Jeddah, (IINA) : The Islamic Development Bank (IDB) and the United Nations Development Program (UNDP) on Monday launched a new report that spells out the potential of Islamic finance in ‘impact investment’ for the achievement of the UN Sustainable Development Goals (SDGs).

Impact investing refers to investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.

The report, entitled “I for Impact: Blending Islamic Finance and Impact Investing for the Global Goals,” was launched by IDB President Dr. Bandar Hajjar, and UNDP Assistant Secretary General Magdy Martinez-Soliman during the 42nd Annual Meeting of the IDB Group in Jeddah, Saudi Arabia.

It reviews recent developments and key factors for the growth of Islamic finance and impact investing, and makes policy recommendations for development actors to leverage Islamic finance for impact investing as a way of fostering inclusive finance, curbing poverty, and achieving the SDGs.

The report was produced by a joint team of experts from the Islamic Research and Training Institute (IRTI) of the IDB Group and UNDP’s Istanbul International Center for Private Sector in Development.

Speaking during the launch, IRTI Director-General Prof. Mohamed Azmi Omar, said; “IDB Group and UNDP collaborated to produce this report in order to raise awareness of the compatibility between Islamic finance and impact investing. Islamic finance and impact investing are both based on ethical and social criteria, and emphasize inclusiveness. One of the key aims of the report is identifying areas of convergence of the two sectors and to develop collaborative strategies for achieving the global development agenda.”

The report has recommended creating an enabling environment to promote Islamic finance impact investing as part of the larger dialogue on inclusive financial systems and responsible investing principles. It has also supported the creation and functioning of an efficient capital market system for Islamic finance impact investing, including supporting existing and new intermediaries.

The report suggested formulating well thought out, comprehensive regulatory, accountability, tax and legal frameworks, and raising awareness of the current and potential levels of convergence of Islamic and impact investing.

It has recommended establishing standards for impact measurement and reporting so that the sector’s metrics are aligned with the common practices of the global impact investing community.

The report advised bringing together key stakeholders from governments, the private sector, and support organizations in both the Islamic and conventional impact investing spaces to discuss critical bottlenecks, learn from best practices, establish relationships and benefit from the cross-pollination of ideas and shared beliefs.

To further these recommendations, IDB Group and UNDP have established the Global Islamic Finance and Impact Investing Platform (GIFIIP) to position Islamic finance impact investing as one of the leading enablers of SDGs implementation worldwide through private sector engagement.