Abu Dhabi Islamic Bank (ADIB) and Thomson Reuters have chosen the finalists for their Ethical Finance and Innovation Challenge and Awards, with the shortlisted entries ranging from a sharia-compliant fund supplying schools with cheap, clean energy to a new way to hedge financial risk.

The awards, which address issues of ethics in finance and innovation in Islamic banking and offer prizes of up to $100,000, drew interest from hundreds of individuals and institutions in 55 countries, with interest highest in the UAE, Pakistan, Malaysia, the United Kingdom and the United States.

The finalists will present their entries at the Global Islamic Economy Summit (GIES) held in Dubai on November 25-26, with the winners chosen by a panel of judges and voting among delegates.

“It fills me with hope that many people are searching for a new economic model, which gives investors the incentive to supply capital, while serving the broad interests of society – improving lives, and our environment,” said ADIB Chief Executive Officer Tirad Al Mahmoud. “We want to encourage innovation to accelerate the development of sustainable financial solutions that make a positive difference in the world. The finalists for the awards have shown that the answers are out there, and we now need to start putting them into action.”

The finalists for the $100,000 Islamic Finance Industry Development Award are Seif Tageldin of Imam University in Saudi Arabia, Saudi Arabia; Shaher Abbas, Islamic Finance Advisory and Assurance Services (IFAAS) in the United Kingdom; and Mohamed Radwan, and independent consultant on Islamic Finance products.

The finalists for the $50,000 Ethical Finance Initiative Award are Dr. Shehab Marzban of Shekra Shariah Compliant Crowdfunding; Dr. Adnan Aziz & Ian Biscoe of F&C Shariah Sustainable Opportunities Fund; and David Loundy of Devon Bank.

ADIB and Thomson Reuters will also present a Lifetime Achievement Award on November 26 to an individual who has made a significant contribution and impact in the ethical practice of financial services.

Shortlisted entries
Finalists for Islamic Finance Industry Development Award
1. Seif Tageldin, Imam University – Riyadh: Istisnaa-Hedged Musharakah
Seif Tageldin, on behalf of Imam University, is proposing asolution to the problem of how to optimally utilize existing Islamic financing structures to offer financial hedging services comparable to those offered by conventional futures’ markets to meet the needs of the industrial sector. The solution involves the use of Istisnaa, a type of type of sales contract that allows for flexible and delayed payments.

2. Shaher Abbas, Islamic Finance Advisory and Assurance Services (IFAAS), UK: Mudarabah Financing A New Approach
Shaher Abbas isproposing a solution for working capital, overdraft and project finance based on the Islamic financial principle of Mudaraba, a contract based on a partnership in which one partner is the investor and the other is a working partner who manages the investment. The proposed structure uses a set of control functions to reduce the inherent risks of Mudaraba financing solutions, allowing a client to utilize any amount of funds up to an agreed limit at very low transaction costs.

3. Mohamed Radwan, Independent expert on Islamic Finance products: Hattita to Bank order – Hattita finance
Mohamed Radwan is putting forward a solution for short-term cash-flow financing based on a type of fiduciary contract of sale called Hattita. Through a Hattita financing structure, the “seller” offers to sell goods and expressly mentions the costs incurred and specifies the loss amount or the negative mark-up.

Finalists for Ethical Finance Initiative Award
1. Dr. Shehab Marzban, Shekra Shariah Compliant Crowd-funding: Financial Inclusion Through Investment Inclusion
This Shariah-compliant crowd-funding company aims to fund SMEs, which are often too big for microfinance and too small for venture capital and private equity. Shekra combines the advantages of conventional crowdfunding, angel investing, venture capitalism, as well as, philanthropic contributions and mentorship provisions.

2. Dr. Adnan Aziz & Ian Biscoe, F&C Shariah Sustainable Opportunities Fund
The F&C Sharia Sustainable Opportunities Fund is a collective Islamic equity combines traditional Sharia-based negative screens with wider positive sustainability considerations resulting in an approach more aligned with the spirit and objectives of Sharia.

3. David Loundy – Devon Bank, Bringing New Energy to Financing New Energy
Devon Bank’sinitiative involves the financing of geothermal HVAC systems and solar power for non-profit religious institutions, community organisations, social service agencies, schools and municipal facilities. It involves the creation of an investment vehicle that owns the power generation systems and sells energy at a discount based on the non-profit’s power pricing. The income is used to recover the cost of the systems, and generate a profit for investors, but once the systems are paid for, they are given to the customer.
 

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