DUBAI – The Global Ethical Finance Forum (GEFF) will play host to a particularly critical issue faced by the rapidly growing responsible finance industry: standardization. Experts from leading institutions such as Securities Commission Malaysia (SC), Climate Bonds Initiative, UK Sustainable Investment and Finance Association (UKSIF), Principles for Responsible Investment (UN PRI) and Forum Ethibel will discuss how to engage main street regulators in setting standards, ensure strict compliance with principles, avoid “green washing”, and facilitate crossover within the industry through the development of common standards. Principles and standards for responsible finance were varied across jurisdictions before the conception of the historic initiative of UN-backed Principles of Responsible Investments (UNPRI). Since its launch in 2006, UNPRI has brought together 1380 investors who manage assets worth $59 trillion under a single set of 6 principles. The UNPRI framework is widely accepted, but in order to facilitate greater coherence in the industry, it is paramount to have the support and involvement of main street regulators. The issue of enforcement is also under speculation as some signatories have fallen short in implementing them. This is increasingly being realized by UNPRI as it began to implement new procedures to ensure the compliance of its principles via the introduction of a tiered approach. UNPRI recently suggested an overhaul of its principles. As such, the upcoming GEFF is a truly historic as it will engage key stakeholders from various corners of the world to discuss the subject of standard setting and facilitate the widespread support by the responsible finance industry. Speaking ahead of the historic forum, Justine Leigh-Bell highlighted the synergies between Islamic finance and the green investments: "The rapid growth of the green bonds market, as well as the success of Islamic Finance in the last few years, further underpins the potential for a green sukuk market. But to be successful, two streams of standards are required: Robust standards to ensure the green credentials – leveraging best practices in the green bond market – and standards to ensure compliance with Shariah Law. The huge potential for green sukuk will allow Islamic investors to more easily address SRI, ESG and faith based investing in their investment choices. It also has the potential to attract non-Islamic investors who otherwise would not have invested in sukuk but invest due to the green credentials. Zainal Abidin of Malaysia's Securities Commission reiterated the foundational similarities between Islamic finance and the wider ethical finance industry, and emphasized the need for a unifying framework of principles: “In order to capitalize on these similarities and facilitate the development of both financial disciplines, it may be constructive to seek some degree of convergence through a set of standards that address their common principles and features. In so doing, both Islamic and ethical finance may benefit from a broader range of products and a wider investor and issuer base within a robust framework that promotes greater transparency and market confidence. Nevertheless proper assessment and deliberation among key stakeholders of both disciplines is a critical prerequisite to ensure relevance and applicability of a common framework.” — SG
