Combining Islamic Financeand Sustainability -sacred principles, new paradigm

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Shaping the Future of Islamic Asset Management:


Tayyib Inspired

Project Tayyib is inspired and framed by the Islamic concept of “Tayyib” (pure, wholesome, and impactful). It seeks to complement the existing “halal” paradigm successfully built by the early Islamic finance pioneers. At its heart it seeks to reflect Shariah compliance coupled with enhanced focus on active responsible (also referred to as ESG/Sustainable) investing framed by Islamic values.

Responsible investing and Islamic finance have many shared principles such as stewardship of the environment, protecting worker rights and having positive social contribution.

COP28 occurs at a time where the world faces a global climate and nature crisis and increasing calls for stakeholder capitalism whereby the financial system works for people and planet alongside profit. Launching at COP28 the Tayyib Secretariat aims to develop solutions to support financial markets to better combine responsible investing and Islamic Finance to create a more sustainable, inclusive and equitable world.

Project Tayyib Objectives:


1

Empowering growth

Responsible investing is rapidly growing and is projected to surpass $30 trillion by 2026. This presents a compelling business opportunity for Islamic asset managers to access diverse agnostic global ESG liquidity pools, enabling them to attract new mandates. Furthermore, many of these liquidity pools target deployment in the global south, a natural realm for numerous Islamic asset managers.

2

Encouraging innovation and expanding choice for existing Islamic finance consumers

Using the Tayyib concept to develop new innovative ESG linked products expands the current product offering. This can include solutions for customers wishing to have their Islamic pensions aligned with net zero goals.

3

Global collaboration and enhanced participation

Combining approaches benefits both conventional and Islamic markets.

Islamic principles can present additional perspectives and solutions to challenges and tension points emerging within the global conventional ESG market. With over 1.6bn Muslims globally ensuring all voices are included in addressing the “S” in ESG enables a more considered and relevant solutions.

Contemporary Islamic Finance has principally grown from an exclusionary basis. The sector can benefit from the considerable global developments in sustainability classification, reporting (e.g GRI) and accounting frameworks and approaches to issues such as nature and biodiversity (e.g. TNFD).

Background: Project Tayyib - a market driven initiative:


The Islamic finance sector is valued at over $4 trillion and spans prominent financial hubs across the globe, including London, Luxembourg, Dublin, Istanbul, Dubai, Bahrain, and Kuala Lumpur. The early pioneers of Islamic finance skilfully created Shariah-compliant "halal" options, driving financial inclusion and GDP growth.

The Tayyib inspired approach seeks to build on this success, with the introduction of enhanced sustainability considerations through producing practical market tools for asset managers.

Project Tayyib is a market driven initiative, building on several years of market assessment and formally commissioned in 2022 by the UK Islamic Finance Council (UKIFC) together with the Global Ethical Finance Initiative (GEFI). Market analysis undertaken has validated the demand and bought together partners reflecting a genuine global collaboration with stakeholders from the UK, Malaysia and the GCC.

New global initiatives similarly inspired by the concept of Tayyib and deeper reflection on the Maqasid al-Shariah (objectives of Shariah), are underway in different geographies and sectors. These initiatives collectively  are welcomed and can build a stronger movement towards making better, more inclusive and climate conscious financial markets.

Developing a Tayyib inspired market solution


In developing a set of principles of Tayyib inspired investing a number of factors have been identified.

The Shariah law is the “north-star” within the Islamic world. Using Islamic principles such as the Maqasid al-Shariah (objectives of Shariah) and Qawaid (Islamic legal maxims) is a central consideration in framing the Tayyib concept.

Other factors to consider include referencing the current state of mainstream responsible investing including the proliferation of ESG frameworks and the challenges being faced by asset managers in applying these. Understanding such can proactively avoid duplication, minimise the barrier to adoption and ensure solutions are practicably implementable.

Detailed analysis is required to develop principles of Tayyib inspired investment and to create associated market tools that allow these to integrate into the investment management approach. This R&D will be a key function of the Tayyib Secretariat.

Market Approach Led by Practitioners

Referencing Leading Frameworks

Applying a “Maqasid Lens” to Identify Additionality

Dr. Mohamed Ali Elgari

I have no doubts that Islamic principles can have a positive impact in the global transition to a more sustainable and equitable economy. I urge the Islamic finance industry to embrace the opportunities that lie ahead and to work collaboratively in the ESG finance space to create a more sustainable future for all.

Chair Global Ethical Finance Initiative (GEFI)


Dame Susan Rice

“With global growth in sustainable finance, it is an opportune moment for the Tayyib concept and the beautiful principles it encapsulates to come to the fore in Islamic finance.”

Chair Steering Committee, Project Tayyib


Tan Sri Azman Mokhtar

“The development of the GEFI Tayyib Seal is a groundbreaking first step, this collaborative effort paves the way for a dynamic and transformative intersection of Islamic finance and ESG considerations.”

The Secretariat


Launched at COP28, the Tayyib Secretariat represents a global collaboration involving the UK, UAE and Malaysia. The Secretariat is co-managed by GEFI and the UKIFC and supported by ISRA Consulting. The Host Financial Centre is UAE based DIFC. The appointed Technical Partner is PwC Dubai. An Advisory Panel (representing shariah scholars, multilateral bodies, and select industry developmental stakeholders) and an Industry Consultation Group will be established to support the Secretariat. Interested applicants may contact the Secretariat.

Advocacy

The Tayyib Secretariat will present the Tayyib concept and underlying Islamic principles with a view to contribute and collaborate with key stakeholders in both the Islamic finance and conventional ESG/sustainable finance arenas. This approach will allow for the Islamic finance sector to benefit from developments in mainstream sustainable finance and contribute it's voice to help inform discussions and shape developments in the global mainstream markets.

Research

The Tayyib Secretariat will build on the initial research undertaken to further refine the concept of Tayyib and associated investment considerations arising from applying a "maqasid lens" to select investment asset class (including, ECM, sukuk, RE and PE as a proxy for impact investment).  Research will be done in cooperation with Islamic scholars and supported by academia and practitioners. Regular assessment, supported by GEFI, of mainstream ESG frameworks will be undertaken to ensure relevant developments are incorporated.

Steering Committee members


Azman Mokhtar Steering Committee Chair

Cliff Prior

David Sheasby

Kate Walsh

Muneer Khan

Noman Tahir

N. Tariq Shaikh

Omar Shaikh

Salman Siddiqui

About Us


The Islamic Finance Council UK (UKIFC)

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. The UKIFC has remained committed to its guiding principle of making a tangible, positive impact to the sector. The team has advised governments, authored technical reports, presented at international conferences and developed training programmes which, collectively, have changed global regulation and played a leading role in exploring the relationship between Islamic finance and the broader ethical finance arena.


Global Ethical Finance Initiative

The Global Ethical Finance Initiative (GEFI) oversees, organises and coordinates a series of programmes to promote finance for positive change.  It brings together the world’s business, political, and social leaders to build a fairer finance system for people and the planet.

Work done so far


Project Tayyib kicked off in 2022 with extensive research being undertaken over a 12 month period to COP28. This was commissioned and lead by the UKIFC and GEFI research teams. This initial “problematization” phase has identified critical ontological challenges, ESG application issues (convergence and divergence) and potential areas of additionality (value add).

We would like to express our thanks and gratitude to the below organisations, who formed a temporary Steering Committee for the initial aforementioned research period providing guidance to the UKIFC and GEFI research team.

Our particular thanks and acknowledgment to Nadeem Haq, Tan Sri Azman Mokhtar, Omar Shaikh, Muneer Khan and the ISRA team for their extensive efforts.

Supporting Organisations - thank you!


Tayyib Inspired Resources


GEFI Path to COP28 Campaign »

Global Islamic Finance & UN SDGs Taskforce »

Islamic Finance Global Survey »

Driving Climate Action in the GCC »

How to encourage greater Islamic investment in sustainable finance »

Project Tayyib: Bridging Values and Finance »

GEFI Industry Updates »

An Ethical Convergence: Islamic Finance and ESG Principles »

From Halal to Tayyib,  Islamic Finance & the SDGs 2021 Virtual Summit »

Financing a Sustainable Future: Green and Sustainability Sukuk Report 2022 »

Securities Commission Malaysia Maqasid Al-Shariah Guidance »

An Ethical Convergence: Islamic Finance and ESG Principles »

Tayyib Inspired Resources


COP28 in Dubai: The landscape of climate commitments in the GCC

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How to encourage greater Islamic investment in sustainable finance

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