According to a research by Maybank Islamic Berhad and IslamicMarkets.com, ESG Shariah Funds will experience strong growth in the next two years.
The study surveyed 143 professionals working across a wide range of sectors, from Insurance to Fintech.
36% of them expect a dramatic growth, while 49% expect a slight increase in the number of fund launches.
The demand is actually underserved
Three out of four, 73%, believe the current Islamic Finance market “underserves” ESG demand.
Looking for Shariah AND ESG. compliance certification
Practitioners believe that if investment products were certified as both Shariah and ESG-compliant, they would attract more non-Muslims than Muslims, because of the strong demand for ESG in Europe.
72% agree that the introduction of a global standard for ESG and Sharia would boost demand.
More standardization to come, but not in the short term
The launch of a global standard may not happen in the next two years, according to 55%, and just 52% expect “good or dramatic progress” on the adoption of a unified global legal and regulatory framework for Islamic Finance in the same period.
The lack of standardisation has been a topic in the Islamic Finance Industry for decades.
“Islamic Finance is indeed growing strongly but we believe the growth could be further boosted if it was able to offer Shariah and ESG compliant funds globally” said Maybank Islamic Chief Executive Officer, Dato’ Mohamed Rafique Merican. “This study is showing that potential demand for such funds would rise from the traditional as well as the non-Muslim investors.”
“There is widespread agreement that the current Islamic Finance market is not meeting the potential demand for ESG and Shariah-compliant funds even though there is an expectation of a growing number of funds being launched” added Shakeeb Saqlain, CEO of IslamicMarkets. “The issue remains, as it has for decades now, the lack of a global regulatory and legal framework.”
