are a relatively new development with limited issuances but have a clear alignment with the value system of Islamic law. As Islamic finance evolves, innovative products such as green sukuk represent the potential for a new class of products that consider more than legal permissibility, moving towards a positive impact in line with SDGs.”
2. How Islamic Finance Contributes to Achieving the Sustainable Development Goals
How Islamic Finance Contributes to Achieving the Sustainable Development Goals, OECD Development Co-operation Directorate, 44 pages, 2020
In this report, the authors argue that in Muslim-majority contexts, Islamic finance could be socially, culturally and ethically more acceptable than conventional finance and better suit development. The report discusses Islamic social finance instruments and opportunities that can be used for achieving UN SDGs.
The report “identifies the opportunities that Islamic finance presents for donors, as they look to deliver the Sustainable Development Goals (SDGs). To achieve the SDGs by 2030, Arab and OECD DAC donors need to mobilize innovative forms of financing and deliver the UN Secretary-General’s call to deepen the transformation of development finance systems.”
3. Reforming Islamic Finance for Achieving Sustainable Development Goals
Reforming Islamic Finance for Achieving Sustainable Development Goals, Tariqullah Khan, 19 pages, 2019
The author explains the possibilities of Islamic finance contributing towards SDGs in the light of objectives of Shariah. The paper examines that a change in the perspective current system will be helpful in achieving SDGs.
The paper suggests that Maqasid should be given more importance, and argues that “The paradigm of Islamic economics and finance is guided by the motivation of comprehensive human development (CHD) and its preservation as manifested in the objectives of Sharīʿah (maqāṣid al-Sharīʿah)”
4. Role of Islamic Finance in Sustainable Development Goals
Role of Islamic Finance in Sustainable Development Goals, Abdul Ghafar Ismail, Salman Ahmed Shaikh, 16 pages, 2017
The paper explains the potential of achieving UN SDGs in light of the philosophical foundations of Islamic finance. The authors focus on environmental and climate changes caused by human beings. The paper suggests Islamic social finance instruments like zakat (obligatory alms) and waqf (charitable endowment) can contribute towards scaling up efforts in commercially non-viable but socially vital projects and programs.
They find that “there is much potential for Islamic finance to promote sustainable economic development through such approaches as widening access to finance, financing infrastructure projects, and expanding the reach of Takaful. Real sector based productive enterprise in Islamic finance has positive implications for the ecosystem.”
5. Sustainable Development Goals and Role of Islamic Finance
Sustainable Development Goals and Role of Islamic Finance, Habib Ahmed, Mahmoud Mohieldin, Jos Verbeek, Farida Aboulmagd, 47 page, 2015
According to the authors, basic principles of Islamic finance stabilize the economic system and give importance to social responsibility. The working paper explains how social financing tools like Zakath and Waqf help to achieve SDGs by enhancing stability and resilience to the financial sector, financial inclusion, reducing vulnerability of the poor, contributing to environmental and social issues, and infrastructure development.
They argue that “practical measures are required to enhance the contribution of the Islamic financial sector to achieve the SDGs. We have identified five tracks through which Islamic Finance could support efforts to achieve the SDGs: financial stability, financial inclusion, reducing vulnerability, social and environmental activities, and infrastructure finance.”
Concluding thoughts
Together, these reports and papers display the harmony between Islamic economic thought, Islamic finance, and the SDGs. However, they also show that the majority of the work to practically utilize Islamic finance for achieving the SDGs remains to be done.
Global Islamic Finance and SDGs Summit Launched
The UKIFC in partnership with UN and Islamic Development Bank is organising a virtual global summit on Islamic finance and the SDGs, to coincide with the UN General Assembly.
The summit will:
- Highlight the natural alignment between Islamic finance and the SDGs, based on the Maqasid Al-Shariah (higher goals of Islam);
- Examine some of the challenges for Islamic finance and the SDGs;
- Showcase the practical progress made by Islamic financial institutions on the SDGs, including multilateral organisations, governments, and commercial banks and asset managers; and
- Showcase the role for Islamic social finance in achieving the SDGs.
By focusing on the natural alignment between the Islamic faith and the SDGs, we will seek to drive engagement with and acceptance of the Goals among communities who might otherwise not engage with them. The summit will feature a mixture of high-level discussions about the global trends facing the Islamic finance industry, scholarly debate regarding the Goals, and practical showcases of SDGs in action in Islamic finance.
The Global Islamic Finance and SDGs Taskforce, initiated by the UKIFC, was launched by the UK Government together with IsDB to promote awareness and adoption of the SDGs amongst commercial Islamic financial institutions. This summit is informed by, and builds on, the work of the Taskforce and the UKIFC’s broader activities in promoting the SDGs and its work with GEFI as part of the Faith in Finance Path to COP workstream.
Confirmed Speakers Include:
- Dr Ahmed Al-Meraikhi, Special Adviser to the UN Secretary General
- Tan Sri Azman Mokhtar, Board Member, International Centre for Education in Islamic Finance
- Raja Amir Shah Raja Azwa, CEO, HSBC Amanah Malaysia Berhad
- Stella Cox CBE, Managing Director, DDCAP Group
- Rafe Haneef, CEO - Group Transaction Banking & Group Chief Sustainability Officer, CIMB Group
- Charles Haresnape, CEO, Gatehouse Bank
- Farmida Bi CBE, EMEA Chair, Norton Rose Fulbright
- Dr Akram Laldin, Executive Director, International Shariʽah Research Academy for Islamic Finance
- Arshad Mohamed Ismail, CEO, Bank Pembangunan Malaysia Berhad
- Najmuddin Mohd Lutfi, CEO, BIMB Investment Management Berhad
- Hajara Adeola, CEO, Lotus Capital Limited
- Omar Shaikh, Managing Director, UKIFC
To register your interest for the summit, follow the link to our sign up page.
UKIFC and ISRA launch report on Islamic finance and the SDGs
The Islamic Finance Council UK (UKIFC), in partnership with Malaysia based International Shari’ah Research Academy for Islamic Finance (ISRA), has launched the first report in a thought leadership series that aims to assist and encourage active engagement in support of the UN Sustainable Development Goals (SDGs) by the global Islamic finance sector.
The report, Islamic Finance and the SDGs: Framing the Opportunity, provides an introduction to the SDGs within the context of Islamic finance, emphasising the opportunity the SDGs present to the Islamic finance sector.
The SDGs seek to address global economic, social, governance and environmental challenges by 2030 and have been adopted by 193 countries. They recognise that ending poverty and other deprivations complement strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our natural environment.
With a $2.5 trillion per year financing gap the UKIFC has committed to a 24 month action oriented programme of activities to address barriers blocking Islamic Financial Institutions from embracing the SDGs. The report follows the launch of a global Islamic Finance and SDG Taskforce that is supported by the UK Government and involves senior level participants from across the globe.
With Covid-19 exposing the fragility of people and the planet the SDGs is a recognised global framework upon which we can, collectively, build our social, environmental and economic resilience. With its underlying Shari’ah principles, Islamic finance is naturally aligned to, not only support but, lead the financial services sector’s efforts towards achieving the Global Goals.
TAKEAWAYS FROM THE REPORT INCLUDE:
- There has been limited participation from Islamic finance sector in leading UN initiatives (such as Principles for Responsible Investment, Principles for Responsible Banking and Principles for Sustainable Insurance) that support financial institutions to align with the SDGs.
- To achieve SDG targets, Islamic Development Bank Member Countries need annual funding of between US$700 billion and US$1 trillion which represents around 40% of the total global SDG financing gap.
- Opportunity for Islamic finance to tap into emerging global liquidity pools seeking SDG-aligned products.
- Alignment with the SDGs supports the tayyib (pure, good) concept which contends that the focus of Islamic finance products and services should be on the evaluation of wider societal impact rather than an overly legalistic analysis of Shari’ah compliance.
- With assets expected to reach US $3.8 trillion in 2022, through its adeptness at innovative financial structuring, Islamic finance is well placed to create instruments that drive capital towards the SDGs.
With a deep rooted commitment to social benefit Islamic finance should be at the front and centre of this new, sustainable economic paradigm. With the SDGs emerging as the shared blueprint for peace and prosperity for people and the planet, now and into the future, it is time for the global Islamic finance sector to step up and demonstrate its credentials for driving finance for positive change.
Executive Director of ISRA, Dr Akram Laldin, said:
“Islamic finance has a lot in common with impact investment and can play a major role in addressing the problems faced by society. It also has the potential to bring added value to the efforts to mobilize resources for the sake of realizing the SDGs.”
Richard de Belder, Advisory Board Member of the Islamic Finance Council UK, said:
“The UKIFC firmly believes that the Shari’ah principles which underpin Islamic finance make the sector well positioned to lead in promoting the SDGs to achieve global economic and social justice combined with sustainability and to drive home the point that we are all vice regents with temporary custody of the world’s finite resources and so need to act in a way that recognises this.”
Charles Haresnape, CEO, Gatehouse Bank, said:
“The environmental and social challenges facing the world impact everyone and equally we must all play our part in affecting change for the better. Islamic Finance institutions already champion fairness and ethics through Shariah principles and by working to align our business activities with the UN’s SDGs we can further solidify that commitment. As the first UK Shariah-compliant bank to become a signatory to the principles we have seen first-hand how oversight from the UN encourages us to scrutinise the impact of our activities and importantly, assess where we can improve. This is an important global scheme that we would encourage other Islamic finance providers to be part of to drive positive change.”
Stella Cox, CEO, DDCap Group, said:
“The 17 SDGs are an incredibly important resource as they provide a roadmap to address some of the world’s most pressing matters, from battling climate change to reducing social inequality and raising global living standards. Every institution, regardless of size, can and should seek to align its work with the objectives of the 17 goals. Furthermore, there is a natural alignment between the SDGs and the core values in our industry. UKIFC’s Islamic Finance and SDGs Thought Leadership Series provides us with the opportunity to call to action and inspire greater engagement of the global Islamic banking and wider financial industry in delivering against the targets set within the SDGs. We are proud to support the UKIFC’s valuable work during the publication of this important series of reports.”
New Islamic finance taskforce to deliver global sustainable growth.
A new international taskforce is to be created with the support of the UK Government to engage the Islamic finance industry with the UN’s Sustainable Development Goals. The high-level Islamic Finance and Sustainable Development Goals (SGDs) taskforce will be anchored in London and run by the Glasgow-based Islamic Finance Council UK (UKIFC). Economic Secretary to the Treasury John Glen said the new initiative will ‘drive forward innovation around the world’. The UK Government will be the founding country partner when it begins in 2020, with an aim to promote understanding and encourage adoption of the UN SDGs amongst Islamic financial institutions. Gatehouse Bank has confirmed participation and interest has already been expressed from Malaysia and Dubai, as well as other UK organisations.
The UN’s SDGs are the blueprint to achieve a better and more sustainable future for all, addressing issues such as climate change, education and equality. But a recent analysis from UKIFC and Malaysia-based ISRA found a considerable lack of knowledge, misunderstandings and minimal engagement by Islamic financial institutions with the SDGs. Islamic finance is one of the fastest growing sectors in the global financial industry, with assets expected to reach US $3.8 trillion in 2022. Innovative financial structuring in the sector can help create instruments that drive capital towards the SDGs. The UK – and London in particular – has already become a centre for Islamic finance, helping finance developments such as The Shard and the Olympic Village. In 2014, the UK Government cemented the UK’s position as a hub for Islamic finance by becoming the first western country to issue sovereign Sukuk – Islamic bonds. With the City’s strength in conventional financial services, the strong legal framework and progressive outlook it continues to intellectually innovative and assist developments in the global Islamic finance arena.
The UKIFC was established in 2005 as a specialist advisory and developmental body focused on promoting and enhancing the global Islamic and ethical finance industry. It was the first global specialist Islamic finance body to sign up to the UN Principles of Responsible Banking (PRB). With Gatehouse Bank the only fully Shariah-compliant signatory, the UK is leading the way in relation to the Islamic finance sector’s engagement with the global framework that aligns with the SDGs. In 2016, the Church of Scotland and the UKIFC signed a partnership agreement to co-develop an ethical finance solution open to all society, regardless of race, religion or ethnic background and based on the shared values between the faith traditions. The UKIFC supported this month’s Ethical Finance 2019 global summit in Edinburgh, which brought together over 400 senior representatives from more than 200 companies and organisation.
The Economic Secretary to the Treasury, John Glen MP, said:
“The UK is a world leader in Islamic Finance, so I am pleased we’re now a founding country partner and observer member of the new Islamic Finance SDG Taskforce. “This Taskforce will bring together the global Islamic finance community so it can help us meet our international, environmental and sustainability objectives – using UK expertise in sustainable finance to drive forward innovation around the world.”
Richard de Belder, Advisory Board Member of the Islamic Finance Council UK, said:
“Delivering the UN’s Sustainable Development Goals will require private sector involvement. “But business-as-usual in the global financial arena will not deliver the 2030 goals. “A step-change in private investment in SDGs is required, and Islamic finance, as one of the fastest growing sectors in the global financial industry, provides a unique opportunity for innovative solutions. “We need a fairer system of financial management that delivers more than just profit and the inherent principles within Islamic finance are naturally aligned to the sustainability agenda. “This new taskforce will explore ways to bring people and institutions together to help achieve the UN SDGs.”
Charles Haresnape, CEO, Gatehouse Bank, said:
“We welcome the opportunity to support and participate in the Islamic Finance and Sustainable Development Goals Taskforce. “Our Shariah-compliant finance principles mean that our products and services are ethical by design and as a founding signatory of the UN’s Principles for Responsible Banking, Gatehouse Bank has committed to strategically aligning its business with the UN’s Sustainable Development Goals. “We are confident that the taskforce will play a significant role in identifying innovative solutions for sustainable finance in the future.”
ENDS
NOTES TO EDITORS
The Islamic Finance Council UK (UKIFC) is a specialist, not-for-profit, advisory and developmental body focused on promoting and enhancing the global Islamic and ethical finance industry. It has helped six countries develop enabling regulatory frameworks for Islamic finance, enhancing financial inclusion to over 15 million people, established the award-winning Ethical Finance Round Table series running since 2010, launched the world’s first joint venture between Islamic finance and the Church of Scotland, and delivered development sessions to over 500 Islamic scholars across the globe.
The framework of an Islamic financial system is based on elements of Sharia (the law of Islam) which governs Islamic societies. The fundamental concept of Islamic finance is that money has no intrinsic value and should only be used as a measure of worth.