Can SRI be part of Islamic finance and part of it as an asset choice? SRI and Islamic finance, a common future?

We see that socially responsible investment (SRI) is growing in importance and is becoming a growing market, as is isr and Islamic finance. There is an increasing demand and interest in both concepts ( sri and Islamic finance ).

It is interesting to note that apart from the fact that both are developing strongly, there is also a shared common basis between the values and principles that define them. We legitimately want to compare them, whether in terms of commonalities, differences and objectives.

sri and Islamic finance

SRI and Islamic finance share the desire to invest in a healthy way, with a long-term vision and in a responsible way with social equity. The aim is to move towards ethical finance, which finances, develops the real economy, participates in the creation and redistribution of values. These two concepts choose in which sector to invest, practising sectoral exclusion, in the case of SRI there is also active ownership.

There are points of divergence in terms of vision and regulation of these concepts. It is not based on religious principles, whereas Islamic finance is and sectoral exclusion in IF ( Islamic finance) is more widespread. The leisure and financial industry are excluded but not systematically, unlike the pig industry, which is systematically excluded in Islamic finance, whereas they are admitted to it.

A strong point of divergence is the interest that is prohibited in Islamic finance unlike SRI. We note that the debt ratio is a key factor in including a company in the universe of Islamic finance investment (33%).

It is then quite possible to have investments in IF funds and vice versa, despite the points of divergence. However, it would seem that the most complicated meaning is SRI in Islamic finance because it has a religious dimension and is more demanding in terms of investment criteria and universe.

Depending on the type of SRI asset, it can take place as an investment in IF, we can think of a label that can indicate to funds governed by the Islamic financial system that they are authorised and can be taken under management.

With regard to the Islamic SRI financial system, we can also see the emergence of a structure that validates investments classified as Islamic finance.

For example, we would then have assets, funds classified as SRI that want and can reach IF clients, that would take steps to obtain accreditation from the responsible body. Similarly, for assets, Islamic financial funds to reach SRI clients who may be interested in this approach.

So, this will bring a diversity of investment, wealth and complementarity between finance and Islamic SRI in terms of principles, ideology and investment class.

Rachid MAMDOUH

Rachid MAMDOUH


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