- Responsible finance has grown across the developed markets but its growth in emerging markets where Islamic finance is concentrated has lagged
- Islamic finance can benefit from cooperation with other areas of responsible finance through greater integration of environmental, social and governance (ESG) into Islamic financing activities recognising their close fit with the principles of Shari’ah
- The Responsible Finance Institute highlights the universal value proposition of Islamic finance and offers a unique way for Islamic financial institutions to provide leadership for the development of the global responsible finance industry
September 2, 2015 – Dubai, United Arab Emirates – The Responsible Finance Institute (“RFI”), a non-profit organisation,
sees potential for Islamic finance to lead convergence around
responsible financial principles to make the financial sector support
equitable, inclusive and sustainable economic development. A key aspect
of its mission will be exploring opportunities for collaboration
between responsible finance solely focused on ESG and an Islamic finance
industry that recognises the key overlaps between the principles behind ESG and the principles which guide Islamic finance.
The announcement followed the Institute’s inaugural meeting of its Council of Advisors chaired by Dr. Zeti Akhtar Aziz and its Board of Trustees led by Chairperson Prof. Datuk Dr. Rifaat Abdel Karim that met in Edinburgh, UK on August 31st to finalise a work plan through to the end of 2016.
The RFI’s
efforts will be led by its Chief Executive Officer Blake Goud who will
lead the development of its research agenda to map the global scope for
responsible finance and opportunities for convergence. The RFI plans to
also become the reference point for creating awareness for how the
universal value proposition of Islamic finance contributes to the
development of responsible finance industry. The research agenda will
include, among other activities, the creation of an indicator of the
quantitative and qualitative development of responsible finance
In addition to
the RFI’s research agenda, RFI will host insightful roundtables in key
centers of responsible finance globally to engage different perspectives
in discussion of key issues in the industry. These roundtables, will
bring together professionals, academics and regulators of issues that
will shape the future of the responsible finance industry. They will be
supplemented with webinars to engage with additional stakeholders.
The RFI’s
awareness activities will build towards a conference to be held in the
second half of 2016. The RFI believes that to promote a balanced
discussion of the responsible finance industry, it is vital
to bring the ethical and socially responsible principles of Islamic
finance into the conversation about supporting equitable, inclusive and
sustainable economic development.
Tan Sri Dato’ Sri Dr. Zeti Akhtar Aziz, Chairperson of the RFI Council of Advisors said: "Since
the financial crisis, there has been an increasing focus on the need
for how financial institutions can incorporate ethical and responsible
finance in their businesses across the industry. I am delighted to
support RFI’s efforts towards greater convergence of the socially
responsible and ethical principles of Islamic finance within the broader
responsible finance industry”.
Professor Datuk
Dr. Rifaat Rifaat Karim, Chairperson of the RFI’s Board of Trustees
said: “The RFI will be the source for creating and disseminating
research and that provides a robust, detailed and balanced perspective
about responsible finance. Disseminating this research and stimulating
robust discussion about how to support greater integration
of ESG into Islamic financing activities as a way of moving Islamic
finance closer towards the principles of Shari’ah”.
Blake Goud, the
RFI’s CEO said: “One of the biggest missing pieces in responsible
finance research today is the role that Islamic finance plays and what
it can gain from engaging with the broader responsible finance
community. Building awareness about the growth in areas like socially
responsible investing (SRI) Sukūk and financial products that
focus on financial inclusion of the global Muslim population is not
fully recognised in the responsible finance sector.”
About the Responsible Finance Institute (RFI)
The RFI is being established to integrate
principles and solutions of the responsible financial sectors,
including the ethical and socially responsible principles of Islamic
finance into the global economic system to support equitable, inclusive
and sustainable economic development.
Its mission is to conduct research that explores the connections
between the socially responsible, ESG and Islamic financial sectors,
supports their convergence towards shared standards and engages
stakeholders to build the responsible finance industry as a catalyst for
economic development for the benefit of all.
The Responsible
Finance Institute is being established and will operate with a global
focus that also reflects the importance that emerging markets have in
laying the foundations of Islamic finance as a unique part of
responsible finance industry.
In addition to
HE Governor Zeti and Professor Rifaat Ahmed Abdel Karim, the RFI Council
of Advisors includes HRH Emir Muhammadu Sanusi II and Professor Simon
Archer. The RFI Board of Trustees includes Professor Rifaat Ahmed Abdel
Karim (Chairperson), Dr. Sayd Farook (Vice Chairperson), Ms. Sarah
Marten (Vice Chairperson), Mr. Daud Vicary Abdullah, Mr. Abdulla Al
Awar, Mr. Hasan Al-Jabri, Mr. Tirad Al-Mahmoud, Dr. Mohd. Daud Bakar,
Mr. Sultan Choudhury, Ms. Stella Cox, Mr. Brandon Davies, Mr. Rafe
Haneef, Professor Datuk Dr. Mohd Azmi Omar, Mr. Omar Selim and Mr.
Mustafa Adil.
About Responsible Finance
After the
financial crisis, it was apparent that the link between risk and reward
had been broken and needed to be rebuilt with ethics and morals at its
heart. The financial crisis illustrated in stark fashion that ethics and
business are not adversaries and that ultimately they need each other.
It is within
this context that ‘responsible’ finance practices can play a powerful
role in shaping the future of the global economy. There are various
definitions and practices encapsulating the ‘responsible’ finance
sector. These include sustainable, responsible and impact investing
(SRI), environmental, social and governance (ESG) screens and Islamic
finance, which is a form of financial intermediation in which funds are
raised and applied using asset-based methods or partnerships in
accordance with Islamic law instead of lending and borrowing.
Yet, the guiding
principle that is shared among all of them is an appreciation that
financial services can be a force, and indeed are necessary for
equitable, inclusive and sustainable development. 