Responsible Investing and Islamic Finance - More Similarities Than Differences
April 19, 2018 | Updated at May 16, 2018
There is immense power and potential for impact when people share common ideas and work together. We see examples around the world, and technology such as social media can help bring people together more rapidly. How can we bring together the many voices that seek to apply values in the financial system in order to shape a better world?
Perhaps the place to start is to consider whether these many voices share common ideas. We are here to say emphatically, “YES”. For Muslims, Islamic finance links the financial world to the ethical world through the strong connections to faith. Outside the Islamic financial system, there are initiatives going with many names which are all focused on bringing ethics to finance. The names include Socially Responsible Investing, ESG investing (Environment, Social, and Governance investing), Impact Investing, and Responsible Investing. Fortunately, these initiatives are increasingly collaborating through the good work of organizations such as UN PRI. Many are using the term Responsible Investing across the initiatives.
Until a few years ago, Islamic finance was considered different. Very few people anywhere in the world even asked the question about compatibility with Responsible Investing. In 2016 in Kuala Lumpur, Malaysia, an organization called the RFI Foundation held its first summit with the express purpose of connecting Islamic finance and Responsible Investing. The summit identified many areas of compatibility.
Both of us have worked since then to help people around the world understand the deep level of connection between Islamic finance and Responsible Investing. Each of you, through your participation in IslamicMarkets.com, have seen the many articles from brother Daud. Brother Kurt published an article in the journal of the Institute of Advanced Islamic Studies called “Good is Always Good”. This article showed the Islamic, Catholic, and even secular guidance for business are very similar. Further, where there were differences, the differences are mainly about emphasis.
We want people around the world to join together to increase the use of ethics in financial matters, and that is relevant. Each of us brings our experience and our faith. These experiences and faiths make us stronger. The message here and in other venues should help build comfort and even trust that we are attempting to move the world in the same direction. Let us expand the collaboration to have maximum impact. It is truly about relevance, trust, and impact: #RTI