Research: number of ESG Shariah funds to increase in next two years

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The number of investment funds that comply with both ESG and Shariah standards could increase sharply over the next two years, suggests a recent study by Maybank Islamic Berhad in collaboration with IslamicMarkets.com.

Non-Muslims will also be interested in such funds

The research intimates 36% of Islamic Finance professionals across several sectors expect a dramatic increase in the number of such funds. According to CEO Dato’ Mohamed Rafique Merican of Maybank Islamic:

Islamic Finance is indeed growing strongly but we believe the growth could be further boosted if it was able to offer Shariah and ESG compliant funds globally. This study is showing that potential demand for such funds would rise from traditional as well as the non-Muslim investors.

49% of these experts see at least a slight increase in the number of ESG Shariah investment products in the coming years.

The need for a unified regulatory and legal framework

On the flip side, 73% of professionals said the current Islamic Finance market underserved the consistently rising demand for ESG. As per Shakeeb Saqlain – the chief executive of IslamicMarkets:

There’s a widespread agreement that the current Islamic Finance market is not meeting the potential demand for ESG and Shariah-compliant funds even though there’s an expectation of growing number of funds being launched. The lack of global regulatory and legal framework remains an issue.

Just over half of them anticipate good progress on the aforementioned issue in the next two years.

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