New report from RFI Foundation & Refinitiv explores the synergies between Shariah and ESG Screens in Emerging Markets

London, United Kingdom, 12 September 2023 – The RFI Foundation, in collaboration with Refinitiv, launched the "Islamic Finance ESG Outlook 2023: Balancing Performance and Risk." This comprehensive report navigates the intersection of Shariah and ESG screens, shedding light on their harmonious potential within OIC markets.

Against the global backdrop of the Covid-19 pandemic, the spotlight on ESG considerations has grown stronger. Over the past five years, the integration of ESG practices within Islamic financial institutions has undergone remarkable growth, offering both challenges and transformative opportunities.

The report reveals an important correlation: companies in Emerging Markets adhering to Shariah principles that display lower ESG scores exhibit significantly improved investment performance compared to higher ESG-scoring counterparts. This correlation doesn't suggest that ESG and Islamic investments are incompatible; rather, it highlights the capacity for Shari’ah screens to provide a different and complementary form of risk mitigation than ESG scores.

Blake Goud, CEO of RFI Foundation, highlights, "This report contributes to the evolution of our sector by shedding light on the investment impact of combining ESG considerations with Shariah screening. It shows the potential for Islamic finance to contribute not only to the objectives it shares with broader responsible finance, but also to provide the potential for improving investment outcomes as well."

As the industry embraces a transformative period, our report serves as a guidepost inviting stakeholders to explore further the nexus of Shariah and ESG integration.

The report is available for download at Zawya.com.