UNEPFI Membership: Will Islamic Finance turn to positive injunctions?
Michael Gassner pointed out to me his call for institutions engaged in Islamic finance to jointhe United Nations Environment Programme's Finance Initiative. This initiative aims to"promote linkages between sustainability and financial performance."
This is consistent with my earlier call in my book on Islamic Finance that those engaged in Islamic finance should support the earlier UN initiative for financial markets knows as "who cares wins."
I have long been a critic of the Islamic finance industry focusing mainly on avoiding prohibitions, but not recognizing that prohibitions are secondary to positive injunctions:
إن الله يأمر بالعدل و الإحسان و إيتاء ذي القربى و ينهى عن الفحشاء و المنكر و البغي، يعظكم لعلكم تذكرون"God commands justice, beautiful dealings, and generosity to one's kin, and forbids ugly dealings, blameworthy behavior, and transgression; he admonishes you, so that you may remember."
For instance, why are "Shari`a compliance" screens for stock investment simply negative in nature (avoiding certain types of stocks based on ratios that are often questionable religiously and economically, but that is another subject) and letting fund managers decide based on purely financial risk-return tradeoffs within the allowed universe of securities. It would make more sense for an "Islamic" portfolio to also balance how much good a company does in deciding how much weight to give it in an investment portfolio.
I second Michael Gassner's call, and hope that the trend toward more positive aspects in "Islamic finance" will eventually justify the name (rather than simply focusing on how to make people excessively indebted or otherwise mimic conventional financial players in ways that utilize medieval legal tricks).