Responsible Finance Summit (RF Summit) is a 2-day international conference with the aim to forge meaningful alliances between Islamic Finance (IF) and the responsible finance ecosystems. It is being organized by RFI Foundation and co-organized by Middle East Global Advisors, two leading institutions delivering the agenda of sustainable and inclusive economy and connections within the broader responsible finance industry. The summit took place at Sasana Kijang, a renowned centre for knowledge and learning excellence established by Bank Negara Malaysia. I had been personally invited by one of the speakers to attend this amazing event on 30-31 March, 2016.
Below is the summary of keynote and panel sessions from the summit:
Day 1 (30 March 2016)
Panel 1: Going the Distance – Hot Money versus Patient Capital
Discussion Leader: Stuart Hutton (Chief Investment Officer of Simply Ethical)
1) Dr. Zamir Iqbal (Lead Financial Sector Specialist of World Bank)
2) Dr. Azmi Omar (Director General of Islamic Research and Training Institute)
3) Hon Cheung (Regional Director, Official Institutions Group of State Street Global Advisors)
4) Rushdi Siddiqui (Co-Founder & CEO of Zilzar Tech Sdn. Bhd)
The discussion started by distinguishing between Hot Money as a short-term investment, and Patient Capital as a long-term investment. It is part of global financial architecture where it may strengthen economic and financial governance in international level. These two components are what responsible stakeholders need to understand before deciding in which way to invest. Dr. Omar argued that in Islamic Social Finance perspective, Zakat is an example which develops trust-fund. Siddiqui further linked that similar approaches can be seen on CSR, SRI, and Sustainability Projects – which may act as a commitment mechanism. Dr. Iqbal mentioned the importance of responsible finance in emerging market economies from asset-based finance & risk-sharing as the instrument to stabilizing the force, which being agreed by Hong Cheung as he explained that financial infrastructure is a high-social investment which can be presented in three (3) ways: 1) creation of ‘Bank-able’ project, 2) Creation of Investment (Project Bonds, Green Bonds, etc), 3) Creation of Infrastructure fund.
Panel 2: The Greenies, Do-Gooders and Religious Fundamentalists – Addressing Popular Perception Responsible Finance
Discussion Leader: Daud Vicary Abdullah (President & CEO, INCEIF)
1) Abdulla Mohammed Al Awar (CEO of Dubai Islamic Economy Development)
2) Hasan AlJabri (CEO of SEDCO Capital)
3) Julie Moret (Head of ESG, Director-Investment Risk, Franklin Templeton Investments)
4) Prof. Dr. Mohamed Akram Laldin (Executive Director, International Shari’ah Research Academy)
The conversation began by putting into perspective of Syariah as a fundamental basis in Islamic Finance which has a strong correlation with Responsible Finance towards ethical dimension. Shariah is believed to be a drive towards economic sustainability making profit by adding value to the society, as it is “not selling products that will risk on environment”. Furthermore, Environmental, Social and Corporate Governance (ESG) issue is embedded together with Syariah and being seen as mutually exclusive compatible – which is why there has to be uniform standards through proper integration process in implementing Shariah that can affect the performance of investment portfolios (e.g. companies, sectos, regions, asset classes, etc). The panel concluded that there still needs more efforts to be undertaken in terms of education, standardization, and enforcing through legislation & institution which may help in raising awareness of Shariah & Islamic Finance as essential component in Responsible Finance.
Panel 3: Integrated Reporting & Islamic Finance – Addressing Impact
Discussion Leader: Omar Selim (CEO of Arabesque Partners)
1) Hardik Shah (Sector Manager of Sustainalitics)
2) Prof. Dr. Maliah Sulaiman (Dean of Kulliyyah of Economics and Management Sciences – International Islamic University Malaysia)
3) Janoearto Alamsyah (Islamic Finance Research Team Leader of Bloomberg)
It is being understood that integrated reporting helps investors to manage key risks, improves future performance, and builds confidence towards the stakeholders. Transparency makes the flow of communication easier in order to set new strategies for future initiatives. In Islamic Finance perspective, this can be seen towards the implementation of Shariah Governance where it is important to set specific agenda into environmental, social and governance itself that may contribute towards value proposition of responsible finance principles.
Panel 4: CEO One-on-One – How can Islamic Finance Support and Develop Responsible Finance?
Discussion Leader: Dr. Sayd Farook (Co-Vice Chairperson & Trustee of RFI Foundation)
Industry Leader: Hasan AlJabri (CEO of SEDCO Capital)
The dialogue discussed on private equity which invested under Shariah Financing is believed to be an ethical investing and a driving force to economic sustainability. AlJabri further discussed with approaches that have been undertaken on Islamic Financial Institutions reflecting towards western products resulted on improving quality of standard, encouraging stability in investment, and reducing the impact of harmful products & services.
Panel 5: The Impact of Leadership and Policy in Developing Responsible Finance – Finding Role Models for Growth
Discussion Leader: Stella Cox (Managing Director of DDCAP)
1) Zainal Izlan Zainal Abidin (Exec. Director – Islamic Capital Market of Securities Commission Malaysia)
2) Omar Khan (Director of Strategy & Development of Crescent Wealth)
3) Jessica Robinson (Head of Asia (ex Japan) of Principles for Responsible Investment)
4) Emily Chew (Vice President & Asia Pacific ESG Research Lead of MSCI)
The main highlight of the panel discussed on Sustainable and Responsible Investment (SRI) Sukuk Framework with the aim to facilitate the finance of sustainable and responsible investment initiatives. It is being launched by The Securities Commission Malaysia (SC) and is believed to be one of the most effective governmental policies in stimulating responsible finance & investing. This initiatives is one of the essential benchmarks that Islamic Finance referenced on to embed on the whole picture of Responsible Finance.
Panel 6: Measuring the Impact of Responsible Investment and Reporting to Stakeholders
Discussion Leader: Kurt Lieberman (CEO of Magni Asset Management LLC)
1) Datuk Darrel Webber (Secretary General of RSPO)
2) Muhd Ramadhan Fitri Bin Ellias (Executive Vice President & Head of Syariah of Maybank Islamic)
3) Benjamin McCarron (Founder and Managing Director of Asia Research and Engagement)
The panel explored on how far the government is being supportive towards inclusive finance and to have a clear communication flow with the stakeholders of financial institutions. It is being argued that there’s a gap between level of awareness & level of literacy by the government which is why it is important to foster human capital management with the need of right expertise. This is because most people are still skeptical due to lack of understanding towards the concept, and that reaching “sustainability” requires a long process as well as heavy-duty standard in implementation. However, it is believed that the responsible investment is progressively going well as it seeks out companies with strong environmental, social governance, and ethical to the benefit of society at large.
Panel 7: Harnessing Techies for Good:- Broadening the Base of Finance through the Use of Technology
Discussion Leader: Paul Loomis (Regional Director for GCC and Asia of The Business Year)
1) Jason W. Best (Co-Founder & Principal of Crowdfund Capital Advisors LLC)
2) Sam Quawasmi (Md & Co-Founder of Eureeca)
3) Robin Newnham (Head of Policy, Analysis and Capacity Building of Alliance for Financial Inclusion)
4) Isvary Sivalingam (Senior Manager of MicroSave)
It is being agreed throughout the panel that technology has the opportunity to increase transparency in which crowd-funding helps to promote it. Crowd-funding is the latest innovative implementation where it creates platform that enable mobile-money to democratize the investment. It has become a game-changer in today’s investment that brings attitude of openness in regulations into existence. Furthermore, there are four (4) stakeholders which need to be satisfied in crowd-funding practice, such as: 1) Investors – to protect them ethically by making sure they clearly understand with what they are currently investing in, 2) Companies – with accessible procedure on the capital, 3) Regulator – by providing transparency to access the tools, 4) Ecosystem – to ensure that the platform of crowd-funding get enough ‘oxygen’ in making profit.
Panel 8: Connecting with the Man on the Street:- Expanding Responsible Finance at the Retail Level
Discussion Leader: Mohd Daud Bakar (CEO & President of Amanie Advisors)
1) Monem Salam (President and Fund Manager of Saturna Sdn Bhd)
2) Najmuddin Mohd Lutfi (Chief Executive Officer of BIMB Investment Management Bhd)
The talk investigated on the risk as well as return perspective of ‘Sukuk’ Bonds; which will later be measured together with Shariah compliant National Bonds in the UAE , if it provides a standardized-template for other countries to open up fixed income markets to all retail investors. This type of ethical investment acted as a driving force for country’s ambitions in social responsible investment. Challenges are identified on applying the model towards retail consumers when it comes to cost-competitive investment option. Nevertheless, it is being concluded that Sukuk may be a great benchmark on foreign investment in responsible finance.
Panel 9: Making an Impact:- How can Impact Investing become more Prominent within Responsible Finance?
Discussion Leader: Blake Goud (CEO of RFI Foundation)
1) Umar Munshi (Director & Founding Partner of Club Ethis/Kapital Boost)
2) P. Ming Wong (Co-Founder & CEO of Asia Community Ventures)
3) Margie Ong (Chief Executive Officer of Thoughts in Gear)
4) Mohammad Raafi Hossain (Manager of Narwi Platform, Silatech)
The panel focused on the rise of social enterprises as a “game-changer” in business. Social enterprises are seen to be pivot in “doing things that matter” on environmental, social, and sustainability of a society – engaging youth that has become a social trend. Impact Investing has embedded on this concept but is still seen to remain niche due to lack of understanding towards the framework.