Today Islamic Finance Council UK (UKIFC) became the first advisory body dedicated to Islamic finance to endorse the United Nations Environment Finance Initiative’s (UNEP FI) Principles for Responsible Banking (UN PRBs), joining 64 other international banks and stakeholders.
The UN PRBs represent an opportunity for the Islamic Banking industry, which is made up of over 1,300 financial institutions and windows, and is growing at 6% annually. It is a USD2.4 trillion contributor to the international banking marketplace forecasted to reach USD3.8 trillion by 2023 (Islamic Finance Development Report 2018).
The Principles are the first global framework to enable banks to integrate sustainability across their operations and enhance their positive impact with in the regions they operate in. Arab African International Bank (AAIB) (Egypt), Commercial International Bank (CIB) (Egypt), CIMB Bank (Malaysia) and Garanti Bank (Turkey), which operate in muslim-majority countries, are amongst the founding signatories.
The PRBs strongly align with the principles of Islamic Finance. Alignment and Impact are embedded in the foundational goals of the Maqasid al Shariah, a framework of purpose in Islamic practice that focuses on the objective of wealth and the preservation and continuity of life. Achieving communal prosperity and financial transparency underpin Shariah compliant finance, based on a law designed to protect all members of a society. Fairness and inclusion are themes of Islamic finance that resonate with the remaining four UN PRBs (Clients, Stakeholders, Governance and Transparency). Adopting the UN PRBs will encourage more innovation in the use of Islamic finance instruments to achieving the SDGs, such as green Sukuks.
Omar Shaikh, Member of the UKIFC’s Advisory Board said: “The UKIFC is the leading organization in Islamic finance actively promoting greater integration with the broader ethical finance marketplace. The underlying principles of Islamic finance align well with people, planet and purpose. The enhanced nature of stakeholder involvement in Islamic finance sits particularly well with the ethos of UNEP FI’s Principles for Responsible Banking 6 principles and for this reason we welcome and endorse them.”
Simone Dettling, head of the Banking team at UNEP FI said: “It is fantastic to see this coalition growing so quickly. The Principles for Responsible Banking are rapidly setting the global standard for what it means to be a responsible bank. We invite banks that haven’t endorsed them yet to join and show their commitment to the sustainable banking system of the future.”
The Principles, developed by 28 of the world’s leading banks, are currently out for global public consultation until May 2019 and will become available for signature in September 2019, during the UN General Assembly. Shariah compliant banks and intermediaries are encouraged to join the coalition by endorsing the Principles.
The UKIFC contributes to research and advisory on the alignment of the UN SDGs with the Maqasid al Shariah in the Islamic Banking industry, shaping the industry’s role in the broader ethical finance industry and promoting shared values across faith-based finance and investment institutions (The Edinburgh Finance Declaration).
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Notes to editors
Islamic Finance Council UK
The UKIFC is a specialist advisory and development body focused on promoting and enhancing the global Islamic and ethical finance industry. The organisation was launched in 2005 by a group of likeminded professionals who sought to make a contribution to the development of the Islamic finance industry. The UKIFC specialises in four core areas, being: 1) Ethical finance – helping to promote better co-ordination and understanding of the shared values between Islamic finance and the broader ethical finance arena; 2) Advisory – specialist capability in advising government agencies, regulatory bodies and financial institutions on creating enabling frameworks for Islamic finance; 3) Executive training – delivering bespoke capacity building programmes aimed at practitioners and regulators focused on commercial issues; and 4) Thought leadership – authoring reports, community education and providing industry comment towards influencing regulation and encouraging the development of the sector based on strong research and insights.
Principles for Responsible Banking
The six Principles for Responsible Banking that banks commit to are:
1) Alignment: We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.
2) Impact: We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.
3) Clients & Customers: We will work responsibly with our clients and our customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations.
4) Stakeholders: We will proactively and responsibly consult, engage and partner with relevant stakeholders to achieve society’s goals.
5) Governance & Target-setting: We will implement our commitment to these Principles through effective governance and a culture of responsible banking, demonstrating ambition and accountability by setting public targets relating to our most significant impacts.
6). Transparency & Accountability: We will periodically review our individual and collective implementation of these Principles and be transparent about and accountable for our positive and negative impacts and our contribution to society’s goals.
For more information about the Principles visit www.unepfi.org/banking/bankingprinciples
- The Principles were launched by the Founding Banks’ CEOs on 26 November 2018 in Paris at the UN Environment Finance Initiative’s biennial Global Roundtable and the 4th Climate Finance Day, under the patronage of the French President Emmanuel Macron.
- The Principles are now in a six-month global public consultation period until 31 May 2019 before they will be signed by banks from around the world. Banks and stakeholders are invited to provide feedback and input to guide their further development, and to signal their support by becoming Endorsers of the Principles for Responsible Banking.