A credit rating agency finds ‘natural’ links between Islamic finance, sustainability and ESG

When the Principles for Responsible Investment (PRI) launched their Credit Rating Initiative, one of the six founding members was RAM Ratings, after interacting with WWF and Saturna Capital on sustainable finance and understanding how a credit rating agency could drive change. RAM Ratings was the first domestic credit rating agency in Malaysia when it was set up in 1990. In the time since, as Malaysia has developed Islamic capital markets, RAM has rated many of the sukuk issued as Malaysia’s sukuk market became the most liquid in the world.

RAM extended its innovation in Islamic finance to sustainable finance through RAM Consultancy, a provider of sustainability services and ESG analytics that plays a vital role as an industry catalyst for both. RAM Consultancy CEO Promod Dass, who was previously Deputy CEO for RAM Ratings, linked the evolution from Islamic finance to responsible finance. Speaking with the RFI podcast, he said: “It was natural for us to envisage the strong linkages or shared values between the ethical/responsible finance elements in Islamic finance as well as sustainability and ESG.”

Listen to the rest of the podcast to learn more about how ESG factors are becoming systematically and transparently integrated into credit rating methodologies, and how Islamic finance, sustainability and ESG intersect and complement one another in understanding and measuring investment and financing risks.