The Church of Scotland and Islamic Finance Council UK have announced a partnership to create ethical financial services.
The joint venture will draw on how the Christian and Muslim communities have supported ethical finance in the past and examine the practical commercial viability of new models which can tackle inequality and poverty. This pioneering initiative is the first time the Church and Islamic finance have come together to collaborate and will aim to create solutions open to everyone regardless of religious or ethnic background.
This initiative has come into being through a shared belief that existing financial institutions have in recent years lost their social conscience. Following the banking crisis of 2008, further ongoing scandals of misselling payment protection and interest rate fixing have raised the question if reforms have worked. We believe this is an exciting opportunity for faith groups to work together on solutions which will benefit the whole of society, regardless of faith or belief.
On announcing the project Rt. Rev Dr Angus Morrison, Moderator of the General Assembly of the Church of Scotland, said: “In 2012 the Church of Scotland’s special commission on the purpose of economic activity identified human flourishing and the protection of the planet for future generations as two of the most critical purposes for financial interaction. Our current system has gone badly wrong, creating massive inequality and the destruction of our shared natural resources by money-making machines overtaking commerce that serves the common good.
“The Christian and Islamic faith traditions share a commitment to economic justice and a call to an equal distribution of the gifts of God. By collaborating and “putting our money where our morals are” we have an opportunity to live out our common values and make a tangible change for those most affected by poverty. Active concern for our communities is an obligation and we look forward to meeting the challenge together.”
The Islamic Finance Council UK (IFC) is inspired by a commitment to developing a fairer, more responsible finance system. It has been recognised globally for its work in promoting shared values and increasing connectivity between ethical and Islamic finance stakeholders across the UK. For more than 5 years the IFC has been leading the debate on ethical finance through a series of events based in Edinburgh.
IFC Advisory Board Member Omar Shaikh said: “In recent years we have developed a strong relationship with the Church of Scotland and this project is a result of that positive engagement and the mutual desire to work collaboratively on a project which brings together the best of our respective faiths. The positive message of faith groups working together presents a beacon of light which we hope can inspire many others across the world.
“Scotland has a proud heritage in ethical finance with the savings bank movement able to trace its origins back to the Rev. Henry Duncan of the Church of Scotland. This model was also used as the blueprint for the early Islamic banking attempts in the 1960s, which makes it particularly poignant that this new initiative in being led in Scotland.”
The project will research, shortlist, test and then establish a viable ethical finance business solution. The consultation and business plan phase is expected to last a year, with the first workshop to take place this May in Edinburgh with theological and financial experts coming to Scotland from as far afield as Nigeria, Malaysia and Bahrain.
International Islamic Finance
Worth over $2trn, the Islamic finance sector has witnessed tremendous growth over the past decade. Moving forward a key growth strategy for Islamic financial institutions will be their ability to successfully enter and tap the considerably larger ethical finance arena. Along with the commercial opportunity, by focusing on the inherent convergence in ethical values will increase the appeal of Islamic finance in new global markets and allow an avenue to address the aspirational dissatisfaction growing within the industry as witnessed by key stakeholders raising concerns over excessive synthetic imitation of conventional structures.
Africa and Nigeria specifically is well known for its triple heritage. Often referred to as non-interest finance, Nigeria has been taking a lead in developing this sector to promote financial inclusion. Ex-Governor of the Central Bank of Nigeria, HH Emir Sanusi commented, “One immediate success of this initiative is how it is bringing together faith communities on their common values. This is powerful example that many globally can take from, including us in Nigeria. Well done to the Islamic Finance Council UK and the Church of Scotland for showing their vision, leadership and bravery.”
Islamic finance in Malaysia has taken considerable market share and attracted many Chinese Malays and those not of the Islamic faith. Dr Akram Laldin, CEO of Malaysia based Bank Negara body ISRA commented, “Islamic finance is founded on moral and ethical values and these values are shared by different faiths. This joint venture with the Church demonstrates that people from different faiths can work together on the common ground that we share. Together we can strive for the betterment of humanity.”
Scottish communities show leadership
Minister for Europe and International Development, Humza Yousaf, said: “Ethical finance offers a great opportunity to diversify Scotland’s financial services industry, allowing it to grow and prosper. I’m delighted to see the Islamic Finance Council’s hard work in this field acknowledged by the EFICA. The Scottish Government is committed to creating a more socially responsible and fairer economy in Scotland and is building upon our progress to become a worldwide industry leader in the field.”
Since the issuance to the public, in 2013, of its report on the purpose of economic activity the Church of Scotland has promoted a range of new initiatives including the development of the Churches Mutual Credit Union in partnership with other UK churches and support for WEvolution, a pioneering movement developing Self Reliant Groups and social enterprise in Scotland’s poorest communities.
Rev Sally Foster-Fulton, convener of the Church of Scotland’s Church & Society Council said: “In the Church we don’t just want to talk about how we need to do things differently. We want to demonstrate how we can and are. Working with the Islamic Finance Council UK is an important part of that work. Not only are we trying to build a fairer economy together. We are also building vital friendships and relationships across our faiths. That is also really significant in today’s world where these relationships are so often defined by division.”
Scotland’s leading Sunni Muslim theologian, Shaykh Ruzwan commented, “Today marks the beginning of extensive consultation between Muslim faith representatives headed by IFC and its associates and the Church of Scotland on working towards a shared principles framework distilled from the intellectual legacy of the two great faith traditions that will inform the debate on ethical and sustainable models of economy. As the financial crisis of the last decade is being pushed firmly to the back of the collective memory, the systemic non-sustainability of the current financial model further amplifies the need to highlight alternative practice that places human nurturing and the environment at the core of deliberation on what economy should be.
In doing so, it also engages those that question the relevance of religion in the creation of the common good and provides a new model of Interfaith engagement – moving from dialogue to action. The Scottish context of this initiative, with its unique history in the development of the Enlightenment, in ethical banking as well as its pioneering ecumenical work, serves as the perfect environment in which to embark on this journey.”
UK leading innovation as a global financial hub
Prime Minister David Cameron has stated the UK’s position as a center for Islamic finance. As the first Western government to issue a sovereign sukuk, today’s pioneering development of interfaith collaboration showcases the UK’s ability to innovation and contribute to the global Islamic finance sector.
Lord Sheikh, Patron of the Islamic Finance Council UK and Co-Chair of the All-Party Parliamentary Group on Islamic Finance and Diversity in Financial Markets, said, “The UK has successful positioned itself as the leading Western Hub for Islamic finance with over £20bn in shariah-compliant assets. This pioneering retail focused initiative presents a great opportunity to build not only a robust sustainable business but also demonstrates British communities working together building stronger, interdependent communities.”
CityUK Islamic Market Advisory Group Chair, Stella Cox, said, ‘
The UK is a world leading centre for Islamic Finance, and its industry stakeholders have been proactively seeking to further the development of Islamic finance through engagement with a more universal audience. Research currently being undertaken, supports the assertion that socially responsible investment principles can combine effectively with the ethical and prudent financial screening procedures of Islamic and faith-based finance to support sustainable, economic growth and a more measured approach to global, financial practice. Amongst these initiatives, the award-winning IFC EFRT round table series has demonstrated that there are a great many shared values to provide a foundation for further collaboration.
The City, as a financial hub, has long since shown that it is open for business and that it welcomes innovation….Further defining and shaping our shared ‘ethics’, as we progress, is a debate to which the faith communities can meaningfully contribute, with the common objective of proving a model that motivates and inspires our global partners.’