Islamic banking leaders explore the role of responsible and sustainable finance in reshaping value creation

The RFI Foundation and Dubai Islamic Economy Development Centre (DIEDC) organized a half-day roundtable event on responsible and sustainable finance, hosted by Bank Negara Malaysia. The high level participants discussed and shared experiences in adopting responsible finance best practices.

The roundtable was attended by more than 60 participants representing Islamic banks, key asset owners, ESG-focused asset management firms, government officials and regulators, including a delegation from the United Arab Emirates.  The UAE delegation was organized by the DIEDC as a part of their regional GIES Roundtable series that includes dialogues in Kuala Lumpur, Jakarta and Bangkok this week covering several Islamic economy-related themes including banking.

Blake Goud, CEO of the RFI Foundation stated: “We appreciate the opportunity to organize a roundtable bringing together so many high level leaders and key stakeholders to discuss how Islamic banks can strengthen their business strategy.  It will also help them to respond when investors who engage on ESG issues with their investee banks as a part of their active ownership responsibilities. RFI has worked with our members, and we will continue to work with other Islamic banks who recognize the importance of addressing the environmental, social and governance risks embedded in their balance sheets.”

Abdul Rasheed Ghaffour, Deputy Governor of Bank Negara Malaysia emphasised: “Shari’ah embeds inherent features that make it natural for Islamic financial institutions to play catalytic role in advancing sustainability agenda. While considering profit, financial institutions should not forgo the element of being socially and environmentally responsible. ‘Tone from the top’ is essential in ensuring smooth and orderly transition within an institution.”

Saeed Mubarak Kharbash Al Marri, Deputy CEO of Strategy and Planning at DIEDC added: “We are delighted to collaborate with the RFI Foundation again and bring an international component to the discussions on responsible finance within Islamic banks. As key institutions within the broader Islamic economy, Islamic banks must ensure they are on strong footing on sustainability so that they will continue to operate from a position where they can lead by example. This will enable them to provide the most effective support for a full range of Islamic economy businesses that are increasingly oriented towards positive social impact and have become a significant growth driver in many markets around the world, including in the UAE and Malaysia.”

The participants of the roundtable expressed optimism in their ability use responsible and sustainable finance to redefine their value creation model.  It was further agreed that responsible and sustainable finance practices such as environmental, social and governance (ESG) consideration could be used as an important tool to manage investor engagement, which is increasingly focusing on ESG issues.

UPDATE (10/21): A summary of the roundtable is available here.