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SPOTLIGHT


Notwithstanding the opportunities,


there are challenges faced in addressing ESG in developing countries including inadequate awareness/education at different levels, decision-maker focus on short-term/immediate development needs, rather than long-term development goals, limited financing for ESG, as well as inadequate data and lack of standardization in ESG reporting.


OFQ: How does an event such as the current pandemic affect ESG-credentials and capabilities? Will we see ESG gains lost as countries / companies shift their focus? BMHH: The COVID-19 pandemic offers an unanticipated opportunity for rethinking and forging a more equitable, resilient and sustainable path to meet global development goals. The pandemic has revealed the gaps in the resilience of vital systems including health, transport, food, and energy systems as well as other valuable social and economic infrastructure. By mainstreaming ESG effectively in COVID-19 recovery efforts and interventions, options are offered for a green, low carbon, resilient and sustainable recovery. This would help address development needs along with challenges such as climate change, which has the potential to create an even larger systemic environmental, social and economic crisis and failures in the future. In the development community,


there is an increasing emphasis on the importance of supporting a green COVID-19 recovery. MDBs have agreed that beyond the short-term emergency response, we will focus on interventions that ‘build back better’ by placing sustainability at the heart of any recovery efforts and focus on increasing long- term resilience. This includes reinforcing a shift toward low-emissions, inclusive and socially responsible pathways that create jobs, robust economies, human wellbeing and a healthy planet. At the IsDB, we continue to ensure that all our development co-operation activities and programing adequately consider and prioritize ESG issues to drive sustainability through our investments.


OFQ: How important are green bonds to ESG, and what have you been able to achieve since issuing?


BMHH: IsDB green Sukuk are important for the Bank’s ESG corporate objectives and beneficial in many ways. Namely, meeting SDGs 6, 7, 9, 11 and 13, among others. IsDB is a pioneer of the Sukuk market, issuing the first-ever AAA- rated Green Sukuk at our Sukuk Summit in Luxembourg in November 2019. The proceeds of the issuance, worth ¤1 billion, are exclusively allocated to projects for renewable energy, clean transportation, energy efficiency, pollution prevention and control, environmentally sustainable management of natural living resources and land use, and sustainable water and sanitation projects across our 57 member countries. These green issuances help drive the Bank’s agenda to support more low carbon, climate resilient, socially responsible projects, as well as having a direct impact on the Bank’s position as an institution of choice for green investors. What’s more, they offer the opportunity to demonstrate the beneficial impact that IsDB investments have on the larger community in which


we operate, while being profitable for direct stakeholders. They have also helped reflect our focus on development results, including environmental and social elements, especially for external stakeholders.


OFQ: How important is ESG to the future of international development? BMHH: ESG has an important role to drive the global development agenda and remains important as an enabler for current and future development activities. It offers an opportunity to address development through a multi- dimensional lens and minimizes the risk of development gains being eroded by environmental and social-related disruptions. ESG is an integral part of any sustainable development and offers the opportunity to increase global and collective ambition and realize the SDGs. That said, the COVID-19 pandemic





ESG has an important role to drive the global development agenda and remains important as an enabler for current and future development activities.


has presented a global crisis that is forcing us to confront new challenges, in a rapidly changing environment. The pandemic has led to unprecedented impact for all our member countries – not just economically, but on a social, health and infrastructure level too. As a result, we must continue to find innovative solutions in the face of the pandemic in the way we embody ESG. For example, in June 2020, the IsDB launched the first sustainability bonds to raise US$1.5 billion from a wide range of investors to finance social projects in affected countries. These were the first Sukuk of their kind related to the pandemic in the global capital market. The proceeds of these Sustainability Sukuk will be used in social projects that improve healthcare facilities, equipment and critical staffing in member countries to mitigate the effects of COVID-19, as well as to support SMEs and promote employment as countries recover from the effects of the coronavirus. We believe that focusing on healthcare (SDG 3) and job creation (SDG 8) should be key for countries in the aftermath of the pandemic. Essentially, in this global context of


working toward the SDGs and COVID-19 recovery, we believe that Islamic finance will prove the notion that ethical investments and attractive financial returns are not mutually exclusive.


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PHOTO: IAEA


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