Scotland may be “on the cusp” of establishing the world’s first ethical finance hub, according to experts in the field. The comments come ahead of a meeting taking place on Thursday between the financial services industry and John Swinney MSP, cabinet secretary for the Scottish government.
The Islamic Finance Council (IFC) UK and Scottish law firm Tods Murray are leading the initiative. Islamic and ethical finance are closely related and the sector is growing rapidly. According to an industry expert, Islamic finance will be worth $2 trillion (£1.2 trillion) globally by the end of this year.
Speaking ahead of the meeting, Graham Burnside, chairman and head of banking at Tods Murray and IFC board member, said, “We have seen ethical finance debate gain real momentum in the last 12 months.
“We know that the financial services industry is fully behind the proposal and there is no doubt that Scotland is now well placed to develop the world’s first centre for the development and promotion of ethical finance, which could in turn stimulate the development of innovative financial products.”
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Last year, figures released by the IFC found that more than 50% of Scots want to see some of their money invested using green or ethical criteria. This signalled the opportunity for the creation of an ethical finance hub.
Swinney commented, “Providers of ethical finance have the potential to position themselves as a viable alternative to mainstream institutions within the financial services sector in Scotland which will inevitably benefit consumers and the industry itself as increased competition drives standards and promotes innovation.”
According to the organisations, Scotland could also see investment of over £100m in public projects from Islamic capital markets as a result of new powers to issue bonds. From 2015 the Scottish government will have the additional power to issue investment bonds.
Burnside said, “This additional source of borrowing paves the way for Scotland to establish a suitably rated sukuk bond which, according to the Islamic Finance Council, could comfortably leverage well in excess of £100m from Islamic capital markets.
“The use of these powers could offer a way forward for large scale infrastructure and renewable projects, which is an area of real interest to Gulf investors and one which is generally acknowledged is in search of funding.”
The firm added that such a project would bring together key players from government, financial services, academia and the third sector to facilitate both commercial investment and thought leadership.