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How Sharia and sustainable investing are converging

sharia_investingThe past couple of years have seen a number of Islamic funds integrating ESG criteria. For Funds Europe’s April issue, Tanya Ashreena reported on how the worlds of sustainable and Sharia investing are converging, and to what extent the trend may continue.

In December 2020, Schroders announced the launch of its Islamic Global Equity Fund, stating that it would include a diversified investment strategy that combined Sharia law compliance with multi-factor investing and ESG principles.

The Schroder Global Investor Study published in 2019 found that many investors in the Islamic world are putting an increased emphasis on sustainability while deciding how to allocate their portfolios – and that there is an opportunity for the Sharia investment industry to capitalise on this. 

The firm’s Islamic Global Equity Fund was said to be in line with these findings.

Meanwhile, HSBC Global Asset Management’s James Grist, head of group distribution for the Mena region, highlighted in the article that there is a “convergence” between ESG (environmental, social, and governance) and Islamic investing.

“Fundamentally, they both consider their impact on society and the welfare of people and the environment,” he said.

“As ESG investing has become more mainstream, due in part to the increasing awareness of the effects investments can have on our planet, there has been rising demand from investors for investment solutions that address ESG considerations.

“Therefore it is not surprising that there is also demand from investors who are seeking Sharia-compliant investment versions of the same solutions, enabling them to align two important principles – Islamic and ESG – together.”

Read the full article on sustainable and Sharia investing here: Sharia: When Muslim principles meet ESG

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