KARACHI: US tech firm Spectreco LLC and AlBaraka Forum, a Saudi think-tank, would launch an Environmental, Social and Governance (ESG) Index in June to develop a robust benchmark for sustainable investments that align with the Islamic law and global regulations, the Spectreco chief executive officer told Arab News.
The two partners announced the launch of the Artificial Intelligence-led Shariah-compliant ESG index at the 45th AlBaraka Islamic Economics Symposium which was held last week in the Saudi city of Madinah.
“The actual launch of this index will happen in Istanbul in June,” said Faraz Khan, the winner of UK’s prestigious Order of the British Empire who was born in Pakistan’s southwestern city of Quetta.
“In the next three to five years, we hope to make this index [will be] the most widely used index in the MENA [Middle East and North Africa] region, starting with Saudi Arabia and led by it.”
The index is designed to be a “game changer” and a smart, technology-driven solution that will integrate the faith-based financial system with global ESG regulations. It will have the fundamentals of both the global ESG regulations and Shariah-compliant financial systems, and will be binding them through technology, according to Khan.
Spectreco and AlBaraka are currently looking for users, asset managers, banks and funds for the index that would help the Islamic economy and the wider world to integrate in a more value proposition-oriented way. The initiative would serve stakeholders, including investors, regulators and Islamic finance institutions seeking to align faith-based investment practices with modern sustainability goals, as the reporting of their compliance with ESG regulations is becoming mandatory for companies from Europe, the United Kingdom, Asia Pacific, and parts of North America.
“Now your trade and FDI both have embedded the sustainability and ESG and carbon footprint mechanisms across their space,” Khan told Arab News in an interview.
He said Islamic economies from the Middle East and North Africa region, including Qatar, the United Arab Emirates (UAE) and Saudi Arabia, were moving toward mandatory ESG compliance reporting, while Oman had already made it mandatory.
“A huge Islamic economy is moving toward mandatory reporting,” said Khan, whose firm aims to simplify sustainability reporting, compliance and performance tracking across multiple jurisdictions.
Speaking of the leverage his company has over others in terms of entering Saudi Arabia and other gulf markets, Khan said they have a technology that has an end-to-end mechanism and is driven by data, evidence and AI in the space of ESG and sustainability.
“We have on-ground expertise of the built environment and financial services and investor paradigm,” he said.
Yousef Hassan Khalawi, secretary-general at the Albaraka Forum that aims to advance Islamic economy, said the global Islamic economy was attracting more and more people and its size was expected to increase to $7 trillion by 2028.
“This is yet not that number which can represent the capacity of Muslims which are as a population now almost around 25 percent” of the world population, Khalawi told Arab News in a separate interview from Bahrain.
At $2 trillion, he said, the Islamic finance industry is still less than five percent of the global finance industry. He said the Shariah-compliant index would encourage bankers and business developers to develop more products that would meet global sustainability standards.
“It is, it should be a global index which means it should cover banks from Indonesia till Nigeria till even South Africa,” Khalawi said.
Around 65 percent of Islamic banking assets were concentrated in the Gulf Cooperation Council (GCC) region as well as Malaysia, according to the Albaraka official. In Saudi Arabia, the size of retail Islamic banking stood more than 95 percent while the corporate size was over 70 percent.
“Here, you are focusing on the major markets and then the rest of the world will come easier,” he added.
Khalawi called Pakistan a “very important nation,” with one of the “fiercest creators” of the Shariah-compliant economy.
Pakistan’s Islamic banking is growing at more than 20 percent every year and its government is trying to fully make its interest-based financial system Shariah-compliant by Dec. 2027, a deadline set by Pakistan’s Shariah court in April 2022.
“Many initiatives also will come in Pakistan,” Khalawi said. “For sure, we are considering Pakistan, as I said, in every single initiative we have.”
US tech giant joins hands with Saudi think-tank to launch AI-led, Shariah-compliant global ESG Index
https://arab.news/gu494
US tech giant joins hands with Saudi think-tank to launch AI-led, Shariah-compliant global ESG Index
- The new index aims to bridge $2 trillion Islamic economy with global ESG standards, says CEO of US tech firm
- Saudi think-tank Albaraka Forum says the index will help grow the Islamic economy to $7 trillion in three years
IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan
- Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
- Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains
ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.
The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.
Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.
The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.
“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.
But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.
The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.
The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.
Despite the progress, Pakistan’s structural weaknesses remain severe.
Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.
The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.
The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.
