Page 71 - Full Book_24.4.2021

In Retrospect

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The Will to Suceed

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Achieving a Leading Repute

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Paving the Way for a Sustainable Future

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Growing Impact of Sustainability and Environmental, These are:
Social and Governance (“ESG”)

The pandemic has put significant emphasis on the role Qard Hassan - This instrument could provide cost-free breathing
of stress-testing within risk management. Stress testing space until the environment stabilises. One example is when
should form an integral part of the overall. The COVID-19 some central banks opened free liquidity lines for financial
outbreak has prompted financial institutions across the institutions to provide subsidised lending to their corporate and Adhering to the Best Governance Practices
small and midsize enterprise clients.
globe to pay greater attention to ESG risks in order
to build greater resilience in their business operations Social Sukuk - These instruments could help support the
and supply chains, and we believe that Islamic finance education and health care systems amid the current slump and
markets will see a similar trend as well. attract environmental, social, and governance (“ESG”) investors |
(those investing for social reasons) and/or Islamic investors
Sustainability has become a more important consideration (those looking for Shariah-compliant investments).
during the pandemic, and new product launches reflect
this, such as ESG-based Islamic investments targeting Green Sukuk - This could rise given the growing focus on
social issues such as mass unemployment. The goals or environment, social and governance issues globally. Green Sukuk Laying the Foundation for Financial Growth
objectives (maqasid) of Shariah share some links with issuance last year was small, at only around US$4.5 billion.
ESG considerations and the broader aim of sustainable
finance. For example, Islamic finance’s goal to protect Waqf - This could help provide affordable housing solutions or
life aligns with sustainable finance principles, which access to health care and education for people that might have |
emphasise environmental and social protection. Green lost a portion of their income.
Sukuk is an example of instruments that could be used
to finance environmentally friendly projects. Zakat - This could help compensate for lost household
income because of COVID-19.
These products could make a difference when it comes Additional Information & Disclosure Summary
to socially responsible financing that can contribute
to shared prosperity and provide growth that is more These instruments and the additional layer of governance Islamic banks and
inclusive. instruments are subject to, could help put the industry more prominently
on ESG investors’ radar.
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Sources;
• Refinitiv & ICD 2020 Report
• S&P Global Ratings : Global Islamic finance industry will continue to expand slowly in 2019-2020 24 th AGM Information
• Morgan Stanley Institute for Sustainable Investing: Sustainable Signals - The Individual Investor Perspective