‘Is Islamic finance moral?’
The question startled me. It had been asked by a Chief Risk officer of a Sharia—compliant investment platform.
Of course it is moral, I thought. It may be somewhat rigid in its exclusions, but it has a moral basis.
Umer Suleman, the Chief Risk Officer of Wahed Invest told us that, while teaching students for an Islamic Finance Diploma, he asked them to raise their hands if they thought Islamic Finance was moral. None did.
And most of those Muslims participating in a Round Table on Building Resilience: Capital, Climate and Innovation at the Oxford Centre for Islamic Studies had the same doubts. It wasn’t that they doubted the guidance of their faith. It was the way it had been applied. They felt that it had become formulaic, and lost relevance to the real human needs that they saw around them. And, they all agreed, Islam is a living faith whose teachings were all about how to take care of the most vulnerable, how to share wealth; how to use it wisely to the benefit of others.
What a contrast between this self-critical discussion and ours in London. Admittedly Lord Turner once described most of the activities of the City as ‘socially useless’. Yet I rarely hear people in this world testing their activities against their own moral code. Perhaps that is why, when an inquiry convened by Tomorrow’s Company and chaired by Sir Richard Sykes, suggested that finance , like medicine, needed a Hippocratic Oath to guide it, the suggestion got nowhere, even if it led to other changes.
22 years on from that inquiry, leadership, innovation, systemic thinking and a focus on the wellbeing of future generations were my themes for the Round Table.
If finance is to be a force for good in society, we need a special kind of leader. The kind of person who thinks about what can be done – abundance thinking. Leaders who say ‘Here is what society and customers need. It doesn’t yet pay. How can I change things so that I can profitably provide it? ‘Not the leaders who say ‘I can’t help – there isn’t a business case.’
Such leaders are the twenty-first century equivalents of the pioneers of Tata and Toyota. Tata’s founder Jamsetji Tata started the company in 1868 with a clear vision of Tata powering India’s growth towards independence. [i] Toyota’s founder Sakichi Toyoda challenged his son to ‘complete something that will benefit society’. [ii]
The prize today for such leadership is illustrated in a new report by The Earthshot Prize and the University of Exeter. This has identified 51 areas across climate, nature, air, oceans and waste where tipping points are near. [iii]
To get to the tipping point requires faith, an acceptance of scarce returns in the early stages until the compounding effects of one’s investment pay off.
According to Jason Knauf, Earthshot’s director,
‘There’s a danger in assuming we have to wait for cleaner technologies to become cheaper before backing them. The aim is to find the jammed gear: the barrier stopping a good solution from spreading, and the push that might release it. The real political question is …which interventions unlock a market that can then grow without them….’
That is what imaginative and purposeful leaders do.
Three presentations truly stood out.
One was by Abubakar Suleiman, CEO of Sterling Bank, Nigeria. Abubakakar had the vision to create an Islamic bank that followed Sharia principles, alongside a conventional bank. He demonstrated over time how profitable this could be. The title of his talk was ‘Capital is not scarce. Orchestration Is.’ He showed how one investment could serve many systems at once – with synergies in impact and returns across healthcare, education, agriculture, renewable energy and transport.
The second came from Hamdan Abdul Majeed, founder and MD of Think City. After originally working for Malysia’s sovereign wealth fund, he had with their encouragement created a resilience project called Think City. Penang is vitally important for the world supply of semiconductors. But it faces many social challenges and is vulnerable to flooding. By focusing on the priorities determined by the UN Sustainable Development Goals (SDGs) , Think City has brought together every resource from commercial, financial and civic life to invest together in the resilience of the City and the island on which it lives. For every $1 invested in resilience by Think City, there now a return of $3 directly, and more than $5 when including the second and third order impacts. As the flooding threat rises so will the future financial returns.
The third came from Neil Kiely. Androscoggin Bank is a 156 year-old mutual bank in Lewiston, Maine owned by its depositors. It has long been rooted in the community, but under the leadership of Kiely it has reinvented itself. It identified a demand for Islamic finance, and created a sustainable deposit programme, enabling investors in this fund to know that investments are in line with the SDGs. While profitability is still critical, profitability is no longer the mission but rather, as Kiely puts it ‘the fuel for the mission’. The bank has converted its status to that of a Public Benefit Corporation. It has reached out to the communities around it and asked them what is needed.
The work of the Global Ethical Finance Initiative (GEFI), originating from Edinburgh, was prominent in the weekend’s discussions. Dame Susan Rice, an experienced banker and chair of GEFI had a wealth of examples to offer of positive financial initiatives. She emphasised the importance of place-based investments:
‘If people can see, hear and touch the benefits then financial gain has real world impact’.
When I got back from Oxford my copy of The Economist was waiting for me. I read the opening words of its cover story editorial. ‘The reality of Islam in Europe’.
‘Panic about Islam in Europe is spreading’ it began. Admittedly it went on to make the distinction between Islam and Islamism.
Yet nowhere did this article acknowledge the contrast between the timidity of our own ethical approach to finance and the muscular courage of Muslims in our midst. I came away from Oxford regretting, as a Christian, that we in the west seem to lack the drive and energy with which this gathering was exploring how best to channel and blend the wealth of Muslims around the world with other funds towards the wellbeing of future generations, and mitigating the calamitous prospects of a – now unavoidable – two degree temperature rise.
As I write Sasja Beslik has reported that :
‘Sri Lanka is out of water. .. 160,000+ people with no reliable drinking water. Reservoirs empty. Fish dying by the thousands in dried-up lagoons….
‘India’s monsoon has collapsed by nearly 50% in parts of the country. Rice, cotton, maize, pulses, all at risk, right as harvest approaches…
‘Taiwan is now drilling for 40C heat like it drills for earthquakes and terror attacks…’
‘South Korea rewrote its heat-alert system for the first time in 18 years after watching potatoes cook in the ground.’
‘Japan logged its first-ever “cruelly hot day”, then watched people drown in flooded underpasses weeks later. Now it’s bracing for super-typhoons.’
I came away hoping that we can enjoy greater Islamic influence over our business and investment practices in Europe and beyond. We all need this clear-eyed focus on wealth as conveying obligations, and investment as stewardship.
Moreover, the core principles of Islam chime with those of many other faiths. Where finance is concerned we are overdue for a multi-faith revisiting of that Hippocratic Oath.
Mark Goyder is Founder of Tomorrow’s Company and, with Ong Boon Hwee, author of Entrusted: Stewardship For Responsible Wealth Creation (World Scientific 2020)
[i] Quoted in Living Tomorrow’s Company – Rediscovering the Human Purposes of Business by Mark Goyder Knowledge Partners 2023 p 110
[ii] Ibid p119