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Blue finance could make a meaningful contribution to the SDGs
Blue bonds could cover 10% of the funding needed for SDG14 – which is partly focused on protecting life in the oceans – by 2030, according to a report by SystemIQ. Blue finance has received far less attention than green finance, the broader category of finance of which it is often considered a subset, but has grown meaningfully since the first blue bond was issued in 2018 by the government of Seychelles.
Among the regions in focus in the report, MENAT is notable because it has not seen any issued blue bonds to date, although Egypt is expected to follow a previous green bond issuance with a debut blue bond. There are many promising types of blue finance that could be used across the MENAT region. This is a key part of the global shipping market, including within it the Suez Canal in Egypt and the Jebel Ali port in the UAE (one of the world’s dozen largest ports by volume).
There are challenges in linking together the co-benefits from investing sustainably in one sector of the blue economy with other investments in other ocean-related sectors, but a lot of opportunities as well. Seeing a focus placed on opportunities for blue bonds and other forms of blue finance across the MENAT region and Asia – which includes many OIC countries – should be a call to action to consider blue finance among other developing approaches to responsible finance by financial institutions within these markets.
The RFI Foundation is involved in coordinating an “Oceans Flagship Laboratory” announced during COP 28 which is a part of the BC100+ initiative focusing on blockchain and the SDGs. The Oceans Flagship Laboratory is working to explore the role of technology to increase flows of blue finance, particularly within the MENAT region. Contact us for more information.
Islamic finance is creating opportunities to provide leadership in responsible finance
The Islamic finance market has demonstrated impressive growth in recent decades, with several waves of growth propelled by different global trends. There has been increasing convergence with the development of responsible finance that has occurred over the decade since the agreement on the Sustainable Development Goals and the Paris Climate, which was a principal objective of the RFI Foundation when it was established in 2015.
One success of Islamic finance in adopting responsible finance has been demonstrating the operational compatibility of ESG screening alongside the core mandate for Shariah compliance. A new position paper from the Malaysian International Islamic Financial Centre (MIFC) Leadership Council provides a vision for the next phase of growth and development of Islamic finance. This is one of several initiatives to more firmly establish responsible finance in its core.
There has always been a strong ground for Islamic finance to play a more active and leading role in addressing global needs to address concerns such as the climate and nature crisis. What has taken time since agreement around global goals for sustainable development and restoring balance in planetary systems has been to demonstrate compatibility of climate and ESG approaches with Islamic finance. By conclusively demonstrating this compatibility, Islamic finance has also illuminated opportunities for the sector to lean into its concern for equity and justice and provide solutions as the momentum of interest in responsible finance produces opportunities to feasibly put them into action.