The Global Islamic Finance Forum was held in Kuala Lumpur last week and included a few areas that don’t receive as much attention as they are due. Much of the focus of Islamic finance is on raising its quantitative developments. Or put simply, increasing the assets in Islamic finance without considering how these are deployed and what impact this has both directly in what is financed and through corporate social responsibility. In addition, there has been relatively limited attention played in how to improve governance at Islamic financial institutions both in the sense of traditional corporate governance and in sharia governance.
The concept of expanding a focus beyond just quantitative development is encapsulated in the ICD-Thomson Reuters Islamic Finance Development Indicator, which was released at GIFF where governance and CSR are included along with knowledge and awareness to provide an overall picture of the state of the Islamic finance industry.
Building on this foundation for measuring the growth and development in Islamic finance, an unexplored area for future development discussed at GIFF was exploring ways to build more linkages with the socially responsible investing and sustainable finance industry. The two industries have focused on different things in their development where a large challenge has been replacing fixed income instruments whereas in SRI, a bigger issue is broadening beyond the traditional negative screens (which have significant overlap with the sector-side Islamic investing screens).