Schroders and Maybank Islamic Berhad Launch Thought Paper Exploring the Alignment of Shariah and Sustainable Investing

Schroders and Maybank Islamic Berhad today announced the release of a joint research report that examines the relationship and overlaps between Shariah and sustainable investing.

The thought paper, a result of close collaboration efforts between the two firms, advocates that investors who embrace Shariah principles should also aspire to adopt the ideas of sustainable investing. This is especially since incorporation of sustainability considerations is both complementary in philosophy to Shariah investing, and has the potential to improve investment outcomes.

Traditional Shariah investing focuses on excluding companies which do not comply with Shariah principles, and this singular focus of the Shariah investment industry is ripe for disruption. The paper finds that if investors were to start with a blank slate using Shariah principles as an anchor for portfolio construction, they will probably end up with something substantially different, with sustainability considerations likely to feature strongly.

Lily Choh, Head of Distribution Southeast Asia and Head of Institutional Business Asia Pacific, Schroders, commented:

“We are pleased to be partnering Maybank Islamic Berhad on this groundbreaking research paper, which draws on our respective insights and expertise in both sustainable and Shariah investing.

“As the paper has found, formal integration of sustainability within a Shariah portfolio formally recognises that sustainability principles are at the core of Islamic beliefs, a fact which has failed to receive the prominence it deserves among traditional Shariah investment products. It will also be a progression from the current practice of excluding what is wrong, to also prioritising what is right – an evolution to a more holistic and integrated form of Shariah investing.

“We hope this conclusion can help pave the way for the industry to explore and develop more relevant solutions for the global Muslim community.”

Dato’ Mohamed Rafique Merican, Chief Executive Officer (CEO), Maybank Islamic Berhad, added:

“There are around 1.8 billion Muslims globally, representing approximately a quarter of world population. But despite these numbers, Muslims have been underserved by the asset management industry, with limited innovation in product offerings and low growth in assets. As of June 2019, only $3 billion was invested globally in Shariah global equity funds.[1]

“As the report has shown, Muslims do not have to compromise between their religious beliefs and their desire to invest in a sustainable manner, especially given that the underlying principles are so closely aligned. We believe that by bridging this divide, the global Shariah investment industry can grow and better serve the Muslim community.

“This thought paper is also part of our Centre of Excellence (COE) initiative, where we aim to be the reference point on Shariah matters and best practices for industry players, regulatory and academic fraternities.”

The report is now available on http://schroderstalkingpoint.com

[1] Source: Broadridge, as at July 2019.

For further information, please contact:

Hume Brophy (representing Schroders)

Zuhaili Khalid +65 8468 7182 / schroders@humebrophy.com

Maybank Islamic Berhad

Dr Liza Mydin +603 2297 2289 / lizamydin@maybank.com

Roziana Hamsawi +6012 324 6502 / roziana.h@maybank.com

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