Islamic Finance for SDGs: A Mirage?

Islamic finance principles support socially inclusive, environmentally friendly and development-promoting activities. However, in practice, the industry’s contribution to these objectives has been below its potential. And even though it has been growing, its share globally remains small, even in Muslim countries. This study attempts to shed some light on how Islamic finance that has historically been reluctant to look beyond a compliance perspective has gradually been unleashing the potential of Islamic social finance and shifting to an impact-driven approach with a focus on the objectives of the Sharı`̄ ah. This is undertaken with the expectation to enhance both market outreach and depth. At the same time, this would provide Islamic finance with an opportunity to participate in the UN-mandated development agenda as responsible global actors.