Shariah investments adopting ESG principles

Shariah-based investments are moving towards adopting sustainable concepts of investment, namely the environmental, social and corporate governance (ESG) principles, hence narrowing the investment scope further. RHB Research analyst, Alexander Chia noted that the similarities between Shariah and ESG are uncanny due to the selection criteria for their underlying investments such as the call for justice, empowerment for all stakeholders, ethical practices and social responsibilities. “Investors who are concerned about ESG factors in their investments can consider Shariah funds as an alternative, as such funds can also be classified as ESG-based investments. Contrarily, enforcing ESG values within the practices of Shariah investments will motivate investors to not only be aware of the Shariah principles, but also question the purposes and impacts of the business on society and the environment,” he wrote in a report on 8 Nov.