KUALA LUMPUR: The principles of Islamic finance can lead the way in sustainable investment as the world seeks to mobilise the vast amounts of capital needed to address the climate crisis, said the Sultan of Perak, Sultan Nazrin Muizzuddin Shah.
He said the transition to a resilient and sustainable future could not be financed by public treasuries alone, making private capital essential; but such capital tended towards the immediate and the certain when left entirely to its own instincts.
"This is where, I believe, the principles of Islamic finance can lead the way.
"A tradition that binds finance to the real economy, insists that capital serve productive and beneficial ends, shares risk rather than shifting it onto others, and forbids the reckless and the harmful - this is most well suited to the demands of sustainable investment,” Sultan Nazrin said in his special address at the 17th Securities Commission (SC)-OCIS Roundtable held at the Oxford Centre for Islamic Studies United Kingdom (OCIS) today.
Building on those principles, he called for sukuk structures, waqf-based mechanisms, and green and blue financing instruments that position impact ahead of commercial convenience.
According to Sultan Nazrin, this requires the courage to challenge existing attitudes and priorities.
"(We need) a financial industry that innovates boldly and prices climate risk honestly -- modelled on Islamic finance,” he said, noting that what much of the world had lately begun to call responsible finance, the Islamic tradition had long regarded simply as finance conducted properly.
In this context, the Ruler said, responsible investment also plays a key role in funding innovation.
"The technologies of clean energy, efficient agriculture, water management and resilient construction are advancing at a pace that would have seemed improbable only a generation ago,” he noted.
He said that in 2025, wind, solar and other renewables overtook coal as the world’s leading source of electricity.
"For me, this is a sign of progress, and a cause for optimism,” he added. - Bernama
