Difference of Shariah-compliant investments from conventional investments?

Shariah compliance is driven by the aim of maximizing benefit and minimizing harm to both individuals and society, with a strong focus on protecting religion, life, intellect, family, and wealth. This approach promotes investments in responsible activities that bring benefits to society. In contrast, conventional finance prioritizes profit maximization and may not have the same ethical, environmental, or social considerations. The difference is that Shariah-compliance is based on the teachings of the Quran and precedents derived from the life of Prophet Muhammad (peace be upon him). Shariah-compliant investment directs investments toward responsible activity that benefits society. Conventional finance may not have the same ethical, environmental or social considerations as its primary objective is typically profit maximisation. ESG, impact investment and responsible finance bear some similarities in its objectives to Shariah-compliant investments.

Last Update: 16 October 2024