Sustainable Development and Participation Banking

In order to solve our social and environmental problems, the importance of business strategies based on "Sustainable Development" is increasing day by day. The steps taken and the principles determined in this direction are also very appropriate and applicable to the essence and principles of the Participation Banking system.

PARTICIPATION FINANCE SYSTEM 12.11.2021, 11:26
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Sustainable Development and Participation Banking

The concept of "Sustainable Development" that gained an institutional identity following the expression of social and environmental problems at the United Nations is defined as a development process that can meet the needs of the present without compromising the chance of future generations to fulfill their own needs. Within the scope of this process, targets focused on social, environmental, and cultural problems have been determined, which are aimed to be achieved by 2030 and consist of 17 goals such as ending poverty and hunger, increasing access to quality education and health services, combating climate change, and eliminating gender inequalities. 

Sustainable Development Goals                                         
 

Thanks to the awareness increased throughout history, we are seeing that governments, companies, and non-governmental organizations take various actions to support the Sustainable Development Goals. Considering the asset sizes managed by financial institutions and the banks, in particular, we can tell that they can make significant contributions to solving social and environmental problems. 
Looking at Participation Banking based on its own philosophy and principles, its contributions to the solution of social and environmental problems in the regions they offer services will increasingly continue as long as their commitment to values such as "Principle of Social Benefit", "Principle of Social Assistance", and "Principle of Trade" grow. 

Principles of Participation Banking

When we examine the Sustainability Reports regularly published by several Participation, Conventional, and Investment Banks operating in our country, we can list the prominent activities that can be implemented as follows: 

•    Generalizing financial support focused on social and environmental impact.
•    Developing innovative products and services such as green sukuk and financing.
•    Increasing the share of financial resources allocated for SMEs in the total.
•    Ensuring the continuity of "Corporate Social Responsibility" projects implemented in areas such as health, education, and culture.
•    Increasing the number of people participating in financial access through the widespread branch network and opportunities brought by digitalization (inclusiveness).
•    Collaborating with non-governmental organizations reporting the effects of in-house operational activities such as the Carbon Disclosure Project (CDP), climate change and water program, and making necessary arrangements.
•    Developing the service infrastructure (branch, ATM, and digital channels) for the visually and physically disabled people.
•    Supporting innovative ideas and female entrepreneurs through entrepreneurship programs.
•    Supporting the development of the agricultural sector in the light of technological developments.
•    Working with international organizations such as UNEP FI and UN Global Compact and organizing business processes accordingly.

It is of great importance for Participation Banking and the financial sector to harmonize business strategy and processes in a way that will comply with and contribute to the Sustainable Development Goals and to continuously increase the positive effects by reducing the negative effects arising from activities, products, and services. 

Note: The Participation Banks Association of Turkey (TKBB) aims to sustainably develop the participation banking sector in Turkey and expand access to Islamic finance products and services at the global level. In this direction, UNDP (United Nations and Development Programme) and TKBB signed a Memorandum of Understanding in March 2021. The parties involved in this memorandum have agreed to act jointly in realizing global goals, supporting existing initiatives, and exploring new cooperation opportunities by utilizing the Islamic finance sector.


Eyyüp Yakup Gedikli


 

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