Islamic Finance

From awareness to action: UK Islamic Finance Council SDGs taskforce looking for practical solutions

BY Hassan Jivraj

27 Aug 2020

Insight

Salaam Gateway

The UK Islamic Finance Council (UKIFC) hosted its first meeting, online, for its Islamic Finance and the U.N. Sustainable Development Goals (SDGs) taskforce in early July.

The taskforce is supported by the UK government’s Treasury department and its first meeting included industry leaders and delegates from the United Nations Development Programme, the Islamic Development Bank, and the Islamic Financial Services Board.

Omar Shaikh, board member of the not-for-profit Islamic finance advisory said subsequent meetings will shift from awareness to action and identifying practical partnerships. “We don’t want to be just a talking shop for SDGs, we are trying to come up with practical solutions,” he told Salaam Gateway.

He explained that the terms of reference the taskforce members have signed up to include promoting awareness, understanding and enabling practical adoption of the SDGs.

Hatim El Tahir, Director of Islamic finance at Deloitte believes that the UKIFC took three important steps: getting government support, as represented by HM Treasury, setting clear policy and practice objectives, and aligning global industry players that include regulators, practitioners and standards setters.

Other participants told Salaam Gateway the meeting was a positive first step in stakeholders sharing their experiences and exchanging ideas in how to incorporate SDGs and ESG into their operations.

Looking ahead, Omar Shaikh said the UKIFC aims to publish another two reports (the first was released in May) in the fourth quarter as well as launch a webinar series.

“The next Taskforce meeting will likely take place in the next 3-4 months,” he said. “We welcome finance ministers and regulators from other parts of the world as well UK government ministers.”

KEY TAKEWAYS FROM THE UKIFC SDGs TASKFORCE FIRST MEETING

Among the participants of the taskforce were Islamic financial institutions and industry bodies that have already introduced or adjusted their existing commercial activities as well as internal policies to incorporate SDGs and ESG principles.

JAIZ BANK

Muhammad Kabir Muhammad, chief strategy officer of Nigeria’s Jaiz Bank said it has four different initiatives addressing the UN SDGs. “We incorporate the sustainability principles in the way we do business, ensuring that we not only run a responsible and profitable business, but that we give back to our communities, and manage our impact on people and the planet in line with Shariah principles,” said Muhammad.

Ihsan Account (a temporary and permanent cash Waqf),
Jaiz Financial Inclusion Centre (providing financing to women and vulnerable groups),
Green Account (encouraging recycling and addressing waste management)
One-Farmer-One-Hectare (supporting small holder farmers with financing and extension services to improve yield)

AL BARAKA BANKING GROUP

Dr. Ali Adnan Ibrahim, Global Head of Sustainability & Social Responsibility at Al Baraka Banking Group, said that within two months of the U.N.’s announcement of the SDGs in September 2015, the bank released its Al Baraka Goals (2016-2020) that are linked to seven SDGs. They focus on job creation, financing healthcare and education.

In May 2016, the Bahrain-headquartered Group pledged financing of $635 million towards achieving the SDGs via Al Baraka Goals.
In early 2019 the bank added sustainable energy to its goals, with an additional financing pledge for 2019-2020 that took its total pledge to $830 million towards SDGs.
The bank is currently finalizing its 2019 sustainability report, which will have more information about its progress over the first four years of Al Baraka Goals, and it is also preparing its next five-year strategy and working on what additional SDGs it should pledge for.
Through financing sustainability, Al Baraka is working towards climate mitigation in energy financing transactions. “Right now carbon disclosure is not mandatory. We are evaluating how best to have carbon disclosure across the Group,” said Dr. Ibrahim. Al Baraka’s headquarters in Bahrain is an energy efficient building, said to Dr. Ibrahim, adding that the bank’s subsidiaries are increasingly focusing on energy efficiency. In Jordan for example, branches have moved to solar power.

Council of Islamic Banks and Financial Institutions (CIBAFI)

Among the initiatives under the Bahrain-based CIBAFI’s Strategic Plan 2019 – 2022 is a Memorandum of Understanding signed with the Partnership for Carbon Accounting Financials (PCAF). The collaboration will enable Islamic banks to measure and disclose the greenhouse gas (GHG) emissions associated with their financing and investments through the development of a carbon footprint measurement methodology.

GIB ASSET MANAGEMENT

Venetia Bell, Head of Strategy of GIB Asset Management in London said the firm’s business strategy is aligned with the principles and objectives of sustainable development. “Our vision as a business is to scale and mobilise capital in support of sustainable development,” she said. The firm invests in both conventional and Islamic assets.

GIB uses five pillars in its investment analysis that are directly derived from the SDGs: Equality, diversity and human capital development; Climate, environmental action and water; Health and wellbeing; Governance and accountability; and Innovation and Infrastructure.
Bell said GIB is keen to work with partners to encourage adoption of the SDGs across the Islamic finance universe. “We already work with other asset owners and managers to improve outcomes through our active engagement approach on our investment portfolios, and find that joining with others allows a louder voice and greater momentum for positive change.”

KEY CHALLENGES

(Reporting by Hassan Jivraj; Editing by Emmy Abdul Alim [email protected])

tags:

SDGs

ESG