Role of Islamic Social Finance in Bankable Nature Solutions to accelerate climate adaptation
Time & Date of Event
2:00 PM to 3:00 PM on Wednesday, 16th of November 2022
The world is facing twin crises: climate change and nature loss, which are impacting people across the globe. There is an urgent need to scale up investment in healthy ecosystems – from rivers to forests, coastal wetlands to mountain grasslands – all of which are crucial for human well-being and development. Yet, there is a huge funding gap. The World Economic Forum estimates that only US$1.4 trillion are invested each year instead of the required US$3.9 trillion to achieve the Sustainable Development Goals (SDGs) by 2030.
The private sector could fill more than half of this funding gap. But environmental projects are relatively unattractive to the private sector owing to the lack of large-scale opportunities, relative illiquid nature of investment opportunities, unconventional risks, relatively low returns and long-time horizons.
This session will showcase one innovative solution to this challenge – highlighting the synergy between Bankable Nature Solutions (BNS) and Islamic Social Finance and the role these can play together in accelerating climate adaptation.
BNS have the potential to shift the existing perception of nature conservation projects. They are financially viable projects, which support the development of more climate-resilient and sustainable societies, economies and ecosystems. BNS help deliver impacts that tackle societal challenges and enhance ecosystems while generating positive financial returns for communities and investors
Building BNS into projects represents a massive opportunity for Islamic Finance since the protection of the planet and the environment, and climate mitigation and adaptation are all goals that conform directly with the goals of Islamic finance.
This session will allow the AU-CEIF and WWF to highlight the potential win-win of BNS and Islamic Finance.
WWF and AU-CEIF are working together to develop a pathway for increased engagement of Islamic finance stakeholders on BNS, building on a study in the MENA region that:
- Identified opportunities and interactions between Islamic finance and BNS projects, which will help to tackle the climate and nature crises, while driving sustainable development; and
- Revealed that custodians of Islamic capital are keen and interested in participating in commercially viable BNS projects.
This side event will allow WWF and AU-CEIF to showcase the work being done towards BNS with Islamic finance stakeholders in mind – helping to open people’s eyes to the opportunities to tackle climate change and nature loss, while generating positive financial returns for communities and investors.
The side event hosted by WWF and AU-CEIF aims to:
Outline the opportunities for Islamic Finance to invest in Bankable Nature Solutions. Explain the synergies between the goals of BNS and the goals underpinning Islamic finance. Detail a case study from Tunisia to demonstrate the approach Islamic finance stakeholders would take to invest in BNS.
Inspire interest in stakeholders to partner on BNS and Islamic Finance. Demonstrate that it is possible to source nature projects and work hand-in-hand with project owners to make the projects commercially viable – an emerging asset class that delivers progress towards SDGs and reasonable financial returns that Islamic capital is expected to seek, while creating a socially good impact.
Invite partners to join WWF and AU-CEIF in co-creating a BNS product for Islamic Finance stakeholders that will spark momentum and a new narrative between now and the COP28 in UAE
Outline a long-term vision for a market leading ‘Islamic Fund for Climate and Development’
WWF is one of the key consortium members of Dutch Fund for Climate and Development (DFCD) that was launched in 2019 to use Dutch government funds to leverage hundreds of millions of Euros in private financing into projects that build climate resilience and drive sustainable development in vulnerable regions as well as delivering a financial dividend.
WWF and AU-CEIF’s long-term ambition is to create, launch and promote an ‘Islamic Fund for Climate and Development (IFCD).
We believe IFCD has the potential to offer a market-leading opportunity to the Islamic finance sector in the BNS space by learning from the model and approach of DFCD and leveraging the expertise of WWF and its partners.