Islamic finance seeks to go green with environment-based products
By Bernardo Vizcaino
Sept 2 (Reuters) - Financial products based on renewable energy and sustainable agriculture are emerging in Islamic finance as asset managers seek a crossover opportunity between ethical and sharia-compliant investing.
Islamic finance follows religious principles which forbid involvement in activities such as gambling, tobacco and alcohol, but the industry has only recently begun to stress themes of wider social responsibility, such as protecting the environment.
Last week, Malaysia announced guidelines for issuance of socially responsible sukuk (Islamic bonds), aimed at helping firms raise money for projects ranging from renewable energy to affordable housing.
In April the Dubai Supreme Council of Energy, a government planning body, and the World Bank signed an agreement to develop funding for the emirate's green investment programme, including "green" Islamic bonds. Dubai aims to derive 5 percent of its energy from sustainable sources and retrofit buildings to reduce energy consumption.
Meanwhile, firms in Britain, Canada and Hong Kong are offering sharia-compliant investments in sustainable farming ventures, which may attract money from Islamic investors in the Gulf and southeast Asia as well as from local investors.
The reasoning is that green investment products can tap a wider range of demand if they are made sharia-compliant to appeal to Muslims. At the same time, non-Muslims who might normally shy away from Islamic investments - because of concerns about pricing, complexity and lack of familiarity - may embrace them if they are green.