LONDON — As the global community grapples with the pressing challenge of climate change, Islamic finance emerges as a pivotal instrument in steering the world towards a sustainable future. The transition from a carbon-intensive economy to a sustainable green one is imperative, and Islamic finance is poised to play a significant role in this transformation, opined Alderman Vincent Keaveny, the former Lord Mayor of London.
The esteemed position of the Lord Mayor of London is not merely a ceremonial one. The officeholder serves as a global ambassador, representing the UK’s vast financial and professional services sectors on the international stage. Alderman Keaveny, who held this distinguished role from 2021 to 2022, highlighted Britain’s pioneering stance in the realm of Islamic finance during his address at the IFN UK Forum in London.
“In these critical times, as nations unite in their resolve to combat climate change, the significance of green and sustainable sukuk in Islamic finance cannot be overstated. Islamic finance is not just an alternative financial system; it is integral to achieving a just and equitable transition to a green economy,” Keaveny emphasized.
He further elaborated on the UK’s unique position in the global financial landscape. “The UK stands unparalleled, leading in both traditional and green finance sectors. In a landmark move in 2021, His Majesty’s Treasury collaborated with various stakeholders to establish a high-caliber working group dedicated to green sukuk,” Keaveny informed.
This illustrious working group came into existence during the pivotal COP26 UN climate conference held in Scotland. It was a collaborative effort involving the UK Treasury, the Ministry of Finance of the Republic of Indonesia, the Islamic Development Bank, the London Stock Exchange Group, and the Global Ethical Finance Initiative. Their collective mission is to research and champion the issuance of green sukuk, which are Sharia-compliant investments channeled into renewable energy and other eco-friendly ventures.
Keaveny also shed light on the burgeoning Sharia-compliant fintech sector in the UK. “The Global Islamic FinTech Index for 2022 ranked the UK among the top five ecosystems for Islamic fintech. The positive impact of Islamic finance on the UK’s economic landscape is undeniable,” he remarked.
While Indonesia and the Gulf Corporation Council countries remain dominant forces in the Islamic finance arena, the UK has carved a niche for itself as a Western nexus for this industry. Its robust Islamic banking infrastructure and the listing of over 70 sukuk bonds on the London Stock Exchange are a testament to its commitment. Notably, the UK also made history by becoming the first Western nation to issue a sovereign sukuk bond in 2014.
Recent data further underscores the UK’s growing influence in Islamic finance. The assets managed by UK-based Islamic funds witnessed a surge, amounting to $280.6 million in the first quarter of 2023, marking a 2.9% increase from the previous quarter’s $272.7 million.
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