A call to action in Islamic finance


REFLECTING on the philosophical roots of modern economics, Malaysia International Islamic Finance Centre (MIFC) chairman Tan Sri Azman Mokhtar (picture) is calling for a shift towards a humane capitalism, rooted in moral philosophy. 

In Islamic tradition, he said the call to action urges collaboration and commitment to navigate the sustainability mountain together, towards a more ethical and prosperous future.

“This is a call to action — a worthwhile ascent, that we may scale this sustainability mountain together in order to fulfil this sacred trust,” he said in his keynote address at the 15th International Conference on Islamic Economics and Finance (ICIEF) in Kuala Lumpur today.

Nevertheless, he underscored the importance of five critical transitions aimed at fostering a more sustainable and equitable global landscape. 

Firstly, he emphasised the necessity of an economic shift, advocating for a departure from the traditional shareholder-centric model towards a stakeholder economy. 

The transition acknowledges the significance of considering the interests of all stakeholders in economic decision-making processes. 

Secondly, he stressed the imperative need to redefine the role of finance. 

He said it is crucial to highlight finance’s purpose in serving the real economy to promote societal well-being, rather than prioritising short-term gains. 

Additionally, Azman called for a profound transformation in businesses and investment practices. 

Moving beyond profit maximisation, businesses should adopt a purpose-driven approach, aligning their objectives with societal and environmental goals. 

The transition entails embracing responsible, sustainable, and impact-driven investment strategies. 

Moreover, urgent action is required to combat climate change and environmental degradation. 

While aiming for a net-zero carbon future, equal attention must be devoted to biodiversity conservation and nature preservation. 

Finally, he urged the Islamic finance sector to transcend emergency-driven practices and embrace a broader conception of public interest principles. 

“These transitions and progress are a start,” he added.

While sustainable finance has made notable progress, he believed that it faces significant challenges, including combatting greenwashing, addressing “green-flagging” (excessive labelling of products to be Islamic in Islamic finance products) and navigating “greenspanning” monetary policies. 

As the global economy pursues transitions towards sustainability, he believed the tangible impact and significance of these endeavours resonate at the grassroots level.

Among the practical ideas and examples aimed at integrating a more humane and sustainable economy through finance and Islamic Finance principles, according to him include equity-based financing, leveraging Islamic Social Finance mechanisms, platforms for blended finance, social impact sukuks, sovereign development funds, initiatives for financial inclusion, social protection insurance schemes, crypto stable coins and holistic sectoral development.