Ethical business growth and Islamic finance
When it comes to business practices and growth, the world is moving towards more ethics based industries. This shift towards ethical business reflects the growing recognition and awareness of the wider impact of business on our economy, our health and addressing inequalities in the world. When businesses link in with the principles of Islamic finance, there is a perfect synergy of value and values.
Ethical businesses and markets grew by almost 35% in 2021-2022. The ethical finance market grew by 50.1% during the pandemic.
There are many different reasons for the growth in ethical business and banking industries. One of the main drivers is consumer consciousness. Consumers are seeking services and products that align with their own personal values and are drawn to companies that can demonstrate their ethical standing. Research shows that 84% of consumers consider the ethics of a business before spending. 63% of customers want to see ethical business practices.
Other reasons include:
- Environmental concerns and climate change awareness
- Social media influence and the spread of information
- Employee and stakeholder expectation
- Regulatory pressures
- Investor preferences
- Global inter-connectedness
- Long-term sustainability
The question arises, does ethical business conduct, especially within an Islamic finance framework, lead to success and growth in business? The answer is a definite yes.
The International Federation of Accountants has found that the business landscape is continuing to see growth and change. The pandemic and global recession have led to changes in the ethics of businesses and how they operate. This is driven by the increase in Muslim spending, investing and operations, but also due to the demand for ethical business principles following a very unstable financial period.
Islamic finance is based on ethics, so the alignment of ethical business growth and Islamic finance goes hand in hand.
Reports by TheCityUK have identified that the global banking assets within the Islamic finance sector totalled $2.8 trillion in 2022. This figure increased by 50% in the years between 2026 and 2022. In addition, by 2021 the UK Islamic bank's assets were in the region of $77.5 billion. The global sukuk insurance industry was worth $196.5 billion by 2021 and continues to see growth despite the pandemic.
Within Europe, excluding Turkey, the UK made up 85% of the European Islamic banking assets. the UK has always been ahead of the game when it comes to using Islamic finance to promote research into sustainable development options and ethical finance options. London continues to be one of the leading financial centres in the world.
This blog will examine the pivotal role of ethical business growth and Islamic finance, and how Sharia principles play a pivotal role in steering businesses towards long-term success.
Ethical Business
Ethical business practices themselves can be a huge catalyst for sustainable development and business growth. When combined with an Islamic finance funding model of management, that growth can be long-term and successful.
Islamic finance is rooted in ethics and Sharia principles that focus on the greater good of society over exploitation.
Aligning business operations with ethics ensures that businesses are able to create an environment where long-term success can be achieved.
Ethics And Islamic Finance
Both Islamic finance and ethics are inextricably linked. The foundational principles of Sharia rules relating to financial transactions guide how deals should be conducted. The emphasis is firmly placed on social justice, ethics, fairness, and equity.
One of the main principles of Islamic finance is the absolute prohibition on interest. This is a fundamental principle of the Islamic finance market. For the traditional corporate world, a move away from interest based lending and transactions seems at odds with their profits based perspective. Actually, the opposite is true.
Charging interest is seen is Islam as creating an extremely exploitative market and cannot lead to stable economics and transactions. Recent fluctuations in global interest rates demonstrate how variable and unpredictable interest based lending can be. Islam considers the charging and payment of interest to be an unethical and prohibited practice.
According to the Fitch Ratings, in 2023 the assets within UK Islamic funds were approximately $280.6 million, a growth of 2.9% from the previous year.
Profits With Purpose
Islamic finance champions the idea that you can achieve profits with purpose. Ethical practices might be the driving force behind the stability, but they can also lead to sustainable practices that can weather turbulent markets and governmental changes.
S&P Global Ratings believes that the Islamic finance market will continue to grow by as much as 10%. This is based on evidence that despite the global pandemic, the market grew 10.6% despite the double blow of the oil prices drop and the pandemic.
Navigating Ethical Business Practices
Navigating ethical business requires a considered approach. It is not enough to simply state that your business is ethical, but to be able to demonstrate that it practices what it preaches.
Taking a professional and intentional approach to ethics within business is fundamental. Businesses need to have an understanding of their impact objectives and sustainability.
Here are some steps businesses should take:
- Develop strong leadership
- Lead by example
- Understand ethics
- Curate your business practices
- Understand the environmental, societal, political and individual impacts your business has
- Review your investment strategy
- Train, teach and communicate with staff
- Embed ethics in decision making
Beyond Profit Margins
Islamic finance focuses on business potential beyond monetary profits. It places emphasis on social justice, sustainability, and community wellbeing. These demands are also now coming from consumers who want to see ethical business practices from the companies they spend with.
The perception amongst consumers is that companies should prove they are ethical and sustainable.
Remember, 40% of consumers now choose brands that have environmental sustainability within their practices and values (DigitallyAlex.com). Over 60% of consumers want an ethical service, and 34% will stop using a product or service if unethical practices within the business are uncovered.
The relationship between consumers and businesses has been evolving rapidly over the last few decades. The recent Marigold Report in 2023 found that 60% of consumers make less impulsive spending choices, and the ethics of a business feed into their decisions.
Conscious Capitalism
Younger generations including Millennials and Gen Z have increased spending power. As consumers, they are very conscious and globally aware of social justice issues. These groups are leading the demand from consumers for more ethical and conscious capitalism.
In 2022, 53% of young consumers said they were willing to spend more to pay for ethical products. Over 63% of consumers aged between 25-35 stated that they would like to have the ethical values of products listed on them.
50% of Gen Z and Millennials want to buy from more ethical brands, and over 54% will avoid brands they do not think are ethically minded.
These statistics all highlight the role of responsible and ethical business practices in driving success and retaining customers.
Ethical Funding And Islamic Finance
For businesses looking to operate within Islamic finance frameworks, they will find that these funding options are no longer exclusive to Muslim regions such as the Middle East and Saudi Arabia. The Islamic finance industry in the West continues to grow year on year.
In the UK alone, the Islamic finance FinTech industry was ranked the 5th in the world in the Global Islamic Fintech Index in 2021. The UK continues to invest in Islamic finance infrastructure and services in the UK continue to expand.
For businesses to truly see ethical growth and sustainability, they need to look beyond the traditional financial services on the market. More and more businesses are looking at Islamic finance lending and funding options to incentivise growth.
Whilst the Gulf region still accounts for the largest share of Islamic finance assets (over 45%, with the Middle East and South Asia at 25.9%), the Islamic finance industry in the West is growing at a fast pace.
As concepts relating to corporate social responsibility increase, and consumers move away from capitalist, wealth hoarding enterprises, it is clear that Islamic finance offerings will increase with the demand.
From Values To Value
Transitioning from business models that are not ethics based to those where ethics are at the forefront of operations may seem daunting.
However, as long as a considered and intentional approach is taken, businesses will find that ethical business practices not only lead to innovation but better results. Businesses can leverage ethical practices to enhance their own market standing and position.
Ethical businesses see better results overall according to an Institute of Business Ethics report. This includes ethical finance, ethical practices, and ethical business objectives.
Ethical businesses attract diverse clientele and foster prosperity which is long-term. Often, customers wanting a more ethical approach are also those with more money to spend. The partnership of business and ethics leads to growth and customer retention.
In 2022, Deloitte found that 48% of spending adults wanted to see more ethical and sustainable business practices. Over 76% of businesses in the UK now mark ethics as a high priority for their organisation. The business landscape is evaluating, navigating and changing as they understand customer choice and preference.
Ethics And Integrity
What Islamic finance aims to do is foster long term business growth in a sustainable and stable manner. The ethical framework is one which many businesses now rely on and promote.
In the dynamic and fast-paced world of Islamic finance, investing and operating ethically has been yielding great dividends for business. From 2017-2-21, assets under Islamic finance funds globally saw an average annual increase of 13%.
For any business, whether large or SME, the market currently offers dynamic and flexible Islamic finance options to scale growth.
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If your business is to grow, you need to invest in it. Whether the business is a start up, just getting going, or an established firm looking to expand, it needs cash to pay for recruitment, infrastructure, marketing, stock or whatever it is that you need for growth.
Choosing the way to fund your business growth can make a huge difference to your firm's future. While raising finance has one objective - to give you more working capital to invest in growth - the method you choose can have significant implications.
There are different routes for raising this finance. You can put money into the business yourself, take out a bank loan, receive capital from an external investor or take one of several other options. Factors that influence your choice include why you want the finance, the amount involved, your attitude to risk and business ownership, the assets available and your plan for repaying the funds.
How much and for how long
Before entering into a funding arrangement, it's important to be very clear on how much money the business needs and the plan for repaying it. You're investing in future growth, meaning potentially more sales and more profit, but how long will it take for these to come through? Preparing a detailed budget and cashflow gives you clearer visibility of how long it will be before you can repay. While you can't predict the outcome of your business growth activities, you can, using some reasonable assumptions, form a good idea of what's likely to happen.
Armed with this information, you're now in a better position to choose the right funding option for your business.
Debt finance
Raising money for your business can involve borrowing money from your family, a bank or other financial institution. Borrowing, or debt finance, can take the form of a loan, a credit card, invoice finance or some alternative mechanism, such as peer-to-peer borrowing. You're committing to make repayments over a period of time, usually paying interest on the amount borrowed.
Debt finance is either secured or unsecured. A secured debt is where the amount borrowed is linked with an asset, such as a building, and the lender has rights over that asset should you default on making the agreed repayments. You're giving the lender some security that they'll get their money back should your business become unable to repay.
An unsecured debt is not linked to an asset, making it harder for the lender to recover their money. As a result, the interest payments on an unsecured arrangement are often higher and the amount you can borrow is lower. Many financial institutions ask that a director signs a personal guarantee, making them personally responsible for ensuring that the debt is settled.
One risk of debt finance is that the business can become trapped in a debt cycle. You're continually borrowing and paying interest, which eats away at profits. Debt finance can be hugely useful, but its use should be planned and managed.
Equity finance
Equity finance means exchanging part of your business in return for a cash investment. This can be a popular approach for a startup company, particularly where high growth is anticipated, but it needs substantial investment to get going. Venture capitalists and angel investors are always looking out for investment opportunities like this - a business they can buy into that will give them a high return, years in the future.
Because equity capital means giving up ownership of part of your business, it can also mean handing over an element of control. The extent of this should be agreed in advance, in order to set clear expectations. Some investors are comfortable with leaving the founder to manage the business while others want some input into strategic decisions. This can be useful where the investment comes from someone with solid commercial knowledge and experience that they are able to share. Some angel investors want to provide mentorship as part of their investment.
Business angels and others willing to make an investment in equity will want some assurance as to how they will get their money back, and more besides. This could be in the form of dividends or as proceeds from the sale of the business.
The benefits of equity investments include access to larger sums of capital, and potentially, access to the expertise of their investor and their network of contacts. The downside can be loss of total control.
Asset finance
Your choice of funding is broader when your business has assets, such as property, equipment or non-tangible items such as intellectual property. An asset has intrinsic value and this value can be released by taking out finance that's secured on the asset. An example of this is a sale and leaseback arrangement, where the business effectively sells the asset, say a major piece of equipment, and then leases it back from the new owner. This ensures that you can still use the asset, but you also get a lump sum payment from the sale.
A related approach to raising money is invoice finance, also known as invoice factoring. This is often used to improve cash flow in a business that raises invoices on credit terms. The company gets paid almost as soon as it's raised an invoice, even though the customer may take 30 days or even longer to settle the bill. As with most such asset finance arrangements, the interest rate on the money borrowed will affect its cost and the impact on the bottom line.
Business finance can also be raised against the value of an asset in the possession of the business owner, typically a private property.
Crowdfunding finance
The sharing of the risks and rewards of doing business has been at the heart of commercial funding for hundreds of years. That's the principle behind the stock market. Today, crowdfunding is a popular solution to the problem of finding investment for your business growth plans. It comes in various forms, allowing you to raise either debt or equity finance. There are a number of crowdfunding platforms online, each of which offers a different approach to both risk and reward for their members.
The Qardus option for business funding
We provide finance to small and medium-sized enterprises with growth potential that the business owners want to unlock. The funding available is from £50k to £200k with terms of between 6 and 36 months.
Our funding process is rooted in Islamic community principles and is certified as Sharia-compliant. As a result, we don't charge interest and we don't work in business sectors considered damaging to society, such as alcohol, tobacco or gambling.
Because of our principles, our funding solution is an attractive option for Muslim business owners, but we also provide funding to business owners outside the Muslim community.
We offer fast, flexible and affordable business growth funding that's firmly grounded in ethical principles.
In recent years Islamic Finance has firmly established itself as one of the most vibrant and yet often overlooked sectors within FinTech, as well as within the global financial services industry more broadly.
However, Islamic Finance is in fact a very broad term that encompasses a wide range of products, services and types of firms. What is true across this diverse segment of global financial services is that there is a lot of excitement for good reason. This is not at all surprising given the wave of innovation, growth and success of both the leading firms and the sector as a whole over recent years.Whether you are new to the world of Islamic Finance or a professional, our Insider’s Guide to Islamic Finance provides expert insights and latest data analysis on the sector - highlighting just how successful Islamic finance has become at a global level.
WHAT IS ISLAMIC FINANCE?
Islamic finance refers to financial services activities, most notably banking, insurance and financing (credit), that must adhere to Sharia law (Islamic Law). The term can also be used to refer to Sharia-compliant investments as well as broader capital and equity markets.
The common practices of Islamic finance and banking arose alongside the establishment of Islam. However, institutional Islamic finance did not emerge until the twentieth century. Currently, the Islamic finance sector is growing at a rate of 15% to 25% per year, with Islamic financial institutions managing assets worth over 2.7 trillion USD globally.
SIZE AND GROWTH OF ISLAMIC FINANCE
The global market for Islamic Finance continued positive momentum in 2020, recording a growth rate of 10.7% year-on-year, driven primarily by strong performance within Islamic Banking as well as the Equity and Capital markets:
- Islamic Banking: 4.3% year on year growth with a growth in total assets of 248 billion USD, particularly in the largest Islamic markets such as Saudi Arabia and Iran.
- Capital Markets: 26.9% year on year growth
- Islamic Insurance (Takaful): 10% annual growth rate and over 51 billion USD in total assets in 2019 prior to the global financial slowdown caused by COVID-19.
While the size and growth of the Islamic finance sector is heavily concentrated in those countries and regions where Islam is predominant, this is rapidly changing in recent years, due to an increase in global migration patterns as well as broader trends in society around ethical investments and sustainable development.
Currently the top 3 countries where Islamic Finance is most well established account for 66% of the global market size across a wide range of metrics:
- Saudi Arabia
- Iran
- Malaysia
However, the Islamic Finance sector is growing rapidly in terms of overall scale, diversity and reach around the globe and into new periphery markets. In 2020 there were over 1,526 islamic finance institutions in operation around the world, with over 46 countries now supporting the growth and development of Islamic Finance within their legal and regulatory frameworks.
This is particularly true within FinTech, where firms and growth has gravitated towards London, the global hub of innovation in financial services, despite the relatively small Islamic community in the United Kingdom.
THE FOUR MAIN AREAS OF ISLAMIC FINANCE
Our guide breaks the data and the sector down into four key areas that are currently driving innovation and global success:
- Islamic Banking
- Islamic Capital Markets (ICM)
- Islamic Insurance (Takaful)
- Islamic Fintech
This page provides an overview of each, including the latest data trends and key highlights, which are expanded on further in each of the individual sections to provide detailed analysis and insight on each area of Islamic Financial Services.
Section 1- Islamic Banking
In 2020 the total size of the Islamic Banking sector had a growth rate of 4.3% year on year and reached over 2.7 trillion USD in total assets. While Islamic banking is still largely regional in terms of market share and overall size, it now accounts for over 6% of the global banking market. Islamic Banking is also both the oldest and most important sub-sector within the global Islamic Financial Services industry, comprising 68.2% of the total market.
SIZE AND GROWTH
In the worldwide IFSI, the Islamic banking category maintained its dominance. Among the 36 jurisdictions included by the IFSI Stability Report 2021, the domestic market share of Islamic banking in relation to the total banking market segment has increased in at least 23 nations.
The performance of the Islamic banking category increased by 4.3 percent in 2020, compared to 12.4 percent in 2019. The Islamic banking segment now accounts for 68.2 percent of the global Islamic Financial Services Industry, down from 72.4 percent in 2019. This decrease is primarily due to the rising significance and strong performance within the Islamic Capital Markets during recent years, rather than indicating a drop in the performance within Islamic Banking.
Islamic Banking is still largely concentrated within geographic regions and markets, where it is the market leader within financial services. Taken together the 15 systemically important Islamic banking jurisdictions accounted for 92.4 percent of global Islamic banking assets, representing only a small increase from 91.4 percent in the previous year. These combined markets also now account for 82.7 percent of the total global assets linked to Sukūk that are currently outstanding, which indicates the availability of high-quality liquid assets (see SECTION 2 for more on Islamic Capital Markets).
DIVERSITY WITHIN ISLAMIC BANKING
As of 2020 there are now 526 Islamic Banking Institutions operating across 72 countries, with a systemically important market share in 15 of these jurisdictions. Within the Islamic Banking sector there is both innovation and diversity in terms of their operations and structures.Breakdown of Islamic banking institutions:
- 428 commercial
- 57 investment
- 22 wholesale
- 19 specialized
Regionally, GCC (the Gulf Cooperation Council countries) retained its position as the largest domicile for Islamic finance assets in 2020. The region accounted for 48.9% of global Islamic finance market share, increasing from 45.9% in 2019. The Middle East and South Asia (MESA) region constituted the second-largest share, accounting for 24.9% of global IFSI assets, remaining consistent with the previous year.
The South-East Asia (SEA) region's share shrank slightly to 20.3% in 2020 from 23.8% in 2019, while that of the Africa region remained small, with a share of 1.7%. The “Others” region, comprising Turkey, the UK and countries from the Commonwealth of Independent States (CIS) region, accounted for 4.3% of total global IFSI assets.
Section 2 - Islamic Capital Markets (Icm)
SUKUK
Growth Rate: 26.9%
Share of IFSI: 30.9%
3,420 - Number of Sukuk issuances Outstanding (2019)
538 Billion USD - Total Value of Sukuk Outstanding (2019)
The sukuk market grew 30% in issuance value in 2019, increasing from 124.8 billion USD in 2018 to 162.1 billion USD. This is the 5th straight year where the sukuk sector has achieved double-digit growth in the sukuk industry, a leader within the overall strong performance in recent years across the Islamic Financial Services Industry.
Notably, although the volume of ṣukūk issuances dropped in 2020, ṣukūk issuances denominated in foreign currencies increased by 7% due to favourable liquidity and global market conditions created by a range of policy actions taken by central banks in Islamic majority markets in response to the COVID-19 pandemic and resulting economic slowdown.
The yield buckets for outstanding ṣukūk have shifted higher, with almost 80% yielding 3–10%
As with other sectors of Islamic Finance, Sukuk market share is both concentrated and significant within several key countries, where it is the debt instrument of choice for governments and has been relied upon to finance budget deficits during the COVID-19 pandemic.
Key Sukuk Markets:
- Malaysia
- Indonesia
- Saudi Arabia
- Iran is the Fastest Growing Market for Sukuk within Islamic Finance
ISLAMIC FUNDS
Number of Funds: 140
Share of ISFI: 30.9% of total assets
Annual Growth Rate: 30% (2019)
In 2020 the ICM sector made up 30.9% of the total assets within the global Islamic Finance Industry, with growth and positive performance in key markets driven by sovereign and multilateral Sukuk issuances.
Islamic funds also recorded a noteworthy growth of 31.9% in terms of the total value of assets under management, while the Islamic equity markets also rebounded in the later part of 2020 after the initial shock and volatility in 1Q20 due to the outbreak of COVID-19 pandemic.
The total assets under management (AuM) of Islamic funds grew by 31.9% in 2020 despite the pandemic . While total AuM grew significantly, the total number of funds increased at a slower rate, which is a positive indication of growth in the average size of funds. The increase in scale of funds may be an indication of the flow of funds into emerging markets' fixed-income funds as a result of the search for yield and increased global liquidity.
Contrasting with the previous year, about 47% of funds now hold AuM of 1 billion USD or more each, while only 1% of funds hold AuM of less than 10 million USD (2019: only 2% held AuM of more than 1 billion USD each).
Section 3 - Islamic Insurance (Takaful)
Growth Rate: -14.8 %
Share of ISFI: 0.9% (2019)
The share of global takaful industry in the global IFSI declined marginally to 0.9% with a -14.8% growth y-to the exchange rate used for some member jurisdictions.
Section 4 - Islamic Fintech
Islamic FinTechs: 241 active in 2020
Transaction Volumes: 49 billion USD
Market share: 0.7% of total FinTech Transaction Volumes
SIZE AND GROWTH
Islamic Fintech is relatively small and recent but has shown strong initial signs of high growth and levels of innovation on a par, or superior to the wider FinTech sector even in the most competitive markets, such as London.
In 2020 the total transaction volume for Islamic Fintechs reached 49 billion USD, which is around 0.7% of the total global FinTech transaction volume.
While this represents an initial period of rapid growth, overall Islamic FinTech remains a relatively small part of the global Islamic Financial Services Industry. However, it is misleading to quantify the results as ‘poor performance’ in comparison to the strong growth within the mature sectors of Islamic Banking and Islamic Capital Markets. Instead, the demonstrated levels of innovation and competitiveness of Islamic FinTech also represents a huge opportunity for future growth.
At present the sector has yet to be fully developed across many regions and also many areas within the diverse FinTech landscape of innovation. Collectively, firms in the top 5 markets for Islamic FinTech account for 75% of the total market size, indicating a high concentration of market activity and room for future growth.
Top 5 Markets for Islamic FinTech:
- Saudi Arabia
- UAE
- Malaysia
- Turkey
- Kuwait
PERFORMANCE AND INVESTMENTS
The performance of Islamic Fintechs is particularly impressive, with projected transaction volumes set to reach over 128 billion USD in total by 2025. This represents a 21% CAGR, compared to the projected CAGR of 15% for the non-Islamic FinTech sector over the same period.
Investors have recognized this strong performance during recent years, with 56% of Islamic Fintechs expecting to complete an equity funding round in 2021. The expected average deal size for these investments was 5 million USD, providing a further indication that investors have high expectations for the performance of Islamic FinTech in the coming years.
Sources Used In This Report
- IFSB - the Islamic Financial Services Industry (IFSI) Stability Report 2021 [https://www.ifsb.org/download.php?id=6106&lang=English&pg=/index.php]
- DinarStandard & Ellipses - The Global Islamic Fintech Report 2021 [https://www.salaamgateway.com/specialcoverage/islamic-fintech-2021]
- ICD-REFINITIV - Islamic Finance Development Report 2020 [https://icd-ps.org/uploads/files/ICD-Refinitiv%20IFDI%20Report%2020201607502893_2100.pdf]
WHAT IS ISLAMIC FINANCE?
Islamic finance is a financial system based on Sharia principles - the religious law enshrined within Islam. Islamic finance offers an alternative financial system to the conventional systems, and is based on fairness, transparency, and social justice.
WHO USES ISLAMIC FINANCE?
Islamic finance is a growing industry and is used extensively by Muslims throughout the world. However, more and more non Muslims are also looking at Islamic finance services as they want to operate in a more ethical way.
DO MUSLIMS PAY INTEREST IN THE UK?
Whilst Muslims are discouraged from paying or earning interest in any form under Islamic finance rules, many Muslims in the West do pay interest. However, more and more Muslims are becoming aware of alternative financial systems and products that enable them to access loans and financial services that are compliant with Sharia law.
CAN MUSLIMS TAKE LOANS?
Yes, of course. Taking a loan is not prohibited in Islam. However, it is important to ensure that the loan terms are compliant with Sharia rules.
HOW DO ISLAMIC LOANS WORK?
Islamic loans are structured and developed to ensure they are halal - that is they do not contravene any rules in Islam relating to finances. For example, an Islamic loan will not have any element of interest attached to it.
WHY CAN'T MUSLIMS EARN INTEREST?
In Islam, interest is seen as exploitative as it leads to the lender making a profit at the expense of the borrower. Islam views interest as the unfair accumulation of the wealthy and this can lead to financial distress for those who need to borrow money. Interest is viewed as being against the promotion of social justice and economic fairness which are key concepts underpinning Islamic finance.
WHAT IS HARAM IN ISLAMIC FINANCE?
The following are deemed haram in Islam: riba/interest, gambling, excessive uncertainty, investment in haram industries or practices.
WHAT IS ETHICAL FINANCE?
While there is no universally accepted definition of ethical finance, the Ethical Finance Hub describes it as "A system of financial management or investment that seeks qualitative outcomes other than purely the management of returns. Outcomes sought may reflect ideas from faith, social, environmental and governance theories."
IS ISLAMIC OR SHARIA-COMPLIANT FINANCE ETHICAL?
The World Bank mentions that Islamic finance is ethical, sustainable, environmentally and socially responsible finance. It promotes risk sharing, connects the financial sector with the real economy, and emphasizes financial inclusion and social welfare.
While there is no universally accepted definition of ethical finance, the Ethical Finance Hub describes it as "A system of financial management or investment that seeks qualitative outcomes other than purely the management of returns. Outcomes sought may reflect ideas from faith, social, environmental and governance theories."
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