Professional Documents
Culture Documents
LOOK EDITION
LOG
Share this article
SUBSCRIBE IN
Index Index Index Index Jobs
NEW
E-
Post
E-
N E WPost
Daily
E-
Paper
The government tapped into the global sukuk market as it recently issued US$ 750 billion with 5.5 years maturity
period and a 10-years tenor of $1.52 billion global sukuks, respectively. (Shutterstock/File)
NEWS BUSINE SS SE ASIA OPINION LIFE STYLETRAVE L MULTIME DIADEEP PAPE R MORE
LOOK EDITION
In recent years, the Islamic finance industry has witnessed the launch of several initiatives
and the creation of innovative structures that align with sustainability and ESG efforts.
In Indonesia, the Financial Services Authority (OJK) published a Roadmap for Sustainable
Financing in Indonesia in December 2014, and the Ministry of Finance issued a green Islamic
sukuk in February 2018, becoming the first Asian country to do so.
Similarly in Malaysia, the Securities Commission Malaysia introduced the Sustainable and
Responsible Investment Sukuk Framework in 2014. This was followed by the issuance of the
first social impact sukuk by its sovereign wealth fund, Khazanah Nasional Berhad. In 2017,
Bank Negara Malaysia issued the Value Based Intermediation (VBI) strategy Paper, and two
years later, Malaysia’s Islamic fund manager, BIMB, signed the UN-supported Principles for
Responsible Investment (UNPRI) to incorporate ESG into investments.
Given the high degree of complementarity between Islamic and ESG investing, this has
NEWS BUSINE SS SE ASIA OPINION LIFE STYLETRAVE L MULTIME DIADEEP PAPE R MORE
allowed Islamic investment managers to tap a wider investor base,
LOOKincluding socially
EDITION
responsible investors outside Islamic jurisdictions who are seeking to diversify their holdings.
Share this article
Index Index Index Index Jobs
There are several factors driving the increased alignment between Islamic finance and ESG in
Politics Academia News Video Events
Whatsapp
recent years.
World Commentary Destina tions
Photo Writing
Facebook
First, Center
regulators are increasingly requiring banks in general and Islamic banks in particular to
considerIndonesia Insight of their activities.
and report on the ESG impact Jakpost Sharia-sensitive
Deep investors are also
Twitter Guide Look Images
increasingly focusing on both sharia To the ESG impact of their investments,
compliance and
Jaka rta Analysis
especially Podca st Mobile
Linkedinin the wake of the pandemic. Apps
Sports Interview
Second, a crucial pillar of Islamic finance is the negative screening of sharia-compliant Publishin
PostScript
products to avoid certain industries that are deemed unlawful or unethical, such as tobacco,
E-
alcohol, weapons and gambling, which is a practice that is adopted in ESG investing asNwell.
EW
Post
Sharia-scholars are also increasingly pushing for “positive screening”, where Islamic banks
E-
need to consider that not only is an initiative sharia-compliant but that it is also socially
N Eor
WPost
Daily
environmentally responsible.
E-
Furthermore, research from Refinitiv’s EIKON database covering over 6,500 publicly listed
Paper
companies shows a clear link between sharia compliance screening and stronger
ESG performance. Refinitiv’s Islamic Finance ESG Outlook 2019 report found that sharia-
compliant companies have ESG scores that are on average 6 percent higher than for those
excluded by the sharia screening process. The research suggests that combining Sharia and
ESG screening could improve overall risk-adjusted returns.
The COVID-19 pandemic has been a catalyst for the resurgence of sustainable sukuk and
investment funds.
Refinitiv data showed that ESG sukuk issuance reached a record value of $4.6 billion in 2020,
boosted by large sustainable issuances during the year. Meanwhile, the sharia-compliant
funds space has been undergoing a shift towards sustainable investment, with Islamic
sustainability funds amounting to $542 million by the end of 2020.
Sustainability sukuk are expected to drive ESG sukuk and Islamic funds growth in 2021, as the
recovery from the economic fallout from COVID-19 continues to be the prime focus for
governments and corporates.
ESG sukuk issued in the first quarter amounted to over $2.5 billion, over half of the total ESG
NEWS BUSINE SS SE ASIA OPINION LIFE STYLETRAVE L MULTIME DIADEEP PAPE R MORE
sukuk issuance in 2020. Islamic ESG funds also continued to build
LOOKmomentum,
EDITIONand grew to a
value of article
Share this $756 million in the first of quarter of 2021, following the launch of several Islamic SRI
funds in Index
Malaysia and Indonesia.Index Index Index Jobs
Add a comment...
Most Viewe d
E-
N E WPost
Daily
E-
Paper
News
Business
Politics
World
NEWS BUSINE SS SE ASIA OPINION LIFE STYLETRAVE L MULTIME DIADEEP PAPE R MORE
Indonesia LOOK EDITION
Jakarta
Share this article
Opinion Index Index Index Index Jobs
Destinations Publishin
PostScript
Jakpost Guide To
NEW
E-
Multimedia Post
Video E-
N E WPost
Photo
Daily
Deep Look
Podcast E-
Paper
About
Cyber Media Guidelines
Contact
Advertise
Paper Subscription
Privacy Policy
Discussion Guideline
Term of Use