كلمة المجلس العام
Secretary General of CIBAFI
Welcome to the 57th edition of the Global Islamic Economics Magazine (GIEM). As always, it is our pleasure to keep you updated with the current updates and prospects in the global Islamic financial services industry. The GIEM also serves as the platform for CIBAFI to keep our stakeholders informed about our activities and key initiatives.
I am pleased to share with you that, as part of CIBAFI’s third Strategic Objective: Awareness and Information Sharing, CIBAFI and the Islamic Research and Training Institute (IRTI) of the Islamic Development Bank Group will continue to hold series of Meetings of the Directors of Operations and Investments of Islamic Financial Institutions (IFIs). This year’s first Meeting is themed “Bringing Islamic Investment of IFIs to the Next Frontier”, and will take place in Manama, Kingdom of Bahrain on 22 – 23 March, 2017. This Meeting will bring together Chief Investment Officers, Heads of Asset and Wealth Management, and other relevant functions related to investments in Islamic financial institutions from key regions: MENA, GCC, South East Asia, South Asia, Africa, and Europe to discuss avenues and strategies to bring Islamic investments of IFIs forward.
This Meeting aims to explore means to strengthen private banking and investment capabilities of the IFIs. It also aims to provide a common platform for sharing best practices amongst industry experts and executives in the area of Islamic investment strategies in various asset classes and business sectors.
In addition, I would also like to share that CIBAFI will organise an “InFocus session” in Tatarstan during the Kazan Summit 2017. The InFocus session has been positioned at various international events, as CIBAFIs’ signature session, will discuss prospects of Islamic finance in CIS region with reference to some of the important growth areas of Islamic finance in the region. In particular session will focus on Small and Medium Enterprise (SME), Takaful and Sukuk markets. The session will explore opportunities for Russia and CIS in Islamic finance, available business opportunities and examine the challenges that may be ahead of the region.
On the research end, I would like to underpin that the Global Islamic Bankers' Survey (GIBS) 2016, which measured the pulse of the Islamic banking industry on responsible business practices, among others, has underpinned the importance of the social role that financial industry stakeholders adopt. The industry has moved on from merely practicing Corporate Social Responsibilities (CSR) to include more enhanced activities including contribution in the areas of education, reducing poverty, help provide standard healthcare services, and promote environment-friendly business practices etc.
GIBS 2016 has revealed that banks have started to adopt green banking activities that aim at creating long-term resilient and sustainable economic, sustainable and environmental value. To lower carbon footprint in in-house banking operations, banks have adopted state-of-the-art technology to provide various banking services via paperless digital and e-commerce channels. Some Islamic banks have incorporated Environmental and Climate Change Risk Management as part of their existing investment risk assessment methodology integrating environmental risks in their credit approval checklists. Increasing number of banks consider Environmental Risk Management alongside the Investment Risk Management system in their business decisions, and carry Environmental Risk Rating in assessing their investment proposals.
More and more banks are developing policies in the areas of green finance, including building climate risk funds, and marketing, training and capacity building related to green financing, and aim to meet the global industry best practices on environmental and social practices.
These efforts imply that investments help recover the environmental degradations and prevent deterioration of the environment. Green investment includes both direct and indirect Green Investments. Direct green investments include encouraging businesses to procure, purchase, set up green products, establish green industry and transform existing traditional ones to environment friendly ones. Indirect green investment involves activities such as financing projects through working capital to projects that are environment friendly.
All these activities reflect the positive impact towards the society and contribute towards reducing environmental and social risks that result from the banks’ financing activities such as financing industries and large factories that are harmful to the environment.
GIBS 2016 results show that most of the environment-friendly business practices of Islamic banks are in the range of low to moderate development, with a) internal environmental and energy management systems and b) environment friendly policy or procedures across all operations of the bank being more developed in relation to other practices. Internal environmental and energy management systems as well as environmental friendly policies or procedures are the most developed across banks in the Middle East ex-GCC. Banks in this region generally have more developed environment-friendly business practices relative to other regions.
For example: one of the banks in the region suggested setting up of standards for preferential financing relating to the protection of the environment. There is a joint project between the bank and the United Nations Development Programme (UNDP) to integrate ‘development’ and ‘banking’ where the UNDP supports the bank’s improvement of its ‘green’ banking and credit procedures and policies. Another bank in the GCC incorporates environmental goals in its strategic plan and provides financing to environmentally compatible projects.
CIBAFI will continue to focus on its role in promoting best practices in the Islamic finance industry and supporting its stakeholders, as well as highlighting areas of long and short term significance for the development of Islamic financial industry. Stay tuned!