KUALA LUMPUR: Islamic finance can contribute in addressing the challenges faced by the conventional environmental, social and governance (ESG) investing space, said Sultan of Perak Sultan Nazrin Shah.
And given Malaysia's track record of global leadership in Islamic capital markets, the country is well positioned to continue to innovate in this space, the Ruler said.
“By doing so, we can further boost the profile of our Islamic finance industry,” he said in his inauguration address at the launch of INCEIF University's new campus here on Thursday (Oct 27).
Having taken the lead in the 1990s, when the Islamic finance industry was in its infancy, the country must once again take charge of the second wave of its expansion, the Sultan said.
“And for this rebooted ‘Islamic Finance 2.0', so to speak, an even greater emphasis must be put on the ESG agenda,” he added.
Sultan Nazrin noted that the country has already made great headway in incorporating ESG considerations into the business practices of companies, and the investment considerations of financial service providers.
He said the regulators, industry players, and research institutions — like the International Centre for Education in Islamic Finance (INCEIF) — have all helped to champion ESG in the Islamic finance industry.
“As new ESG requirements have been introduced, these stakeholders have provided regulatory and supervisory support, leading in product development and other strategic initiatives.
“However, we need to elevate our efforts to compete at the global level — if the country were to demonstrate how Islamic finance could serve the needs of the wider financial markets and the global economy,” he said.
To make Islamic Finance 2.0 a reality, therefore, Malaysia must also strive to be more authentic to the true spirit of Islamic law, the maqasid, said Sultan Nazrin.
“While we work hard for prosperity, we must equally be focused on doing good by the people and the planet,” he added.
Source : The Edge Markets