BANK PEMBANGUNAN SHOWCASED IN PIONEERING GLOBAL RESPONSIBLE BANKING REPORT
~ISLAMIC FINANCE & THE PRINCIPLES FOR RESPONSIBLE BANKING~
The report, launched today by the Islamic Finance Council UK (“UKIFC”), in partnership with Malaysia-based International Shariah Research Academy for Islamic Finance (ISRA) and the Global Ethical Finance Initiative (“GEFI”), is the third report in a 4-part thought leadership series that aims to assist and encourage active engagement in support of the UN Sustainable Development Goals (“SDGs”) by the global Islamic finance sector.
UKIFC Senior Adviser Sultan Choudhury formally announced the report, to an audience of over 3,000 financial practitioners, at GEFI’s flagship annual Ethical Finance Summit.
The report provides an analysis of responsible banking in the Islamic finance sector, assessing the level of engagement with the Principles for Responsible Banking (“PRB) amongst banks in Organisation of Islamic Cooperation (OIC) member states and analysing the approaches used by 9 Islamic finance signatories. It also features notes from interviews from various leading financial institutions from all around the world such as Al Baraka Banking Group, Gatehouse Bank, Gulf International Bank (“UK) and Jaiz Bank who have all shown notable leadership in responsible banking.
The PRB, which launched in 2019, is the world’s leading framework for responsible banking and is underpinned by six Principles that help signatory banks to align with the SDGs and the Paris Climate Agreement.
BPMB became a PRB signatory in May 2020. The commitment forms part of an ambitious 3-year strategic transformation plan that will see the bank focus on delivering sustainable impact to the economy, society and the environment. The bank’s impact assessment framework is aligned with the SDGs.
BPMB’s President/Group Chief Executive Officer, Arshad Mohamed Ismail said, “As one of Malaysia’s leading development financial institutions, we are honoured to be featured in this report as this signals our commitment to the UNEP FI Principles for Responsible Banking. This is in line with our focus to support the nation’s progress through digitalisation, sustainability and inclusivity. Being sector agnostic, we will continue to assess our projects and ensure they positively impact the people, environment and national development.”
“Islamic finance is naturally aligned with the SDGs and the low level of engagement with the Principles for Responsible Banking (PRB) in the OIC region means there is a huge opportunity. Through our Global Islamic Finance and SDGs Taskforce we have the platform to work with UNEP FI and PRB signatories to increase awareness, promote understanding and encourage adoption of the Principles amongst the Islamic finance sector,” said UKIFC’s Board Member, Omar Shaikh.
Head of United Nations Environment Programme Finance Initiative, Eric Usher said, “UNEP FI welcomes this comprehensive report and analysis of the penetration rate and engagement of Islamic finance institutions with the Principles for Responsible Banking. We look forward to welcoming more Institutions engaged in Islamic finance, growing our community in the Organisation of Islamic Cooperation (OIC) member states, and we recognize the need for further engagement and participation amongst these institutions.”
“This series of reports also sheds light on the natural alignment of the Maqasid al Shariah with many areas of the SDGs. Frameworks such as the Principles for Responsible Banking can provide an accelerated pathway for Islamic finance institutions to meet the SDGs, furthering their journey of positive impacts on society and the environment, while continuing to enhance stakeholder value,” Eric Usher elaborated.
With its underlying Shariah principles, Islamic finance is naturally aligned to responsible banking and is well-positioned to lead the financial services sector’s efforts towards achieving the SDGs. However, while a small number of organisations are making significant progress the report has highlighted the pressing need to raise awareness, in OIC member states and beyond, of responsible banking and the benefits to be achieved by integrating Shariah compliance with sustainable finance strategies and becoming PRB signatories.
TAKEAWAYS FROM THE REPORT INCLUDE:
PRB signatories are currently underrepresented in OIC member states, suggesting the PRB should increase its activities within OIC member states. Awareness of the PRB in OIC member states could be increased through working groups, targeted awareness and outreach activities. Given the mutual benefits of becoming PRB signatories to both Islamic finance institutions and the responsible banking industry, increasing engagement should be treated as a priority.
NOTES FOR EDITORS
The Islamic Finance Council UK (UKIFC) is a specialist, not-for-profit, advisory and developmental body focused on promoting and enhancing the global Islamic and ethical finance industry. It has helped six countries develop enabling regulatory frameworks for Islamic finance, enhancing financial inclusion to over 15 million people, established the award-winning Ethical Finance Round Table series running since 2010, launched the world’s first joint venture between Islamic finance and the Church of Scotland, and delivered development sessions to over 500 Islamic scholars across the globe. In 2020 the UKIFC, alongside the British Government’s Treasury department, established the Islamic Finance and Sustainable Development Goals (SGDs) taskforce, which will be anchored in London.
UKIFC – https://www.ukifc.com/
SDG Taskforce - https://www.ukifc.com/sdg/
Senior Executive, Corporate Communications
Bank Pembangunan Malaysia Berhad
HP: (012) 642 1889