FOR the longest time, the world of finance was thought to be about dollars and cents. But in recent times, this has begun to make little sense, made worse by unbridled capitalism.
There is a limit to how far profit can leave people and the planet behind. Time to put back humanity in finance.
But how? Sultan of Perak Sultan Nazrin Muizzuddin Shah has a solution: Islamic finance, which is based on the overarching principle of Islamic law enshrined in the legal maxim: "to avert harm and to promote benefit".
Speaking at the 15th SC-OCIS Roundtable at the Oxford Centre for Islamic Studies in the United Kingdom, the Perak sultan puts it thus: "And it is here, with its faith-based commitment to avoiding harmful activities and striving towards social good, that Islamic finance can set an example for the conventional finance and business worlds."
Those who have been fed on economics as a study of wealth creation may have given humanity a miss. Not when economics is defined as the study of human wellbeing, as Sultan Nazrin defines it.
Economics, or more precisely finance, has been wrong so long that it thinks it is right. It can't afford to continue to do so now. We are in polycrisis everywhere, almost all of it man-made.
Gaza is burning and so is Ukraine. Extreme weather events are wreaking havoc everywhere. Covid-19's devastation hasn't quite left us, but mpox seems to want to take its place.
Such a world would do well with the moral leadership of Islamic finance, which guides "by principles of care for humanity and care for the planet", is the royal view.
Sultan Nazrin sees businesses playing a big role in this polycrisis world. To put it in his words, "businesses must become part of the solution to our various global challenges".
Reminding them of their broader impacts on the world around them, he called on them to take responsibility.
The pursuit of profits is not morally wrong, but if it is put before people and the planet then it would turn out to be so.
According to Sultan Nazrin, there is some good news: there is a widespread recognition that the time for unfettered capitalism is over.
What was "nice to have" has become "must have". This is the story of ESG, short for Environmental, Social and Governance, which the United Nations made famous in 2004 by the world body's report, "The Global Compact: Who cares wins".
Sultan Nazrin's message to the world of finance is this: humanise. Islamic finance is pointing to a faith-based way to do that. Two examples will do. One is risk-sharing. Here gains and liability are proportionately shared, unlike in conventional finance's risk-transfer schemes.
Without fairness guiding them, such schemes can not only leave the risk-takers in penury but can break an entire banking system, as we have witnessed many times before.
The other is social financing, which conventional finance has little appetite for. Global finance can look to the moral leadership of Islamic finance to meet two aims. One is to make finance more humane. Two is to help bring more fiscal sense to conventional finance.