The convergence between Islamic finance and responsible investing has become clearer. Responsible investing exhibits similar facets to Islamic finance where both are values-based approaches, strong on risk management and aim to eliminate poverty through humanitarian welfare. In November 2020, Securities Commission Malaysia (SC) launched the Waqf-Featured Fund Framework which aims to facilitate the offering of funds with Waqf features. Following the launch of this framework, BIMB Investment introduced its first Waqf-featured unit trust fund, Makmur myWakaf Fund, which integrates Shariah compliant environmental, social and governance (ESG). The fund aims to channel half of the potential monthly income distribution for Waqf purposes. The development of Waqf is a significant contributor to social development, greater public good and wealth distribution.
As an Islamic fund manager that integrates ESG into our investment process, we leverage on the Arabesque S-Ray tool to identify Shariah ESG-compliant equities. The platform’s data engine evaluates companies’ sustainability performance across a spectrum of ESG dimensions to create a suite of proprietary scores including S-Ray ESG, UNGC and Temperature, in addition to the Preference Filter that allows for the screening of companies to align with our Islamic values.
We began our journey toward sustainability in 2015, having recognized that sustainability is a rising global trend which greatly influences the financial and investment sectors. We observed that ESG factors were becoming mainstream and there was an opportunity to integrate ESG into our investment process. This led us to form a strategic partnership with Arabesque Asset Management, enabling us to pioneer artificial intelligence and big data technology. We then took the lead among fund managers to become a signatory of the UN Principles for Responsible Investment in 2019.
We are currently seeing the emergence of equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms. This is because there is a huge funding gap in the market for SMEs. ECF and P2P are established to provide funding to SMEs through their digital platforms which bridge the gap between issuers (borrowers) and investors (lenders). We see this as an opportunity to expand our investables by incorporating responsible investing into the investment universe.
Disclaimer: This article is solely for information purposes and based on information obtained from sources we believe to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Expressions of opinion contained herein are those of BIMB Investment Management Berhad only and are subject to change without notice. This article should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell BIMB Investment Management Berhad’s unit trust funds. Any persons wishing to rely upon the information produced in this article should perform their own independent evaluation of risks and benefits or consult directly with the source of information or obtain professional advice. The information in this article has not been reviewed by the SC.