In a significant development for the intersection of Islamic finance and sustainability, the Al Baraka Forum for Islamic Economy and Spectreco LLC have officially entered into a strategic partnership to launch the world’s first-ever Shariah-Compliant ESG Index. The landmark agreement was signed during the 45th Al Baraka Islamic Economics Symposium in Madinah, an event that brought together thought leaders and stakeholders in the field of Islamic economics and finance.
The signing ceremony, which took place in the presence of Prince Faisal bin Salman Al Saud, Governor of Madinah, and Sheikh Abdullah Saleh Kamel, Chairman of the Board of Trustees of Al Baraka Forum for Islamic Economy, marks a milestone in aligning Islamic investment principles with global sustainability and environmental, social, and governance (ESG) standards.
This pioneering initiative aims to provide a comprehensive framework for responsible investment that blends the ethical imperatives of Maqasid al-Shariah (the objectives of Islamic law) with contemporary global ESG standards. The index will enable investors to make informed decisions while maintaining adherence to Islamic finance principles.
Incorporating rigorous Shariah screening processes, the Islamic ESG Index will include sectoral exclusions (such as alcohol, tobacco, and gambling) and financial ratio thresholds to ensure compliance with Islamic law. Additionally, the index will utilize AI-powered ESG analytics, leveraging Spectreco’s proprietary technology platform to deliver advanced insights into the environmental, social, and governance performance of companies, making it a tool for ethical investment decisions in line with sustainability goals.
According to Sheikh Abdullah Saleh Kamel, the Chairman of Al Baraka Forum for Islamic Economy, this index will have far-reaching implications for the future of Islamic finance. “The launch of the world’s first Shariah-compliant ESG index will set a new benchmark for responsible investment that adheres to both ethical and financial standards,” he remarked. “It reflects our commitment to advancing Islamic economic principles in harmony with the global sustainability agenda.”
The partnership with Spectreco LLC, a global leader in sustainability technology and advisory, strengthens the initiative by leveraging their expertise in integrating ESG considerations into financial products. Usman Tariq, CEO of Spectreco, emphasized that the partnership marks a transformative step toward bridging Islamic finance with global sustainability goals. “With our advanced AI-driven analytics, we are proud to support the development of an index that marries financial prudence with ethical investment, catering to a global audience seeking Shariah-compliant and sustainable investment opportunities,” he said.
The Shariah-Compliant ESG Index will serve a diverse array of stakeholders, from individual investors to large financial institutions, offering a trusted framework for making investment choices that are both ethical and aligned with sustainability practices. It will play a critical role in guiding Islamic finance institutions and investors who wish to engage in faith-based investments while ensuring their portfolios meet the environmental and social needs of the modern world.
This collaboration is expected to not only enhance the credibility of Islamic finance globally but also provide a meaningful contribution to the broader movement toward more sustainable and ethical financial practices.
With global markets increasingly focusing on sustainability, the launch of the world’s first Shariah-compliant ESG index represents a key milestone in the growing intersection of Islamic finance and the global ESG movement. As countries and investors turn toward more responsible financial models, this initiative could serve as a catalyst for further growth in the Islamic financial sector, pushing for a more ethical and sustainable global investment ecosystem.