Global Islamic finance industry prioritizes ESG concerns

MELBOURNE, Australia, Aug. 31, 2022 (GLOBE NEWSWIRE) — Over the past few years, the Islamic finance industry has seen tremendous growth due to increased consumer interest in ethical banking and financial services. ESG refers to environmental, social and governance principles: non-financial principles that are increasingly being applied to financial operations in order to create a more sustainable and equitable future. Sharia Loan Experts at Hejaz Financial Services report that as the sector continues to grow, the industry is looking to integrate ESG factors into future forecasting and planning.

A recent consumer survey reveals that around 73% of Islamic banking and Halal finance customers believe that the Islamic finance market could do more to meet the need and demand for ESG financial strategies.

Sharia-compliant financial services are based on principles of morality, says Muzzammil Dhedhy, COO of Hejaz Financial Services. These principles dictate the industries the money is invested in, how Halal loans work and more. A central pillar of Islamic finance is to screen Sharia-compliant products to avoid industries deemed illegal under Islamic guidelines and law, such as tobacco, alcohol, weapons, and gambling. Sharia lending experts point out that these areas are theoretically also prohibited in ESG investing.

Although the two concepts do not always overlap, this changes as financial institutions respond to market demand. Hejaz Financial Services explains that there has been an increase in innovative structured solutions allowing exposure to certain ESG investments that might otherwise not be Shariah-compliant.

Hejaz Financial Services says there is still work to be done when it comes to persuading potential investors to choose ethical investments. Removing cultural barriers and better financial education will enable Muslims to make informed decisions and participate more in financial markets while broadening the appeal of Islamic finance in the wider market.

To find out more about halal loans and Shariah-compliant financial products and services available in Australia, contact the halal home loan experts at Hejaz Financial Services today. For more details call us now on 1300 043 529.

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