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Wednesday, February 21, 2024

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UNDP launches ESG capacity-building initiative for Islamic financial institution

The UNDP’s Istanbul International Center for Private Sector in Development (ICPSD) reaffirmed its commitment to sustainable development, with the launch of its latest initiative: ESG capacity-building for Islamic finance entities.

The project aims to develop an advanced online course on ‘Environmental, Social and Governance (ESG) Standards and Practices for Islamic Financial Institutions’, and Kuwaiti Islamic bank Warba Bank is set to be the primary donor of the initiative.

The course, developed by the ICPSD in collaboration with UNDP Kuwait, will comprise video lectures and other interactive learning tools, and will cover topics such as skill enhancement in sustainable development, climate change mitigation and adaptation within the Islamic finance sector; incorporating ESG practices; navigating risks and adapting to evolving market dynamics; and enhancing the synergy between Islamic finance and ESG investing; among many others.

The program will be accessible online, free for the public, in the last quarter of 2024, and will also be available as an advanced module within the existing massive open online course titled ‘Islamic Finance for the Sustainable Development Goals (SDGs)’, which was co-developed by UNDP ICPSD, the IsDB and Durham University Business School.

“Islamic financial institutions stand at the forefront of forging a path towards a green, resilient, and inclusive future,” a statement from the UNDP read.

“This initiative is intended to serve not only as a learning platform; but also as a catalyst for dialogue and partnership among Islamic finance professionals, ESG investors, and sustainable development experts. It contributes to sustainable solutions to global challenges, reinforcing the role of Islamic finance in achieving the SDGs.”

The year 2023 saw the integration of ESG across the Islamic finance industry, with the top Islamic banks launching their ESG and sustainability initiatives and products. Some notable ones are Abu Dhabi Islamic Bank’s ESG strategy supporting its product innovation and Masraf Al Rayan’s sustainable financing framework. More recently, in 2024, QIIB launched its sustainable framework, followed closely by a sustainable Sukuk issuance, while Oman unveiled its sustainable finance framework which has a special focus on allocating financing toward ESG initiatives.

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