I focus on Halal Investments. Criteria used in screening out non-compliant vehicles include those outlined by the Shariah Supervisory Boards of the Dow Jones Islamic Market Index and S&P Shariah Indices. These are Islamic scholars who interpret business issues and recommend actions related to business decisions for the indices they supervise.
In ever-increasing numbers, Canadian investors have started looking beyond the bottom line on their investments to the ethics and impact of the underlying companies that drive their returns. Many Canadians have implemented responsible investing plans that mirror their personal ethical or religious values. Halal Investing is a subset of Socially Responsible and Ethical Investing based on investments that adhere to Islamic principles.
Halal Investing and Socially Responsible Investing (SRI) both look deep into the companies held in a portfolio or a fund, to evaluate their social, political or environmental impact. While most people associate this type of discipline with environmental concerns, a responsible investor may avoid companies which do business in countries with questionable human rights records, or have corporate governance policies that are not in line with the investor’s morals. Companies that produce certain products may also be rejected. Addictive products and services, such as tobacco, alcohol, or gambling are eliminated.
Halal Investing is Socially Responsible in its avoidance of particular products and industries, but its adherence to Islamic principles extends to avoiding interest-bearing or highly-leveraged vehicles. The complexities of many investment vehicles, combined with the vast scope of many large companies, make it difficult to ascertain whether an investment is compliant without the help of a qualified advisor.
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