Reports
September 2023
Summary Report of the RFI Financed Emissions Database
By Blake Goud & Dr. Eman Tabet
The Summary Report on the RFI Financed Emissions Database offers a comprehensive exploration of important greenhouse gas emissions indicators derived from financial institutions' financing portfolios across 11 OIC countries including the six GCC countries, Malaysia, Indonesia, Türkiye, Pakistan, and Bangladesh. This report and underlying open-access database highlights the foundation for data-driven insights to help the financial sector in these 11 OIC countries to better align with both national and global climate objectives.
August 2023
Islamic Finance ESG Outlook 2023: Balancing Performance and Risk
By Blake Goud, Dr. Eman Tabet (RFI), Jinan AlTaitoon & Mustafa Adil (LSEG)
The period since the Covid-19 pandemic has been incredibly dynamic around consideration of ESG issues, particularly relating to concern such as climate change. For Islamic finance, the rapid growth in adoption of ESG practices by financial institutions and by investors in Islamic markets comes with both a challenge and an opportunity.
The pace of change in ESG is daunting even for mainstream financial institutions, and Islamic finance is already facing competition from other financial institutions with significant financial resources. However, there is an opportunity for Islamic finance to demonstrate its natural alignment with the objectives of the broader responsible finance movement, which if seized could propel the industry’s growth in the coming decade.
This report contributes to this development by providing key insights into the investment impact of ESG when combined with Shariah screening, as well as a unique assessment of the ESG risks within the Islamic banking market.
November 2022
Identifying Financed Emissions Risks in Bangladesh’s Financial Sector
By Blake Goud & Dr. Eman Tabet
This report provides an estimation of the size and sectoral concentration of financed emissions within the financial sector of Bangladesh with all its Islamic as well as conventional banks. The report highlights how financial institutions in Bangladesh can improve the evaluation of their climate-related risks, whilst looking at how this highly climate vulnerable country can position itself as a prospering low-carbon country within the global economy.
November 2022
Identifying the Financed Emission Links in Saudi Arabia’s Financial System
By Blake Goud & Dr. Eman Tabet
This report provides an approximation of the size and concentration of financed emissions within Saudi Arabia’s financial sector. The report traces how supply and demand for emitting sectors spreads financed emissions within the country’s financial sector and its Islamic and conventional banks. It also highlights the pivotal role played by banks in managing their assets exposure from direct emitting sectors which are exacerbated by the demand of other industries for their services.
November 2022
Understanding Climate Risks in the Financial System of the United Arab Emirates
By Blake Goud & Dr. Eman Tabet
This report estimated the financed greenhouse gas (GHG) emissions within UAE’s financial sector. It highlights the emission concentrations across the country’s economy and their interlinkages across the financial sector with all its Islamic as well as conventional banks. The report also looks at the significant, yet untapped role of UAE banks in the country’s journey towards becoming Net Zero by 2050.
July 2022
Identifying financed emissions risks in Turkey’s financial sector
By Blake Goud & Dr. Eman Tabet
This report provides an approximation of the size and location of financed emissions within the financial sector of Turkey. It will make the case for the issue’s importance, and to highlight some areas of concentration of financed emissions. We also highlight some of the interlinkages within the economy and financial sector that can support banks in particular in using their role as intermediaries to amplify the impact they have as they take steps to mitigate their financed emissions risks.
December 2021
Integrating ESG and Islamic Asset Management
By Blake Goud
This report presents a detailed quantitative study based on 20 years of data confirming the value of combining environmental, social and governance (ESG) data with Islamic investment screens. The study, conducted by RFI Foundation and INCEIF – the Global University of Islamic Finance – finds that Islamic screens have not created any systematic performance penalty for investors, and can be complementary to ESG screening practices.
February 2021
Understanding Climate Risks in Indonesia’s Financial System
By Blake Goud and Eman Tabet
This report provides an approximation of the size and location of financed emissions within the financial sector of Indonesia. It will make the case for the issue’s importance, and to highlight some areas of concentration of financed emissions. We also highlight some of the interlinkages within the economy and financial sector that can support banks in particular in using their role as intermediaries to amplify the impact they have as they take steps to mitigate their financed emissions risks.
November 2020
Identifying the Climate Risks Facing Malaysia’s Financial System
By Blake Goud and Eman Tabet
The issue of climate change has risen in importance since the coronavirus pandemic demonstrated the unique challenge of responding to systemic issues that have highly correlated impacts across the economy. This report is a contribution to those providing financing to better understand the relevance of climate-related financial risks associated with the greenhouse gas (GHG) emissions they are financing.
November 2019
Responsible Finance - Ethical and Islamic Finance: Meeting the Global Agenda
By Tan Sri Dr. Zeti Akhtar Aziz, Azleena Idris and Yousuf Sultan
The devastating impact of the Global Financial Crisis was intensified by the delinking between finance and the economy, and by international financial centres having become a leading source of national income and wealth in their own right. In short, there was too much finance. Responsible finance, by providing models for different forms of finance that explicitly factor in ethics, provides an alternative response. This report highlights the specific characteristics and features that ethical finance and Islamic finance share and those that set them apart.
April 2019
Islamic Finance ESG Outlook 2019: Shared Values
ESG scores from Refinitiv’s EIKON database of over 5,000 non-financial companies suggest a direct correlation between Shariah compliance and higher ESG scores. Shariah-compliant companies — to which Islamic financial institutions will direct capital — have ESG scores that are on average 6% higher than for those excluded by the Shariah screening process.
Through a separate analysis conducted by the RFI Foundation, we found that the most common risks across the 11 markets with the largest Islamic finance industries are emissions to air & water, the management of waste and the effects of site contamination, as well as workplace safety & health. These risks are particularly prevalent for Islamic banks that are financing utilities, manufacturing, healthcare, mining/oil & gas, and primary agriculture.
As these Islamic banks improve their ESG risk management, it will not only benefit the bottom line, but will allow the bank to stand out from its peers and discover new business opportunities.
April 2018
Environmental Impact in Islamic Finance
By Tawfique Al-Mubarak and Blake Goud
Several research studies have shown that integration of environmental, social and corporate governance (ESG) in businesses is not just profitable, but it is vital for protecting companies’ social license to operate and ensure their financial sustainability over the long-term. Despite the progress of responsible finance across global markets, its presence in the Islamic finance industry has not developed as rapidly.
This report captures the current state of practice of Islamic finance around environmental & social issues and discusses key opportunities for Islamic finance to shift its values-based orientation towards a greater focus on environmental and social impact. In addition to the primary data we gathered from Islamic financial institutions, this report includes a comprehensive overview of some key recent developments in responsible finance practices from the Muslim world and by major Islamic financial institutions.
Thomson Reuters-RFI Responsible Finance Report
The Thomson Reuters – RFI “Responsible Finance Report” provides an overview of similarities between all sectors within responsible finance (including Islamic finance) and outlines the need to develop and implement regulatory changes and standards that will enhance the availability and growth potential of all sectors of responsible finance. The report was launched at the inaugural Global Ethical Forum in Edinburgh — September 2015.
What is in the Report?
Overview of the history of responsible finance within faith traditions and broadening to include a wider set of environmental, social and governance concerns
Analysis of how responsible investing is correcting perception that responsibility and financial performance are mutually exclusive
Summary of regulatory impediments to the development of responsible finance globally
Identification of a starting point for greater convergence between responsible finance sectors including SRI, ESG and Islamic finance
Quantitative model for asset management opportunity from mutual funds for a ‘prudent ESG’ approach that incorporates Islamic finance and ESG
