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New research shows ESG will boost growth for Islamic Finance

22 March 2022

Both Islamic Finance and Halal economy are forecast to grow strongly this year if they adopt more ESG and sustainable solutions, study shows.

New research shows ESG will boost growth for Islamic Finance

New research, conducted among 143 leading Islamic Finance professionals by IslamicMarkets.com during February 2022, shows they expect strong growth for the wider Halal economy and their own sector this year but predict even stronger growth in the future if the sectors adopt more ESG and sustainability.

More than two out of five (41%) questioned expect the Halal economy to expand to $8 trillion or more this year compared with its current estimated $7 trillion value. Less than one in 20 (4%) expect the Halal economy to remain at $7 trillion while 55% expect it to be worth between $7 trillion and $8 trillion at the end of the year. They are similarly optimistic about the Islamic Finance sector – more than two out of three (66%) expect the market to beat forecasts of being valued at $3.8 trillion by 2023 despite recent double-digit percentage annual growth. Around 10% expect it to be worth more than $4.5 trillion by 2023.

The research was conducted by Maybank Islamic Berhad, the Islamic banking arm of Maybank Group, and IslamicMarkets.com, a leading platform that provides access to expert knowledge and financial opportunities, to support their upcoming forum entitled ‘Driving Sustainable Impact Through Islamic Finance.’

It found growing support for the view that adopting ESG and sustainability will further boost growth across the wider Halal economy and Islamic Finance. Around 86% questioned expect ESG and sustainability to play a bigger role in growing the Halal economy over the next three years. More than one in four (26%) expect the role played by ESG and sustainability to increase dramatically.

Islamic Finance professionals believe current growth rates of between 10% and 15% for the market could be boosted by the growing focus on ESG and sustainability – 58% believe annual growth rates over the next five years could be higher than 15%. Around 85% believe the ethical and responsible investing dynamics of Islamic Finance products could boost uptake among non-Muslims as well as Muslims. Up to 87% agree that growing awareness among global investors of the synergy between Islamic Finance and ESG could boost demand for Shariah-compliant investments as part of diversification strategies.

 

Maybank Islamic Berhad Chief Executive Officer Dato’ Mohamed Rafique Merican said:

The Halal economy and the Islamic Finance industry are firmly set on a growth pathway and there is continuing confidence in their prospects this year. What is more interesting is the accelerated adoption of ESG and sustainability, its impact on growth in the future, and the opportunities that they will open up.

 

Shakeeb Saqlain, CEO of IslamicMarkets added:

Annual growth rates of between 10% and 15% would be very attractive to most markets and it is what Islamic Finance has been achieving. Growth however could be turbo-charged if ESG and sustainability were fully embraced by the sector.

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