Tag Archives: collaboration
Boeing, SAA Launch Sustainable Aviation Biofuel Effort
By Boeing | October 14, 2013 Boeing and South African Airways have announced that they will work together to develop and implement a sustainable aviation biofuel supply chain in Southern Africa, a first for the continent. The companies signed a memorandum of understanding (MOU) for sustainable aviation biofuel supply chain development at The Corporate Council on Africa’s 9th Biennial U.S.-Africa Business, attended by executives from leading U.S. and African firms and government representatives from several countries. This collaboration between Boeing and SAA is part of the companies’ broader efforts to support environmental sustainability for the airline’s operations and the commercial aviation industry overall, in addition to advancing South Africa’s social and economic development. “South African Airways is taking the lead in Africa on sustainable aviation fuels and, by setting a best practice example, can positively shape aviation biofuel efforts in the region,” said Ian Cruickshank, SAA head of group environmental affairs. “By working with Boeing’s sustainable aviation biofuel team, which has a history of successful partnerships to move lower-carbon biofuels closer to commercialization, we will apply the best global technology to meet the unique conditions of Southern Africa, diversify our energy sources and create new opportunities for the people of South Africa.” Boeing has collaborated extensively with airlines, research institutions, governments and other stakeholders to develop road maps for biofuel supply chains in several countries and regions, including the United States, China, Australia and Brazil. The aerospace company’s plan to work with SAA is the first such project in Africa. “Sustainable aviation biofuel will play a central role in reducing commercial aviation’s carbon emissions over the long term, and we see tremendous potential for these fuels in Africa,” said Julie Felgar, managing director of environmental strategy and integration, Boeing Commercial Airplanes. “Boeing and South African Airways are committed to investigating feedstocks and pathways that comply with strict sustainability guidelines and can have a positive impact on South Africa’s development.” Flight tests show that biofuel, which is derived from organic sources such as plants or algae, performs as well as or better than petroleum-based jet fuel. When produced in sustainable ways, biofuel contributes far less to global climate change than traditional fuels because carbon dioxide is pulled out of the atmosphere by a growing plant-based feedstock. Boeing and SAA believe that new developments in technology will enable the conversion of biomass into jet fuel in a more sustainable manner without competing with other sectors for food and water resources. The World Wildlife Fund-South Africa will monitor and ensure compliance to sustainability principles that would ensure that fuel is sustainable and would lead to genuine carbon reductions. Aviation biofuel refined to required standards has been approved for a blend of up to 50 percent with traditional jet fuel. Globally, more than 1,500 passenger flights using biofuel have been flown since the fuel was approved. Continue reading
Sustainable Investing: Opportunity Awaits Islamic Finance Industry
New opportunities in sustainable and responsible investing By Usman HayatSpecial to Gulf News Published: 13:06 September 8, 2013 Islamic finance and the forms of finance generally referred to as sustainable and responsible investing (SRI) are yet to actively collaborate with each other. One would think that to strengthen their position in a market dominated by conventional finance, Islamic finance and SRI would be sharing their successes and failures, coming together for joint ventures, and supporting each other on issues where they have similar views. But such collaboration has not occurred. Building bridges between the two remains an opportunity that is waiting to be seized upon by the industry leaders from the two sides. Islamic finance and SRI share some obvious similarities in their objectives (do good; avoid harm), methods (e.g. exclusionary screening) and claims (such as emphasis on ethics). Both seem to trigger similar expectations among their proponents of being ethically different from conventional finance. They also face similar criticism of not being able to live to up to these expectations as shown by the ‘form versus substance’ debate in Islamic finance and ‘green washing’ debate in SRI. Although SRI is older and larger than Islamic finance, which is estimated between $1 to $2 trillion in terms of global assets, both are relatively small and growing segments. Why are then Islamic finance and SRI not actively collaborating? Some apparent reasons are different countries of concentration, differences in target markets, pre-occupation with their own growth, perception and reputational concerns, cultural barriers, lack of initiative by industry leaders, and simply insufficient understanding of each other. But in the absence of survey data, it is difficult to get to the bottom of this lack of collaboration. Islamic finance is practised by international financial institutions offering conventional finance, such as HSBC. It has also drawn increasing interest from other international organisations, such as the World Bank, which organises an annual conference with the Islamic standard setter, Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Similarly, many conventional financial institutions are active in SRI. For instance, Goldman Sachs has participated in the first social impact bond in the US, it has 10,000 women initiative and its asset management arm is a signatory to UN Principles for Responsible Investment. If both Islamic finance and SRI can work with the leading and sometimes controversial faces of conventional finance, why can’t they work with each other? At times, we do observe financial products that meet some traditional Islamic and modern environmental, social, and governance (ESG) criteria. For instance, the Sustainable Resources Fund launched in 2012, that invests in a mix of agro-forestry, land and sustainable agricultural sectors is supposed to appeal to both Islamic and ‘green’ investors. Similarly, amid increasing news reports about ‘green’ sukuk, Australian solar companies secured funding through ‘green’ sukuk for projects in Indonesia in 2012. Other earlier examples include Dow Jones Islamic Sustainability Index introduced in 2006. Nonetheless, such examples remain exceptions. Their general lack of interaction can also be observed in professional education. For instance, the curricula for Sustainable Investment Professional Certificate (offered by John Molson School of Business, Canada) and Islamic Finance Qualification (offered by Chartered Institute of Securities & Investment, UK) have limited, if any, content about each other. The same trend is observed in industry reports even in a country like the United Kingdom which is home to both SRI and Islamic finance. For instance, the Islamic finance report 2012 by the City UK does not talk about other forms of ethical finance and UK Sustainable Investment and Finance Association’s annual review 2011-12 does not talk about Islamic finance. Unsurprisingly, one sees the same trend of lack of interaction in industry conferences in Islamic finance and SRI. There are of course differences between Islamic finance and SRI. One significant difference is that the concerns of Islamic finance go beyond the purpose of financing and also cover its structure. This is because of Islamic prohibitions of riba and excessive gharar, which are generally interpreted to include lending money on interest and the trading of risk. Also, the exclusionary screening applied in Islamic finance goes beyond the usual suspects (such as alcohol, tobacco and gambling) and covers conventional financial services because of prohibition of riba. However, the current form-oriented and legalistic compliance in Islamic finance that often has little effect on economic substance of transactions suggests that these prohibitions cannot explain the lack of collaboration with SRI. Recently, we had two experts, one on Islamic finance and one on impact investing, at CFA Institute Middle East Investment Conference in Dubai on March 20-21, 2013. Speaking on Islamic finance in the global economy, Ebrahim Warde, professor at Tufts University, was clear that offering social value ought to be a part of Islamic finance. Talking about Impact Investing, Harry Hummels, professor at Maastricht University and a European liaison for Global Impact Investing Network (GIIN), was of the view that it is intending and measuring a positive difference to society that turns an investment into impact investment and by implication Islamic finance could be structured as impact investing. Listening to Warde and Hummels reinforced the idea that there is room for collaboration between Islamic finance and SRI and at the core of expectations from them is the desire to see finance making a positive difference to the society. Interestingly, in London, in October 2013, there are two significant events planned, one from impact investing and the other from Islamic finance. First is the GIIN Investor Forum, October 10-11, a global fathering for impact investors, to be held in partnership by the Global Impact Investing Network and the City of London Corporation (which also has an Islamic finance secretariat). Second is the World Islamic Economics Forum, October 29-31, a mega Islamic finance event that will be hosted in a country without a Muslim majority for the first time. At this stage, the most likely scenario is that the two events will take place independently of each other with no planned interaction. Had Islamic finance and SRI actively been collaborating, these two events in London in the same month could have been a golden opportunity to further collaboration and grow both fields. With so much in common between Islamic finance and SRI and so much to gain from active collaboration with each other, bringing the two sides together is an opportunity waiting to be taken up by the leaders from the two sides. Let’s see if this opportunity will indeed be realised, who those leaders will be and most importantly what gains will be brought about by active collaboration between Islamic finance and SRI. — Usman Hayat is Director of Islamic Finance and ESG investing at CFA Institute Continue reading
Why Isn’t There More Collaboration Between Islamic Finance And SRI
By Usman Hayat, CFA Islamic finance and the forms of finance generally referred to as sustainable and responsible investing (SRI) are yet to actively collaborate with each other. One would think that to strengthen their position in a market dominated by conventional finance, Islamic finance and SRI would be sharing their successes and failures, coming together for joint ventures, and supporting each other on issues for which they have similar views. But such collaboration has not occurred. Building bridges between the two remains an opportunity that is waiting to be seized upon by the industry leaders from the two sides. Islamic finance and SRI share some obvious similarities in their objectives (do good; avoid harm), methods (e.g., exclusionary screening) and claims (such as emphasis on ethics). Both seem to trigger similar expectations among their proponents of being ethically different from conventional finance. They also face similar criticism of not being able to live to up to these expectations as shown by the “form versus substance” debate in Islamic finance and “greenwashing” debate in SRI. Although SRI is older and larger than Islamic finance, which is estimated between USD $1 to $2 trillion in terms of global assets, both are relatively small and growing segments. Why then are Islamic finance and SRI not actively collaborating? Some apparent reasons are different countries of concentration, differences in target markets, preoccupation with their own growth, perception and reputational concerns, cultural barriers, lack of initiative by industry leaders, and simply insufficient understanding of each other. But in the absence of survey data, it is difficult to get to the bottom of this lack of collaboration. Islamic finance is practiced by international financial institutions offering conventional finance, such as HSBC. It has also drawn increasing interest from other international organizations, such as the World Bank , which has organized an annual conference with the Islamic standard setter, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Similarly, many conventional financial institutions are active in SRI. For instance, Goldman Sachs has participated in the first social impact bond in the United States, it has its 10,000 Women initiative , and its asset management arm is a signatory to UN Principles for Responsible Investment . If both Islamic finance and SRI can work with the leading and sometimes controversial faces of conventional finance, why can’t they work with each other? At times, we do observe financial products that meet some traditional Islamic and modern environmental, social, and governance (ESG) criteria . For instance, the Sustainable Resources Fund, which was launched in 2012, invests in a mix of agro-forestry, land, and sustainable agricultural sectors, and it is supposed to appeal to both Islamic and “green” investors. Similarly, there are increasing news reports about green sukuk — Islamic financial certificates that are also environmentally friendly — and just last year an Australian solar company tapped the huge Islamic finance market to fund projects in Indonesia . Other earlier examples include the Dow Jones Islamic Sustainability Index introduced in 2006. Nonetheless, such examples remain rare. The fields’ general lack of interaction can also be observed in professional education. For instance, the curricula for the Sustainable Investment Professional Certification Program (offered by the John Molson School of Business) and the Islamic Finance Qualification (offered by the Chartered Institute for Securities & Investment) have limited, if any, content about each other. The same trend is observed in industry reports, even in a country like the United Kingdom, which is home to both SRI and Islamic finance. For instance, a 2012 report on Islamic finance by TheCityUK does not talk about other forms of ethical finance, and the UK Sustainable Investment and Finance Association’s annual review does not talk about Islamic finance. Unsurprisingly, one sees the same trend of lack of interaction in industry conferences in Islamic finance and SRI. There are, of course, differences between Islamic finance and SRI. One significant difference is that the concerns about Islamic finance go beyond the purpose of financing and also cover its structure. This is because of Islamic prohibitions of riba and excessive gharar , which are generally interpreted to include lending money on interest and the trading of risk. Also, the exclusionary screening applied in Islamic finance goes beyond the usual suspects (such as alcohol, tobacco, and gambling) and covers conventional financial services because of prohibition of riba . However, the current form-oriented and legalistic compliance in Islamic finance that often has little effect on economic substance of transactions suggests that these prohibitions cannot explain the lack of collaboration with SRI. Recently, we had two experts, one on Islamic finance and one on impact investing, at CFA Institute Middle East Investment Conference . Speaking on Islamic finance in the global economy, Ibrahim Warde, professor at Tufts University, was clear that offering social value ought to be a part of Islamic finance . Talking about impact investing, Harry Hummels, professor at Maastricht University and a European liaison for Global Impact Investing Network (GIIN), said that it is intending and measuring a positive impact on society that defines impact investment , and by implication Islamic finance could be structured as impact investing. Listening to Warde and Hummels reinforced the idea that there is room for collaboration between Islamic finance and SRI, and at the core of expectations from them is the desire to see finance making a positive difference for society. In London this month, there are two significant events planned: one on impact investing and the other on Islamic finance. First is the GIIN Investor Forum on 10–11 Oct, to be held in partnership by the Global Impact Investing Network and the City of London Corporation (which also has an Islamic finance secretariat). Second is the World Islamic Economic Forum on 29–31 October , a mega Islamic finance event that will be hosted in a country without a Muslim majority for the first time. At this stage, the most likely scenario is that the two events will take place independently of each other with no planned interaction. Had Islamic finance and SRI actively collaborated, then these two events in London could have been a golden opportunity for further collaboration between and growth in both fields. With so much in common between Islamic finance and SRI, and so much to gain from active collaboration with each other, bringing the two sides together is an opportunity waiting to be taken up by the leaders from the two sides. Let’s see if this opportunity will indeed be realized, who those leaders will be, and most importantly what gains will be brought about by active collaboration. Continue reading
