They say the joint venture is the first tie-up between the Church and Islamic finance and will be open to all, regardless of religious or ethnic background, looking to benefit society as a whole.
It will research, shortlist, test and then establish a viable ethical finance business solution, with the consultation and business plan phase is expected to last a year and the first workshop to take place this May in Edinburgh.
It also comes as a response to the recent financial crisis and scandals such as interest-rate fixing and Rev Dr Angus Morrison, moderator of the General Assembly of the Church of Scotland, said the current system has created “massive inequality”.
He added: “The Christian and Islamic faith traditions share a commitment to economic justice and a call to an equal distribution of the gifts of God. By collaborating and ‘putting our money where our morals are’ we have an opportunity to live out our common values and make a tangible change for those most affected by poverty.”
The move comes after a centre dedicated to bringing ethical finance into the mainstream investment market was launched in Edinburgh last year, the first of its kind in Europe and aiming to develop Scotland as a leader in the sector.
The Scottish Ethical Finance Hub opened at the Riccarton Campus of Heriot-Watt University, home of the Edinburgh Business School.
It emerged after five years of round-table discussions led by the IFC, which said that it has been “leading the debate on ethical finance” with various events in Edinburgh.
Regarding the new partnership, the organisation said it was “inspired by a commitment to developing a fairer, more responsible finance system”.
IFC advisory board member Omar Shaikh said: “In recent years we have developed a strong relationship with the Church of Scotland and this project is a result of that positive engagement and the mutual desire to work collaboratively on a project, which brings together the best of our respective faiths.
“Scotland has a proud heritage in ethical finance with the savings bank movement able to trace its origins back to Rev Henry Duncan of the Church of Scotland. This model was also used as the blueprint for the early Islamic banking attempts in the 1960s, which makes it particularly poignant that this new initiative in being led in Scotland.”