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Saturday, May 25, 2024

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Islamic investment bank partners with UNDP; boosts SDG efforts across portfolio

Kuwait Finance House (KFH) and the United Nations Development Programme (UNDP) have joined hands in a technical partnership that will support KFH to further ramp up its efforts to embed sustainability and the SDGs across its investment portfolio through SDG impact investment and scaling-up of green Sukuk.

Under the signed MoU, the UNDP will provide technical assistance for KFH to further closely align its investments across all of its business sectors with the SDGs through key instruments such as SDG impact standards and issuance of green Sukuk.

“KFH is moving forward in its green finance efforts by providing financial and technical advantages to initiatives that take into consideration environmental aspects and carbon emissions mitigation,” Abdulwahab AlRushood, acting CEO of the KFH Group, said in a statement following the signing of an MoU between the two parties.

“This partnership comes at a right moment, as we are keen on increasing our investment in green Sukuk from the total financing portfolio and scaling up on linking our investment with SDGs,” Abdulwahab added.

KFH previously launched the ‘Keep it Green’ program under which the bank executes several sustainability initiatives, including issuing sustainability Sukuk for the bank’s Turkish unit amounting to US$350 million in October 2021, as well as participating in the financing of the state-owned Kuwait National Petroleum Co clean fuel project in May 2022 by leading the KWD490 million (US$1.6 billion) Islamic tier with a share amounting to KWD275 million (US$898.25 million) of the total KWD1.2 billion (US$3.9 billion) financing deal.

In fact, for its sustainability strategy, KFH became the first bank in Kuwait to receive the Global Sustainability Assessment System GSAS – Gold Level Certificate.

On the other hand, the UNDP has been scaling up efforts to engage countries on Islamic finance as it sees the potential of the industry as a vital innovative financing modality to fill the SDG funding gaps.

In 2016, the UNDP Istanbul International Center for Private Sector in Development and the IsDB established the Global Islamic Finance and Impact Investing Platform to position Islamic finance and impact investing as an enabler of financing the global SDG implementation. In 2021, the UNDP partnered with the IsDB to launch the Center of Excellence in Islamic Finance in West Java, Indonesia.

Globally, record volumes have been reported for Islamic ESG. According to Refinitiv, global issuance of green and sustainability Sukuk reached US$4.4 billion in the first half of 2022, with green Sukuk representing US$2.4 billion of this figure, corresponding to 54% of the total.

Global ESG Sukuk issuances were said to be on track to exceed US$8 billion for the whole year of 2022, following a record issuance of US$6.1 billion in 2021.

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