Another route into the ethical investment universe is through the rapidly-growing Islamic investment industry. Investments constructed along the principles of Shariah law automatically screen out companies deemed to have a harmful effect on society or that are anathema to the Islamic religion,for instance those connected with alcohol, gambling, pornography, armaments, and pork.
Importantly,Shariah law also precludes the charging of interest, which is deemed to be profit made without effort and with no beneficial effects on the community at large. This puts a large swathe of conventional investment off limits to Islamic investors, although a number of specially constructed investment products continue to be approved which circumvent the need to charge interest, and which are proving ever popular. Islamic equity funds are widely available in the traditional Muslim territories of the Middle East and the Far East where many major banks and investment firms offer the products to retail investors. Islamic finance is also gaining a foothold in the west, with many specialist institutions appearing in countries such as the UK and the United States dedicated solely to selling Islamic investment products. Moreover, some major western banks, including the likes of HSBC and Deutsche Bank, are getting in on the act, with more sure to follow.
In some respects, the Islamic banking and finance industries are still in their infancy. However, the sector has grown sharply in the last decade or so, and with the global Muslim population currently around 2 billion, growth potential is clearly in place, so expect to see Islamic investment become an established feature of the investment landscape in years to come.