Doing well while doing good: Moving Islamic banking beyond the CSR paradigm

Financing the SDG agenda internationally requires trillions of dollars. Obviously, governments’ investments are not enough to provide the needed financial resources. Thereby, the private sector in general and the financial sector in particular are required to bridge the financing gap and support the achievement of SDG’s. To illustrate, Arab countries would need a minimum of 230 billion USD a year to finance sustainable development. Unfortunately, corporate social responsibility initiatives are not only ineffective but also unsustainable because such initiatives approach social and environmental issues from the sidelines. Indeed, when corporate sustainability is managed outside a firm business model, its performance and even its existence tend to rely strongly on the firm’s financial performance. Not surprisingly, financial objectives are usually prioritized when they conflict with other goals.

It is true that many Islamic banking institutions undertake several social initiatives ranging from Qard Hassan and energy conservation to zakat payment and charities support. Yet, on average, Islamic banks’ social and environmental initiatives have been rather weak or poor. Islamic banks’ performance in this field is even lower than conventional banks. Many research reports also point out to the low levels of disclosures of Islamic banks with respect to ethics and sustainability. Today, Islamic banks need a paradigm shift by embedding sustainability into their core business model and reconcile their positioning with their ethical roots. In other words, doing well while good instead of doing well and later doing good (sometimes).

Based on an international benchmark of companies that pursue financial and social goals simultaneously, a recent research article sheds light on key success factors to succeed in this paradigm shift and reconcile profitability and sustainability. The benchmark identified four best practices.

  • Setting goals and monitoring progress: Well-constructed goals are important to for dual-purpose companies. Key performance indicators can be built using metrics developed by international NGO’s such as the Global Reporting Initiative and the Sustainability Accounting Standards Board and B-Lab.
  • Structuring the organization: It is impossible to succeed both on financial and sustainable fronts if the organization structure is not designed to support both perspectives. More specifically, the company has to supplement traditional organizational structures with mechanisms for surfacing and working through tensions created by the economic and social perspectives.
  • Hiring and socializing employees: Embedding a dual-purpose focus in the organization DNA requires a workforce with shared values and behavior. Hiring, training and socializing are crucial to get that right.
  • Practicing dual-minded leadership: The board and the management have to manage the tensions that rises when trying to align impact and finance. The company’s governance and leadership must manage tension proactively while committing to the dual goals

Islamic banks engaged in blending profitability and sustainability need to be aware that tensions and trade-offs are inevitable especially when ecosystems supporting such a transition are embryonic or inexistent. Taken together the four levers presented above can make the endeavor more likely to succeed.

Empowering social enterprises through the waqf institution: The case of SDG 3 (good health and well-being)

The problems our planet is faced with are complex and all-spanning. Global environmental degradation and climate change are coupled with increasingly alarming social fracture and economic disparities. Governments alone have failed to provide solutions to those wicked and highly interconnected problems.

In the past fifteen years, a new generation of entrepreneurs have attempted to address the social and environmental complexities at local and regional levels through the so-called social innovation. However, these social entrepreneurs face major hurdles including financing and scaling their products and services. On the other hand, the Waqf institution, considered in the past centuries in Islamic civilization as a major enabler of social and economic welfare, has remained relatively disconnected from modern capital markets and their various forms to achieve growth.

In a paper published in the proceedings of the Waqf and Sustainable development symposium held at Istanbul Sabahattin Zaim University last summer, Dr. Fadwa Chaker and Dr. Wail Aaminou demonstrate how the Waqf institution can be placed at the heart of sustainable economic development by bridging the demand and supply sides of social innovation through structured and efficient mechanisms. The authors firstly describe the theoretical grounding behind social innovation and its role in driving large-scale social impact and sustainable growth. Then, they discuss the Waqf institution as an unconventional instrument for wealth redistribution and eventual economic prosperity. Drawing on the preceding literature discussion, they present a conceptual framework that describes the mechanism through which the Waqf institution can boost inclusive growth by bringing together multiple for-profit and non-profit stakeholders. The authors illustrate the presented framework with the case of good health and well-being as one of the important UN sustainable development goals. In doing so, they show how Waqf helps social innovators address the structural challenges of financing and scalability and how this innovative instrument can thus be considered as a paramount lever for achieving sustainable development.

To download the full paper, please click here

Leveraging Income sharing arrangements to finance education

Source : Koç University, Turkey

Providing quality education is a critical goal in the sustainable development agenda. Indeed, when people are able to get quality education they can break from the cycle of poverty and enjoy healthier and more sustainable lives. Education is also crucial to fostering tolerance between people for more peaceful societies.

OIC countries are far from Ensuring inclusive and quality education for all and for promoting lifelong learning. According to the 2018 report “Education Quality in the OIC Member Countries “, these countries have struggled with a lack of progress in improving education quality in the last two decades as shown in international assessments. Furthermore, the gap between OIC and non-OIC countries seem to have widened over time. Mobilizing financings for education is one of the challenges not only in OIC countries but also globally with  education fees on the rise and students struggling with large debt balances. To illustrate, in the United States student debt reached a new height in 2018 — a $1.5 trillion. A typical student borrower will have $22,000 in debt by graduation.

Income sharing arrangements (ISA) seeks to address this issue by providing alternative financing schemes. Students financed through ISA do not pay tuition nor fees upfront. Instead, the financier (the university or any third party) gets a fraction of their salaries after graduation if certain conditions are met (typically, when the salary exceeds a certain threshold).

On paper, interest of all stakeholders in the ISA scheme seem aligned:

Students have incentives to join ISA, especially those from low and middle-income families;

  • Universities using ISA financing are keen on attracting brilliant students who can make it to the job market. In addition, the university will make sure enrolled students are better prepared for the job market;
  • Recruiters hire well-trained students with skills matching their expectations.

ISAs have gained prominence as an alternative to traditional debt schemes, especially in the US where they are provided by academic institutions (eg. Purdue, App Academy…) or financing start-ups (eg. GS2, Align…).

Given the shortcomings in education achievements in developing and developed economies, this product is worth developing by financial institutions along with the nonprofit sector. It will allow a better alignment of finance and SDG #4 (Ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all) and will provide financial institutions with the opportunity to diversify out of debt-like instruments.

Alternatives Economiques : Une oasis dans un désert

Source :

Dans un environnement médiatique vénérant le « like »et le « buzz » avec une suprématie des réseaux sociaux par rapport aux supports traditionnels, des magazines comme « Alternatives Economique »sont des oasis dans un désert où les contenus superflus, médiocres, biaisés ou erronés ont souvent le maître mot.

« Alternatives Economiques », le deuxième magazine économique le plus lu en France, s’intéresse à l’économie comme enjeu collectif et social, à travers des thématiques variées. A ce titre, l’économie du développement durable est un volet qui est traité en profondeur et d’une manière récurrente dans tous les numéros ainsi que dans les hors-séries.

La qualité du contenu de la revue s’explique par deux facteurs distinctifs :

  • Le financement : Le business model du magazine repose sur le lectorat pour son financement et vit principalement de ses ventes contrairement à la grande majorité des supports qui se financent par la publicité
  • La gouvernance : Alternatives Economiques est édité par une société coopérative, dans laquelle les salariés sont associés et majoritaires au capital. Les autres associés sont ses lecteurs, à travers l’Association des lecteurs et la Société civile des lecteurs, qui accueille les associés extérieurs amis du journal (personnes physiques ou morales)

Il est vrai que pour un lecteur étranger, des thématiques franco-françaises ne présentent toujours pas un grand intérêt. Toutefois, j’accepte personnellement ces contenus car je comprends qu’ils ont un sens pour la majorité des lecteurs du magazine qui résident en France.  C’est le cas également pour «The Economist », bien que plus international,mais qui consacre tout de même une rubrique permanente pour la grande Bretagne.

Un grand bravo aux équipes « Alternatives Economique »qui résistent face au tsunami des contenus « toxiques » enrobés dans le voile de la gratuité et de la facilité.  J’espère que le modèle journalistique prôné par « Alternatives Economique » et par d’autres supports, puisse se pérenniser,se développer et se généraliser.

Partirais-je toujours au travail si j’ai assez d’argent ?

Source :

Dans un monde dans lequel chacun d’entre nous recevrait tous les mois un revenu de base, sans condition, sans compte à rendre, est-ce que nous nous arrêterions de travailler ? Est-ce que cela changerait notre vie ? Peut-on faire confiance aux gens si nous leur donnons de « l’argent gratuit » ? Qui doit payer pour les membres les plus vulnérables de nos sociétés ? A quoi ressemblera le futur du travail (si tant est que le travail existe encore dans le futur) ?

L’idée du revenu de base, encore appelé revenu universel ou allocation universelle n’est pas tout à fait nouvelle. Elle a ses défenseurs et ses détracteurs alors que ses implications réelles sont encore peu explorées surtout dans mon monde où la physionomie du le travail est à la fois évolutive et incertaine.

« Gagner sa vie »  est une excellente série documentaire interactive diffusée sur ARTE sur le revenu de base analysé suivant multiples perspectives. Avec ­7 épisodes explorant des expériences inédites en Afrique, Europe, Amérique du nord, en Asie et Moyen Orient, la série utilise le revenu de base comme prisme pour interroger notre relation au travail et à l’argent et stimuler la réflexion sur ce qui pourrait être envisagé demain sur cette question.

Et si les barrières linguistiques sautaient ?


 Traduction automatique : De grandes avancées

Le mois dernier le quotidien français « La Tribune » a annoncé la sortie de la version française de l’ouvrage de référence “Deep learning“. Pour une première mondiale, ses 800 pages ont été entièrement traduites en moins de douze heures par une intelligence artificielle ! Il s’agit d’une prouesse impressionnante qui montre que la traduction automatique a beaucoup évolué depuis ses premiers débuts.   Continue reading “Et si les barrières linguistiques sautaient ?”