KUALA LUMPUR: Sultan of Perak Sultan Nazrin Shah has called for restoring humanity in finance, emphasising the importance of balancing economic growth with environmental stewardship and social inclusion.
Speaking at the 15th SC-OCIS Roundtable held at the Oxford Centre for Islamic Studies, United Kingdom Saturday, Sultan Nazrin highlighted the critical need for financial systems to prioritise the well-being of humanity and the planet.
"Restoring humanity in finance means that the previously paramount goal of economic growth must now be balanced far more carefully with environmental stewardship and social inclusion goals.
"It means that the pursuit of profits must be tempered by a recognition of our collective responsibility to protect our environment and better serve society at large,” the Perak ruler said in his special address titled “Restoring Humanity in Finance” during the roundtable on Saturday (Sept 7).
His Royal Highness, a keen advocate of Islamic finance, noted that Islamic finance, with its principles rooted in Maqasid al-Shariah, emphasised compliance with Islamic law and the broader ethical objectives of avoiding harm and promoting social good.
"Islamic finance has always espoused risk-sharing instead of risk-transfer because it promotes fairness through proportionate gains and liability,” stressed Sultan Nazrin.
His Royal Highness also cited the global financial crisis as a period during which Islamic financial institutions fared better due to their more stable risk-sharing model.
Sultan Nazrin also addressed the accelerating environmental crisis, the Covid-19 pandemic, and the subsequent surge in social distress and geopolitical tensions, which are among the many elements of what has come to be termed the contemporary “polycrisis”.
"With wars raging in Gaza, in Ukraine and elsewhere, with forced displacement and civilian casualties on the rise across the globe, with the gap between the richest and the poorest widening rapidly, it seems as though we are witnessing nothing less than humanity itself in a state of crisis.
"We must urgently direct all our efforts, all our expertise and skills, towards making our global community kinder and more humane,” he said.
Sultan Nazrin underscored the importance of ESG (Environmental, Social and Governance) standards in holding businesses accountable for their broader impacts on the environment and society.
"ESG compliance is helping to strengthen accountability, not only to shareholders but to stakeholders more broadly,” said the Perak ruler, noting that the proliferation of ESG-related education and training is a positive step toward building more responsible businesses.
Sultan Nazrin also highlighted the growing significance of Islamic finance in global markets, noting that the industry has grown by 10 per cent annually between 2013 and 2023, with projections of it reaching US$6.67 trillion by 2027.
"Despite its very welcome expansion, this market segment remains a tiny proportion of overall capital investment,” he said, adding that more needs to be done to address global challenges such as deforestation, poverty, and climate change through innovative financing mechanisms, such as green sukuk and social waqf instruments.
Sultan Nazrin urged the global financial sector to learn from Islamic finance’s ethical foundations, saying, "My greater hope is that all financial institutions will absorb something of the spirit of Islamic finance on the path to restoring humanity in the sector”.
His Royal Highness left the audience with a stark reminder of the challenges facing the global community, saying, "At the present moment, the richest one per cent on the planet owns almost half of the global wealth, while close to one in 10 people in our world are living in extreme poverty.
"Together, today, let us seek ways to address that imbalance, restoring humanity in finance, for a fairer and more prosperous future for all”. – Bernama
