How Islamic finance can help build a better future for all

Islamic finance products ‘aim to reduce the risk of asymmetric information and are contract-based, making them a natural fit for investors.’ (Shutterstock)
Islamic finance products ‘aim to reduce the risk of asymmetric information and are contract-based, making them a natural fit for investors.’ (Shutterstock)
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Updated 31 July 2021

How Islamic finance can help build a better future for all

Islamic finance products ‘aim to reduce the risk of asymmetric information and are contract-based, making them a natural fit for investors.’ (Shutterstock)
  • Shariah-compliant finance is a rapidly growing industry that prioritizes sustainable expansion

LONDON: The Islamic finance investment model is a natural fit for investors looking to use their money ethically and sustainably, and could be a key industry in helping the world to achieve the UN’s Sustainable Development Goals (SDGs), experts have told Arab News.

Islamic finance takes a different approach from today’s profit-above-all investment orthodoxy.
It prioritizes low-risk investments, and avoids markets such as pork, alcohol and gambling — as well as barring the payment of interest and ensuring ethical governance.
Far from impeding growth, however, this alternative approach to investing is rapidly evolving into a booming industry, Martina Macpherson, senior vice president of partnerships and engagement at Moody’s ESG Solutions Group, told Arab News.
She and her team expect the industry to hold over $4 trillion in assets by 2030.
“Islamic finance (will) continue to expand in the next decade across regions and asset classes, and there is an opportunity for Islamic Finance and Shariah-compliant investments to align with the UN Sustainable Development Goals,” she said.
Aligned with Saudi Arabia’s own Vision 2030, the SDGs lay out a vision of a just, fair and prosperous world by 2030, codified into 17 interlinked goals designed by the UN as a “blueprint to achieve a better and more sustainable future for all.”
The growth of Islamic finance as an alternative investment model will help to meet these goals in two ways: By uncovering sustainable and ethical opportunities and by reducing risk, she said.
The “SDGs and Islamic finance share joint values and fundamentals,” she said. “They are ethically linked, asset-backed, focused on risk and opportunity management, and centered on good governance as well as stakeholder impact.”

FASTFACTS

• Islamic finance products a ‘natural fit’ for meeting the UN sustainable development goals — Moody’s.

• The growth of Islamic finance as an alternative investment model will help to meet these goals through uncovering sustainable and ethical opportunities and by reducing risk, says expert.

“Islamic finance products aim to reduce the risk of asymmetric information and are contract-based, making them a natural fit for institutional investors committed to positive impact.”
Much like the Kingdom’s Vision 2030, one of the central goals of the SDGs is to tackle climate change, and this is “one of the key areas for Islamic finance to synchronize with the SDGs,” Macpherson said.
Stella Cox, managing director of Islamic finance intermediary firm DDCAP Group, speaking with Arab News, echoed Macpherson’s views on the role that Islamic finance can play in addressing issues like climate change. She emphasized, however, the importance of developing “a set of common standards, laws and regulations that will ensure shared best practice” moving toward 2030.
This cooperation, she said, “should be perceived as opportunity, rather than challenge, and that opportunity will enable Shariah compliant firms to work more closely with others in addressing and providing solutions for the biggest environmental and social challenges that the world has ever faced.”
Samina Akram, managing director of Samak Ethical Finance, told Arab News that the importance of ethical investing has only grown as the millennial generation have been “exposed to the harsh realities of the conventional financial system” in the wake of the 2008 financial crisis.
They have been turned off conventional investing by “bad governance, bad leadership, casino type banking, and a lack of transparency,” Akram said.
And critically, she added, “they want no part to play in damaging the environment.”


Camera maker Canon reveals 30% Saudi women employees target by 2023

Camera maker Canon reveals 30% Saudi women employees target by 2023
Updated 23 September 2021

Camera maker Canon reveals 30% Saudi women employees target by 2023

Camera maker Canon reveals 30% Saudi women employees target by 2023
  • It has launched a “Women in Sales” internship program to further support the 2023 target

DUBAI: The Saudi Arabia unit of global camera maker Canon wants 30 percent of its employees to be Saudi women by the end of 2023. 

The move is in line with national efforts to integrate more women into the Kingdom’s workforce.

Canon said it has been working towards this target since 2018, when it first opened offices in Riyadh, Jeddah, and Al-Khobar, but has now made the goal public.

It has previously teamed up with King Abdul Aziz University in Jeddah to develop technology-enabled training, which the camera maker said was proof of its “commitment to support young talent” in the Kingdom. 

The company partnered with Mohammed Al-Mana College for Medical Sciences to fund one female student’s school expenses, including tuition and housing.

It has also launched a “Women in Sales” internship program to further support the 2023 target. 


China preparing for Evergrande's downfall: WSJ

China preparing for Evergrande's downfall: WSJ
Image: Shutterstock
Updated 23 September 2021

China preparing for Evergrande's downfall: WSJ

China preparing for Evergrande's downfall: WSJ
  • Local governments have been ordered to assemble groups of accountants and legal experts to examine the finances around Evergrande's operations in their respective regions
  • Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates

Chinese authorities are asking local governments to prepare for the potential downfall of debt-ridden China Evergrande Group, the Wall Street Journal reported on Thursday, citing officials familiar with the discussion.

The move has been characterised as "getting ready for the possible storm" by the officials, according to the report.


The officials said local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion, the WSJ reported.


Local governments have been tasked with preventing unrest and mitigating the ripple effect on home buyers and the broader economy, the officials said, according to the report.


Evergrande, China's second-biggest property developer, has $83.5 million in dollar-bond interest payments due on Thursday on a $2 billion offshore bond and a $47.5 million dollar-bond interest payment due next week.


Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.


The company, which epitomised the borrow-to-build business model, ran into trouble over the past few months as Beijing tightened rules in its property sector to rein back debt levels and speculation.


Investors are worried that a downfall could spread to creditors including banks in China and abroad.

 


Luxury operator Chalhoub opens new retail hub in Riyadh

Luxury operator Chalhoub opens new retail hub in Riyadh
Updated 23 September 2021

Luxury operator Chalhoub opens new retail hub in Riyadh

Luxury operator Chalhoub opens new retail hub in Riyadh
  • The new retail development, called “Concept by MUSE”, will bring in local, regional, and international brands, particularly catering to the Saudi youth

DUBAI: Luxury retail operator Chalhoub Group has launched a new shopping destination at the Riyadh Park in the Saudi capital, in a new sign of recovery in the Kingdom’s retail sector post-pandemic. 

The new retail development, called “Concept by MUSE”, will bring in local, regional, and international brands, particularly catering to the Saudi youth, the group said in a statement.

“The retail landscape in Saudi Arabia has evolved significantly over the last few years, especially as young customers become increasingly discerning and attentive to global shopping trends while staying true to their roots and culture,” David Vercruysse, president of managed companies at Chalhoub, said.

Over 1,200 products will be featured at the mall, including the work of five Saudi designers Noms Life, Proud Angeles, Dania Shinkar, Cones and Rods, and Kaf By Kaf.

It follows an earlier initiative of the group to support local Saudi designers by giving them financial grants to build their own fashion brands.

The Kingdom has announced several efforts to modernize its economy, including boosting its local retail market. 

“This world’s first demonstrates our commitment to the Kingdom’s Vision 2030 and support to the country’s ambitions to make Saudi a world-class retail destination,” Bachar Sabbagh, the Saudi director of Chalhoub, said. 


Apicorp launches first green bond framework

Apicorp launches first green bond framework
Updated 23 September 2021

Apicorp launches first green bond framework

Apicorp launches first green bond framework
  • The framework will be used to raise green bonds/sukuk for projects aligned with the UN Sustainable Development Goals

DUBAI: The Arab Petroleum Investments Corporation (Apicorp) has launched its first green bond framework.

It follows the recent approval of the OPEC-created financial institution’s environmental, social, and governance (ESG) policy framework, as it aims to develop the sustainable financial market. 

The framework will be used to raise green bonds/sukuk for projects aligned with the UN Sustainable Development Goals - addressing issues in climate mitigation, circular economy, and biodiversity preservation among others. 

It was created in line with the International Capital Market Association’s Green Bond Principles 2021.

“By launching the Green Bond Framework, Apicorp is providing new avenues for investment in projects and ventures that further the development of safe, affordable, and renewable energy sources,” Ahmed Ali Attiga, chief executive officer of Apicorp. 

He said the framework “reflects our deep understanding of the ESG impact of our investments across the energy spectrum and our commitment to setting out new engagement strategies with our stakeholders to spread awareness of their ESG exposure.”

Apircorp earlier said it will allocate $1 billion towards green energy projects and sustainable energy companies over the next two years. 


Dubai's DAMAC Properties receives approval to take firm private

Dubai's DAMAC Properties receives approval to take firm private
Image: Shutterstock
Updated 23 September 2021

Dubai's DAMAC Properties receives approval to take firm private

Dubai's DAMAC Properties receives approval to take firm private
  • The Dubai real-estate company still plans to offer $595 million for outstanding shares of the company
  • The firm has a market capitalization of over $2 billion

DAMAC Properties, known for its deals with former President Donald Trump said Thursday it had received regulator approval for an effort to take the firm private.


The Dubai real-estate company still plans to offer $595 million for outstanding shares of the company, the firm said in a filing on Dubai Financial Market stock exchange.


It said it would offer an update on the plan in the coming weeks. It earlier announced plans in June for the offer to take the company private, then withdrew them as regulators examined the plan.


The buyout would be through Maple Invest Co. Ltd., a holding company of DAMAC's billionaire founder Hussain Sajwani. Sajwani owns nearly four-fifths of the company through various investment firms.


DAMAC stock traded up Thursday over 3 percent on the news. The firm has a market capitalization of over $2 billion.


DAMAC is known in Dubai for a development that features a Trump-branded golf club surrounded by villas and apartments, making it the only one of its kind in the Middle East that bears the Trump logo.


The company’s partnership with the Trump Organization to manage and run the golf course was struck before Trump’s election as U.S. president.