Unleashing the Potential of Islamic Finance: Global Perspectives on Achieving the SDGs with Islamic Finance Tools & Concepts, a new report from the International Federation of Accountants, Malaysian Institute of Accountants (MIA) and the World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia (World Bank) looks at the opportunities presented by Islamic finance, practical examples of its usage from Malaysia, and future pathways towards addressing challenges and unlocking the full potential of Islamic finance to support the SDGs.

The report was released today at Innovation in Sustainable Development: Islamic Finance Paving the Way hosted by MIA in Kuala Lumpur featuring a keynote address from IFAC President Asmâa Resmouki.

In recent years, addressing the Sustainable Development Goals (SDGs) has become increasingly challenging. The worldwide economic downturn resulting from the COVID-19 pandemic has worsened the already significant USD4.2 trillion funding gap to achieve the SDGs. As countries worldwide strive to finance the ambitious scope and scale of the SDGs, they also face the complex task of serving financially underserved communities. Advancing Islamic finance has the potential not only to serve usually underbanked Muslim communities but has broader application considering its synergies with the SDGs.

A major tenet of Islamic finance is the protection of people, planet, and prosperity, and its underpinnings can contribute to fresh thinking on sustainable development paradigms, interpretations, and approaches. The SDGs create opportunities for Islamic finance growth, just as Islamic finance can drive greater sustainable development.

Malaysia has become a pioneer of Islamic finance, attributed in part to its strong governance, supportive regulatory ecosystem, and the pivotal role of a local professional accountancy organization, MIA, in education and stakeholder outreach. Though every jurisdiction’s use of Islamic finance would work differently, Malaysia and MIA can serve as examples to learn from.

“Professional accountancy organizations are playing a key role in advancing sustainable financing, and given the profession’s commitment to support the SDGs, principles of Islamic finance should be considered a viable approach,” said Asmâa Resmouki, IFAC President. “We encourage all IFAC members to look towards best practices such as those cultivated in Malaysia, and seize opportunities presented in their own jurisdictions.”

Learn more about Islamic finance and download the report. 

About IFAC

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in more than 135 jurisdictions, representing millions of professional accountants in public practice, education, government service, industry, and commerce.

This is the first part of a series to help professional accountants, investors, regulators and policymakers enhance their understanding of carbon markets as a potentially important part of the infrastructure needed to support climate action.

The International Ethics Standards Board for Accountants (IESBA) today released its 2023 Annual Report, Respecting the Past, Planning for the Future.

This interactive review of 2023 features comprehensive accounts of the Board’s projects and insights from its leaders, illustrating a period of significant achievement. The achievements include the approval and subsequent launches of the Exposure Draft on International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and ethics standards for sustainability reporting and the final Ethics Standards for Tax Planning and Related Services.

2023 also saw the board approve an Exposure Draft on Using the Work of an External Expert and the IESBA’s Strategy and Work Plan for 2024-2027, all aimed at strengthening the IESBA’s International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).

"2023 has been a transformative year for the IESBA, marked by our continued commitment to strengthening global ethics standards and putting ethics at the heart of corporate decision-making," said IESBA Chair Gabriela Figueiredo Dias. "Our efforts in areas such as sustainability reporting and assurance and tax planning are prime examples of how we are addressing the evolving challenges and opportunities to enhance public trust and integrity in corporate reporting and in the work of professional accountants and assurance providers."

The 2023 IESBA Report also includes an interactive map showcasing the 140+ countries where the IESBA Code is in use and an overview of the Board’s extensive stakeholder outreach efforts and initiatives to promote global adoption and effective implementation of the Code.

Throughout 2023, the IESBA has responded vigorously to the challenges of ethics in the accountancy profession and beyond. The 2024 agenda will focus on final approvals of sustainability-related standards, new workstreams addressing accountancy firm culture and governance, and independence considerations for audits of collective investment vehicles, pension fund arrangements, and investment company complexes.

The full report can be accessed here.

About IESBA

The International Ethics Standards Board for Accountants serves the public interest by setting high-quality ethics standards, including independence requirements, as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.

Along with the International Auditing and Assurance Standards Board (“IAASB”), the IESBA is part of the International Foundation for Ethics and Audit (“IFEA”). The Public Interest Oversight Board (“PIOB”) oversees IESBA and IAASB activities and the public interest responsiveness of the standards.

This interactive review of 2023 features comprehensive accounts of the Board’s projects and insights from its leaders, illustrating a period of significant achievement, including the approval and subsequent launches of the Exposure Draft on International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and ethics standards for sustainability reporting and the final Ethics Standards for Tax Planning and Related Services. 2023 also saw the board approve an Exposure Draft on Using the Work of an External Exper

On behalf of the global accountancy profession, IFAC welcomes the opportunity to provide input to the IESSA ED. The global business community and the accountancy profession are at the start of significant transformation with respect to evolving sustainability disclosures. IESBA has an important role, like other standard setters, in this transformation.

We appreciate the significant resources and effort the Board has devoted to this important project. However, the actions of standard setters, regulators and policy makers must be undertaken and calibrated with the priority of being an effective influence on the transformation and by “bringing along relevant stakeholders” in the business community, including the accountancy profession, on this journey. It is important for the IESBA to be a positive influence in this transformation through the creation of practical, easily understandable, and sufficiently flexible standards.

Below are three key matters we urge IESBA to reconsider to enhance the practicality of implementation:

• Reducing complexity and calling for transparency from practitioners with respect to relevant, jurisdiction-specific sustainability assurance oversight and enforcement where they conduct engagements.
• Ensuring barriers to financial statement auditors providing sustainability assurance to the same client are removed.
• Addressing matters of practicality related to value chain considerations—i.e., through revision or removal of proposed requirements.

Click here to read the comment letter.