Bank Pembangunan Malaysia Berhad has been featured in the Principle for Responsible Banking (PRB) banking report among other banks in Organisation of Islamic Cooperation (OIC) member states. The PRB is a banking report highlighting the analysis of responsible banking in the Islamic finance sector.
This report is the third report in a 4-part thought leadership series that aims to assist and encourage engagement in support of the UN Sustainable Development Goals (“SDGs”) by the global Islamic finance sector.
UN launched by the Islamic Finance Council UK (UKIFC) in partnership with Malaysia based International Shariah Research Academy for Islamic Finance (ISRA) and the Global Ethical Finance Initiative (GEFI).
It also featured notes from interviews from various leading financial institutions from all around the world such as Al Baraka Banking Group, Gatehouse Bank, Gulf International Bank (“UK) and Jaiz Bank who have all shown notable leadership in responsible banking.
The PRB, which was introduced in 2019, presents a premier framework for responsible banking, based on six Principles that assist member institutions in aligning with the SDGs and the Paris Climate Agreement.
BPMB’s President and Group Chief Executive Officer, Arshad Mohamed Ismail said, “We are honored to be featured in this report as this signals our commitment to the UNEP FI Principles for Responsible Banking. This is in line with our focus to support the nation’s progress through digitalisation, sustainability and inclusivity. Being sector agnostic, we will continue to assess our projects and ensure they positively impact the people, environment, and national development.”
The finding from the report shows, since PRB was launched, 14.3 percent of the founding signatories were based in OIC member states. Now only 10 percent of the 221 PRB worldwide signatories are based within OIC member states despite the OIC member states having a collective population of over 1.82 billion (24 percent of the total world population).
UKIFC’s Board Member, Omar Shaikh, said, “Islamic finance is naturally aligned with the SDGs and the low level of engagement with the Principles for Responsible Banking (PRB) in the OIC region means there is a huge opportunity. Through our Global Islamic Finance and SDGs Taskforce we have the platform to work with UNEP FI and PRB signatories to increase awareness, promote understanding and encourage adoption of the Principles amongst the Islamic finance sector.”
The most make up of Islamic finance institutions that are PRB signatories, 27 of the 38 organisations, are based outside OIC member states, across Europe, Asia, Africa, Oceania and the Americas. 38 PRB signatories offer Islamic finance products and services, which equates to 17.2 percent of all PRB signatories.
Additionally, the data reflects, among most Islamic product or service offered by non-OIC member states signatories is corporate finance, with 40.7 percent of signatories are offering this. Amongst OIC member states, the most popular product or services are personal banking and personal, business and corporate banking, at 27.3 percent.
Meanwhile, Head of United Nations Environment Programme Finance Initiative, Eric Usher said, “This series of reports also sheds light on the natural alignment of the Maqasid al Shariah with many areas of the SDGs. Frameworks such as the Principles for Responsible Banking can provide an accelerated pathway for Islamic finance institutions to meet the SDGs, furthering their journey of positive impacts on society and the environment, while continuing to enhance stakeholder value.”
Notably, Signatories to the PRB are currently underrepresented in OIC member nations, implying that the PRB should expand its activity within OIC member nations. Working groups, targeted awareness, and outreach initiatives could help raise PRB awareness in OIC member countries.
Given the mutual benefits of becoming PRB signatories to both Islamic finance institutions and the responsible banking industry, increasing engagement should be treated as a priority.
The report was formally announced by the UKIFC Senior Adviser, Sultan Choudhury to an audience of over 3,000 financial practitioners, at GEFI’s flagship annual Ethical Finance Summit.
