Shariah-compliant investing falls under “socially responsible investing.” This type of investment has become more popular in recent years as investors have better access to see where their funds are going.
Many have been disturbed to find that their money through their super fund is funding businesses that don’t align with the beliefs and values.
What is excluded under Shariah Law Compliant Investments?
The main idea of Shariah-compliant investing is ethical investing. It abandons the typical investment strategies that violate the edicts and morality of Islam. Some of these exclusions include:
Weapons Manufacture and Military Funding
This applies to weapons that can be used to cause mass destruction. By respecting the sacredness of life, Shariah-compliant investments avoid violence. They do not profit from investment in manufacturing weapons intended to kill large groups of people.
This especially applies to nuclear weapons, the aim of which is always violence against humans. Shariah-compliant investing will never fund nuclear weapons manufacture or related trade.
Military funding is also removed from Shariah-compliant investing. In the interest of protecting the sacredness of life, investors do not pay into funds that may support unjust military action.
Haram Food Sources
Shariah-compliant investments do not include any funds going to tobacco, illegal drugs, or alcohol. They also do not go to any meat—particularly pork—that does not follow proper slaughtering guidelines.
Investors can feel confident that their investments will go only to food sources that are compliant with halal practices.
Pornography and Adult Entertainment
Funds included in Islamic super funds do not contribute to any form of adult entertainment. They will not even support businesses that host or disseminate adult materials.
Unethical Scientific Practices
As science advances, Sharia law will also advance in its understanding of modern problems. Currently, this means that things like cloning are off the table for investment practices.
Gambling and Financial Speculation
Gambling is also out in these funds. No money goes to casinos, recreational betting, or lottery funding.
This extends to more professional forms of gambling as well, like speculation in the stock market. Insurance companies are avoided, too.
Shariah-compliant funds do not invest in financial institutions that make money with interest.