Wednesday, July 23, 2008

Shouldn't Islamic funds be socially and environmentally responsible too?

The big winners in faith funds (if you can be so crass) are the Islamic funds. They screen out "sin stocks"—and producers of pork products. The profitable difference is riba, or interest. The Qur'an strictly prohibits the borrowing or lending of money at interest: "Whatever you give as riba so that it might bring increase through the wealth of other people will bring you no increase with Allah," it says. Because of this prohibition, Islamic mutual funds, like those in the Amana group, don't invest in financial-services companies: they escaped the subprime mortgage debacle altogether. Most energy companies, however, are fine. "We don't consider ourselves an environmental or socially responsible fund," says Monem Salam, Amana's director of Islamic investing. "Energy was a big part of our growth."

Over the past year, the Amana funds outperformed the market; their assets have more than doubled from $400 million in 2003 to $1.3 billion this year. Five years ago, most of Amana's investors were American Muslims, Salam adds. Now, he guesses, 80 percent of new investors are non-Muslims.

Continue at Newsweek

Good news: 'Islamic' funds exist and they stay away from anything to do with pork, "sin", and riba-dealing financial services - and, they're leading the market.

But the statement "We don't consider ourselves an environmental or socially responsible fund" doesn't give me a warm, fuzzy feeling.

I will not pretend we live in an ideal world but it would be great if Muslim funds moved to being more environmentally and socially responsible. I am not sure were the line should be drawn but I think some thought should be put into this. A flat out statement like the above should raise some questions from the Muslims investing in the fund.

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