Sustainable Islamic finance has become a priority for many governments and institutions including sustainability objectives within their mandates.
According to Refinitiv, from 2017-Q1 2021, the ESG Sukuk was valued at a remarkable $12.6bn and ESG funds at $756m.
Islamic social financing must be an integral part of the solution for financing sustainable development.
Through Islamic Finance there are opportunities for enterprise development, trade, skills development, Shariah-compliant product and services that key into sustainability and socio-economic inclusion.
According to Madelena Mohamed, Director Islamic Banking and Takaful Department Bank Negara Malaysia, sustainability has shifted from a mere conceptual aspiration that is linked to the fundamental value of sharia, to an increased strategy that organizations can leverage including Islamic Finance institutions.
She said, in recent years, there has been expansion in the area of business sustainability, environment sustainability, and social sustainability.
Sustainability is gaining a lot of traction globally which provides Islamic financial institutions with opportunity to get viewership and influence financial development both within the financial group and also the wider community.
According to her, Islamic financial institutions are strengthening their value and stature within the financial group using sustainability strategies.
The developments are enabling tangible impact to be seen and delivered by Islamic financial institutions, in the area of promoting inclusive sustainable roles.
On his part, Dr Ali Adnan Ibrahim, Global Head of Social and Sustainable Finance Al Baraka Banking Group, Bahrain explained that the journey of sustainable development started in the 60’s, responsible investing initiative started in U.S, climate finance commenced in the 90’s, while 2000 led to the emergence of ESG, and in 2015 there was the emergence of sustainability goals which brought about how the public and private sector need to align itself with responsibility in the financial services with Islamic finance as a key part.
He said, all ESG projects impact are under the umbrella of sustainable finance which makes it very easy for Islamic banking and Islamic financial institutions to converge and engage with other stakeholders across the globe.—Proshare