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.”
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.
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