Islamic Investment Screens May Provide a Way to Overcome ESG Data Limitations in Emerging Markets

In the absence of solid environmental, social, and governance (ESG) data, investors will be looking for other types of ‘low-cost mechanisms’ that include Shariah screens so they can narrow their investment options and find companies that are likely to have lower financial and ESG risks.

Unsophisticated application of ESG screening that excludes entire countries or applies developed market ESG standards to emerging & frontier markets may constrain the new funding needed to achieve the Sustainable Development GoalsAlternative investment screening methods, including some that are a product of the Shariah screening process, can help investors to narrow their investable universe in the absence of ESG dataOver time, the growth of green, social, sust...