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Sunday, May 28, 2023

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Majority of Islamic banking consumers willing to pay premium for SDG-aligned products, survey finds

An overwhelming majority of Islamic banking customers are willing to pay a premium for financial products aligned with the UN SDGs, a global survey has found.

The survey, spearheaded by the Global Islamic Finance & UN SDG Taskforce, received 1,963 responses from customers of Malaysia’s CIMB Group, the UK’s Gatehouse Bank, Habib Bank in Pakistan, Islamic Bank Australia and Nigeria’s Jaiz Bank.

The survey found that 87% of the respondents are willing to pay more for UN SDG-aligned products, while 90% noted it is important that their bank provides such products. An overwhelming majority, 96%, emphasized that it is important that the finance products they subscribe to fit with their personal ethics and values, while 71% highlighted that sustainable financial products would encourage them to use their bank’s products more.

Zooming into the results, it is interesting to note the discrepancy in outcome based on geography. Environmental issues and equality and justice are more important to respondents in the global north, who are more familiar with ethical finance, net zero, green lending and sustainable investing. Reducing poverty and sustainable economic development are of greater priority to global south respondents, who are more familiar with impact investing.

Those in the baby boomer generation — respondents above the age of 65 years — were least likely to be familiar with impact investing, although they were most likely to be familiar with ethical finance, the survey found, while those in Gen Z who are between 18 and 24 years old were most likely to be familiar with net zero, green lending and sustainable investing.

“Our aspiration is that Islamic finance institutions across the world will do more to actively incorporate sustainability goals into their products and services, that bank board members and executives will drive this activity from the top down knowing that this is very much what their customers want and the direction that society is heading,” Sultan Choudhury, a board advisor to the UK Islamic Finance Council, commented.

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