As published on: al-monitor.com, Tuesday 5 September, 2023.
Islamic finance will play “a crucial part” in meeting the just transition, or the phasing down from a high carbon economy to a low carbon green economy to meet climate change targets, according to the former Lord Mayor of London.
The Lord Mayor of London is an elected official who acts as an international ambassador for the UK’s financial and professional services sectors. Alderman Vincent Keaveny, who was Lord Mayor between 2021 and 2022, on Monday described Britain as “at the vanguard” of Islamic finance.
“As the world is ramping up in its efforts to tackle climate change, green and sustainable sukuk will become ever more important in Islamic finance. Islamic finance will be a crucial part of meeting the just transition challenge,” Keaveny said at the IFN UK Forum in London.
“The UK is the only place that leads in both conventional and green finance rankings, and in 2021, His Majesty’s Treasury came together with other groups to form a high-level working group on green sukuk,” he added.
The working group was established during the COP26 UN climate conference in Scotland by the UK Treasury, the Ministry of Finance in the Republic of Indonesia, the Islamic Development Bank, the London Stock Exchange Group, and the Global Ethical Finance Initiative. The initiative researches and promotes the issuance of green sukuk, or Sharia-compliant investments in renewable energy and other environmental assets.
“The UK is also seeing the rise of Sharia-compliant fintech companies. The Global Islamic FinTech [Index] for 2022 put the UK in the top five ecosystems for Islamic fintech,” Keaveny said, adding that Islamic finance had been “hugely beneficial” to the UK economy.
Indonesia and the Gulf Corporation Council countries are the main players in the Islamic finance market. The UK is seen as a Western hub for the industry due to its high presence of Islamic banks and more than 70 sukuk bonds being listed on the London Stock Exchange. The UK also became the first Western country to issue a sovereign sukuk bond in 2014.
The assets under management of Britain-based Islamic funds totaled $280.6 million in the first quarter of 2023 — 2.9% more compared to the previous quarter, which amounted to $272.7 million.