Interconnections between Islamic Finance and Sustainable Finance
The recent collapse of global financial markets highlighted the pervasive weaknesses of the existing international capital markets and suggested the need for an alternative system that might provide a more compassionate and socially responsible template for banking behaviour—behaviour that is more appropriately configured to serve the needs of the world community, including the middle class and the poor.
Since its emergence in the late 1960s, the Islamic financial system has seen a rapid global expansion, particularly in recent years in the aftermath of the global financial crisis. This is mostly the result of its adherence to fair, equitable and socially responsible principles that were widely missing in conventional financial markets. Islamic finance principles offer a just socioeconomic system, in which there is a strong commitment toward not only shareholders but also the overall well-being of society. Hence, it is not surprising that in the light of growing global demand to establish a "New International Economic Order," these principles have placed Islamic finance in a unique position to promote socially responsible and financially sustainable behaviour in the global financial markets.