Environment, Social, Governance

empty Description of term "Environment, Social, Governance"

Islamic finance goes green!!

IFAAS (Islamic Finance Advisory & Assurance Services) has launched 'Oxygen', its CSR programme that aims at improving the environment through Islamic finance. The programme, complementing IFAAS's general CSR policies, features 2 major components: planting new trees on annual basis, dedicated individually to IFAAS clients; and creating new woodland for each project that IFAAS completes. The programme is aimed at replacing the wood consumed by IFAAS in form of paper and locking up some of the carbon created while serving its clients worldwide. To this end, IFAAS is supporting the Woodland Trust who will be planting the trees at various native woodland sites across the UK. The Woodland Trust will provide IFAAS with a certificate each year to confirm the amount of woodland created, and how much CO2 has been locked up.

Social Entrepreneurs: unleashing creative destruction for social change

With more than 30 per cent of young Arabs unemployed, social entrepreneurship must be considered to reduce welfare costs in the region by empowering community members to solve social, economic and political issues that affect them. At a time where the MENA is seeing the drastic effects of political and economic instability, it has never been more pressing for people of the region to be encouraged to look towards new beginnings and the reconstruction of society. Despite coming from different backgrounds, social entrepreneurs all have stories that have influenced them to make transformative social changes that they hope will one day have a global impact.

Azzad Welcomes Pope's Encyclical on the Environment, Social Justice

US-based Azzad Asset Management has welcomed Pope Francis' encyclical calling for swift worldwide action to combat climate change, protect the environment, and move toward economic equality. In the encyclical released 'Laudato Si' the pope issues an urgent invitation to people of all faiths to reduce their consumption of resources and make changes in their daily lives in order to safeguard the earth for future generations. He calls for sweeping government and economic reforms to counter environmental destruction and economic injustice. Azzad added its voice to that of the Interfaith Center on Corporate Responsibility (ICCR) which welcomed the pope's statement. Azzad joined ICCR earlier this year, becoming the first Muslim member of the shareholder coalition.

Gassner's picture

OECD: Encourages changes in the mode of finance, away from debt towards equity

Credit intermediation and stock markets have hugely expanded over the past half-century. Since the 1960s, credit by banks and other financial institutions to households and businesses has grown three times as fast as economic activity. Stock markets have expanded, too, but starting from a lower base and at a much slower pace, so that today their value equals 65% of GDP, a little more than half that of financial sector credit.


Improving the structure and composition of finance is as important as avoiding credit booms for the health of our economies. Facilitating stock market funding through ***lowering the costs of equity floatation and making taxation more neutral between debt and equity, is linked with higher GDP growth (Figure 1). Hence, encouraging changes in the mode of finance, away from debt and towards equity,*** would be particularly powerful in raising economic activity. [page 2 link below]

Gassner's picture

Cryptocurrencies and Islamic finance?

Bitcoin (https://bitcoin.org) started to make the idea of a cryptocurrency popular. What is missing so far is an intense discussion among Sharia scholars.

What makes Bitcoin unique is, that it is a) created by a computer program b) that it is created and verified by a decentralised process, the so-called 'Blockchain' technology (https://en.wikipedia.org/wiki/Block_chain_(database)), which is solving a practical problem for the first time: To enable trust and accounting without a central ledger, such as a central bank. c) that it faciliates payments quick, efficient and discreet - while the latter leads to accusation of misuse, e.g. for gaming, drugs, terror finance etc.

How it can be seen from an Islamic perspective is not widely discussed, despite it deserves the attention. What we find in search engines are some discussions and also an initiative, which calls itself a bank (https://bitcointalk.org/index.php?topic=21732.0).

A green school in Egypt offers lessons on coping with climate change

Egyptian social entrepreneur Mohamed Ashraf Abdel Samad started Shagara (‘tree’ in Arabic) back in 2011! The idea of Shagara is to act by planting trees and plants inside cities to offset problems, increase environmental awareness, and—last but not least—help the economically disadvantaged. To do this, Shagara integrates vegetation into urban areas, blending design concepts with modern agricultural techniques and architecture. The flagship project is “Shagara at School”. It was carried out for the first time at a school in Egypt’s Al-Qalyubia Governorate in February 2013. Today, it is still going, the school extending it in 2015 by using its own resources after receiving an award for quality for the second year running.

Call for Partners: Islamic CSR

Islamic Reporting Initiative invites partners to create the first, mainstream reporting standard for Corporate Sustainability and Social Responsibility, based on Islamic Principles. Launched only last month, the Islamic Reporting Initiative is rapidly gaining support and momentum from across the Islamic world. The initiative aims to generate sustainable growth by building a framework for CSR built on Islamic principles, with the potential of reaching more than 50 Islamic countries worldwide. Together with partners in the Islamic world, the initiative was launched by Drs Daan Elffers, the Chairman of last year's CSR Summit in Saudi Arabia and a judge for the recent CSR Excellence Awards held in the UAE. For more information visit http://www.islamicreporting.org

Al-Rajhi Bank funds education centres for underprivileged children

Al-Rajhi Bank (Malaysia) provided RM325,000 in funding today to two education centres under the management of Yayasan Salam. The centres are the Taska Baitul Amal and Pusat Jagaan Baitul Amal, and the funding was under the bank's corporate social responsibility (CSR) Baitul Amal Children's Programme which provides for 70 children from the ages of two months to six years. Roseta Mohd Jaafar, Al-Rajhi Bank's vice-president and head of corporate communications said the programme was geared towards helping underprivileged children in the Jalan Chow Kit area. Registered under the Social Welfare Department, the Taska Baitul Amal was officially launched on July 19, 2010 and the Pusat Jagaan Baitul Amal on January 2, 2012.

Gassner's picture

The lack of equity finance - really a problem of moral hazard?

Michael Gassner, Editor of IslamicFinance.de presented on the 3ème Congrès International de la Finance Islamique “Les Banques Islamiques et le Financement des Entreprises: Pratiques et enjeux théoriques” en Marrakech, 25/26 Mai 2015.

The presentation discussed that exponential growth of debt in Islamic finance is ruled out, nevertheless, debt and equity finance exists. The specific significance of equity finance (musharaka, mudaraba) lies in need for solid debt/equity ratio, as Muslims shall never die being in debt. Still Islamic banks barely provide any equity finance and the reason often given are moral hazard costs. This is denied as debt as well as equity has specific moral hazard problems, and if anything, even conventional banks would offer a mixture of debt and equity. Rather the assumed reason appears to be in the regulation (capital weight) and taxation (interest deductibility), which makes equity financing from a bank 2-4 times at least more expensive than debt finance, and thus not worth being offered.

The attached presentation is in French.

Mercer 2015 asset allocation survey: alternatives, ESG and sustainability on the rise

With a relative paucity of attractively priced assets available to long-term investors, European institutional investors are diverting their focus and resources to alternative assets, according to Mercer’s 2015 European Asset Allocation survey. The findings also show that the use of passive management of equity and bond holdings increased, suggesting that European investors increasingly prefer to seek returns from manager skill within alternative and unconstrained mandates, while harvesting cheap beta in core equity and bond portfolios. Mercer’s survey also found an increased focus on environmental, social, and governance (ESG) factors within the investment process amongst participating funds.

In September, The UN Launches A Major Sustainable Development Agenda For The Entire Planet

The UN plans to launch a brand new plan for managing the entire globe at the Sustainable Development Summit that it will be hosting from September 25th to September 27th. Some of the biggest names on the planet, including Pope Francis, will be speaking at this summit. This new sustainable agenda focuses on climate change of course, but it also specifically addresses topics such as economics, agriculture, education and gender equality. For those wishing to expand the scope of “global governance”, sustainable development is the perfect umbrella because just about all human activity affects the environment in some way. 17 sustainable development goals are being proposed so far. This truly is a template for radically expanded “global governance”.

RepRisk and CSRHub study finds link between perceived Corporate Social Responsibility (CSR) performance and reputational risk

RepRisk and CSRHub have announced the findings of their joint research report on the link between perceived CSR performance and ESG-related reputational risk exposure. The findings show that correlations do exist between perceived CSR performance and reputational risk. It appears that companies with the most sources of sustainability ratings also have the highest risk exposure. In addition, the data indicates that companies that have strong CSR programs as measured by CSRHub, in the areas of Human Rights and Supply Chain, Leadership Ethics, and Resource Management, seem to have lower risk exposure, whereas those companies who have strong programs in Community Development and Philanthropy, Environment Policy and Reporting, or Compensation and Benefits seem to have higher risk exposure.

G20 Action Plan for Food Sustainability

Following the G20 meeting of agriculture ministers in Turkey, the ministers said that the pressures on natural resources and biodiversity and the impacts of climate change have produced a need for a rise in productivity while at the same time moving towards food systems that are more sustainable. The ministers gave full backing to the G20 Food Security and Nutrition Framework that was agreed last year. Sustainable food systems should promote sustainable increases in productivity and production, use natural resources more efficiently, increase resilience and help address climate change in accordance with the UNFCCC. Sustainable food systems can help promote economic and social opportunities through quality jobs especially for smallholders, rural women and youth.

Sajaya Young Ladies participates in GCC Girls Cultural and Social Forum in Bahrain

An elite group of Sajaya Young Ladies of Sharjah is participating in the GCC Girls Cultural and Social Forum, taking place in Manama, Bahrain, from May 5th to 11th, to discuss topics and issues that concern GCC girls. Four girls from Sajaya are participating in the one-week forum as part of a UAE delegation under the umbrella of the General Authority for Youth and Sports Welfare, where Sajaya girls will present paperwork on Sajaya organisation and entrepreneurship. Organised by Bahrain’s General Organisation for Youth and Sports, the forum brings together a range of girls and young women from the six GCC nations to share opinions and expertise and speak about women entrepreneurship in the GCC countries.

Abdul Halim bin Ismail: How Islamic banks can better serve the poor

Abdul Halim bin Ismail, the recipient of the Royal Award for Islamic Finance 2014, is proposing a new way for the Islamic finance sector to do more for society. His idea calls on central banks, most notably in Muslim-majority nations, to issue licenses to Islamic banks that would allow them to establish subsidiaries — or Sadaqah houses — catering to the social welfare sector. These charity houses would collect donations from the private sector and utilize the funds to make sound investments, with profits supporting programs that improve livelihood, health and education services for disadvantaged populations.

Arabia CSR Network continues to lead way in sustainability reporting

The Arabia CSR Network (ACSRN) trains organisations from all sectors, public and private, to use the GRI framework, a set of guidelines on sustainability reporting. The training course, which took place on April 28-30, taught participants how to create sustainability reports using the Global Reporting Initiative’s (GRI) recently launched G4 framework. The framework enables them to compile well-balanced, accurate and reliable reports that help them better assess the impact of their operations on the environment, said Habiba Al Marashi, Founder, President and CEO, Arabia CSR Network.

Khazanah Nasional to launch first social-impact sukuk

Khazanah Nasional is set to issue Malaysia's first social-impact sukuk. Local agency Ram Ratings said the RM1 billion (US$282 million) Sukuk Ihsan programme, to which it assigned a AAA rating last week, was the first social-impact bond to be rated globally. Proceeds will go towards educational projects. Investors and market observers are eagerly expecting the first issuance off the programme as early as next month, although marketing preparations are still being finalised. Socially responsible investment is catching on slowly in Asia, but issuers in South Korea, India and Taiwan have sold so-called Green bonds and interest from investors is growing.

Less known Quranic injunction — Turn Riba into charity

Dr Syed Zafar Mahmood, President, Zakat Foundation of India, presented a research paper at the University of Glasgow's International Conference on Islamic Perspective of Accounting, Finance, Economics and Management (7 -9 April 2015). The paper explores the effect of Zakat, Sadaqah and Qulil Afwa on society, and discusses why riba is forbidden in Islamic economies. In conclusion, the concomitant theme of all economic activity should be to ensure that the community's wealth keeps on changing hands and circulating across the entire social spectrum.

Skoll Foundation and UN Foundation Grants Fuel Partnerships Between Social Entrepreneurs and UN Agencies

The Skoll Foundation and the United Nations Foundation today announced the winners of a unique set of grants—totaling US$1 Million—that will enable partnerships between social entrepreneurs and United Nations agencies, funds, and programs designed to drive impactful social innovations. This first-time grants application process encouraged Skoll Awardees to partner with UN agencies. Three programs will receive grants that will enable the partners to scale up innovative programs to benefit people around the world: Bringing Books to People with Print Disabilities; Increasing Financial Inclusion and Social Protection for the Rural Poor; Greening Procurement of Health Care Products.

Gassner's picture

Greece vs. Lehman Brothers

Is it fair to compare Greece with Lehman Brothers? May be not, but in fact many would want to figure out, what would happen if sometime later, e.g. in summer Greece would default. Will it be like Lehman? Wouldn't a country's default be more serious than a bank's?

Thus the question is how to compare the size of a country with a size of an investment bank? Surely not exactly but some figures are indeed interesting:

The economy of Greece has a national income of USD 242 billion (nominal gross domestic product) according to World Bank statistics for the year 2013. And the GDP to Debt ratio is said to be around 174%.


Lehman Brothers back in the 2007 annual report showed a net income of USD 4 bn. With long term borrowing of Lehman stood at USD 123 bn this would look much worse in terms of income and debt level than Greece. A better comparison for debt sustainability would need to take into account the assets of a country and a corporate of course. Lehman had reported USD 691 bn. What are the national assets of a country???


Syndicate content