Islamic Finance vs. Sustainability – Commonalities and Difference

1,112 views

Published on

Presentation by Michael Gassner, Islamic Financial Engineer.

Published in: Economy & Finance, Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,112
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
44
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Islamic Finance vs. Sustainability – Commonalities and Difference

  1. 1. Islamic Finance vs. Sustainability – Commonalities and Difference Amsterdam, 13 November 2009 Michael Gassner , Islamic Financial Engineer
  2. 2. Vatican Newspaper „ L‘Osservatore Romano“ Professor Willem Buiter, London School of Economics International Monetary Fund Islamic Finance intensively discussed …
  3. 3. Sustainability and Islamic Finance in Harmony “ Sarasin defines Sustainable Management as “ the production of goods and services with broad social acceptance using production methods with a low potential for conflict.” Reducing risks Seizing opportunities + Sustainability = Ecology Economy Society Sustainable Investments
  4. 4. Islamic Wealth Cycle and the Products Disposal Creation Preservation
  5. 5. Islamic Finance, SRI and Sustainability - time to join each other … <ul><li>Negative Industry Screens </li></ul><ul><li>In Common: Do not sin yourself! </li></ul><ul><ul><li>Islamic: Alcohol, Interest, Pornography </li></ul></ul><ul><ul><li>SRI: Landmines, Child Labour, etc. </li></ul></ul><ul><li>Negative Financial Screens </li></ul><ul><li>Strength of Islamic Finance </li></ul><ul><ul><li>Interest Bearing Instruments </li></ul></ul><ul><ul><li>Stocks highly affected by Interest </li></ul></ul><ul><ul><li>Derivatives </li></ul></ul><ul><li>Financial Weakness, Lack of Liquidity </li></ul><ul><li>Positive Screens </li></ul><ul><li>Strength of Sustainability </li></ul><ul><ul><li>Social Investing; Poverty Alleviation </li></ul></ul><ul><ul><li>Energy & Climate, Water, Health, </li></ul></ul><ul><ul><li>Consumption, Mobility, Smart Housing </li></ul></ul>
  6. 6. Bank Sarasin: Financial Screening Criteria (Islamic) <ul><li>Financial Ratios: </li></ul><ul><li>Leverage Compliance: </li></ul><ul><li>Total Debt / market capitalisation (12 m average) < 33 % </li></ul><ul><li>Cash Compliance Level 1: </li></ul><ul><li>Account receivables / market capitalisation (12 m average) < 33 % </li></ul><ul><li>Cash Compliance Level 2: </li></ul><ul><li>(Cash + Cash Equivalents) / market capitalisation (12 m average) < 49 % </li></ul><ul><li>Interest Income to Total Income below 5 % </li></ul>
  7. 7. Negative Industry Screens Compared Islamic Finance Sustainability Pornography Pornography Tobacco Tobacco Alcohol Nuclear Energy Gambling Armaments Financials (Interest prohibition) Chlorine & agrochemicals Porc Genetic engineering
  8. 8. Bank Sarasin Islamic Screening Process Global Investment Universe Portfolio Construction Filtered for accordance with Sharia Law by Islamic Finance team, Bank Sarasin, in conjunction with our Sharia Board consisting of: Sheikh Dr. Mohamed Elgari, Dr Imran Usmani and Dr Monzer Kahf Output = Sharia Compliant Global Investment Universe List Investment strategy of Sarasin Sustainable Investment ® <ul><li>Risk Controlling: </li></ul><ul><li>Style </li></ul><ul><li>Tracking error </li></ul><ul><li>Security risks </li></ul><ul><li>Liquidity </li></ul>Investment Decision Process
  9. 9. Consistent Investment Decision Process Investment Universe Investment Decision Process Portfolio Construction Filter in accordance with Sharia Islamic Portfolio Inconsistent Investment & screening process Investment Universe Investment Decision Process Portfolio Construction Filter in accordance with Sharia Islamic Portfolio Investment & screening process of Bank Sarasin
  10. 10. Two sided coin: Islamic Finance, SRI and Sustainability <ul><li>Negative Industry Screens </li></ul><ul><li>In Common: Do not sin yourself! </li></ul><ul><ul><li>Islamic: Alcohol, Interest, Pornography </li></ul></ul><ul><ul><li>SRI: Landmines, Child Labour, etc. </li></ul></ul><ul><li>Negative Financial Screens </li></ul><ul><li>Strength of Islamic Finance </li></ul><ul><ul><li>Interest Bearing Instruments </li></ul></ul><ul><ul><li>Stocks highly affected by Interest </li></ul></ul><ul><ul><li>Derivatives </li></ul></ul><ul><li>Financial Weakness, Lack of Liquidity </li></ul><ul><li>Positive Screens </li></ul><ul><li>Strength of Sustainability </li></ul><ul><ul><li>Social Investing; Poverty Alleviation </li></ul></ul><ul><ul><li>Energy & Climate, Water, Health, </li></ul></ul><ul><ul><li>Consumption, Mobility, Smart Housing </li></ul></ul>
  11. 11. Contact Details <ul><li>Bank Sarasin & Co. Ltd </li></ul><ul><li>Michael Gassner </li></ul><ul><li>Loewenstrasse 11 </li></ul><ul><li>8022 Zurich </li></ul><ul><li>Switzerland </li></ul><ul><li>Phone +41 (0)44 213 9306 </li></ul><ul><li>Fax +41 (0)44 213 9291 </li></ul><ul><li>[email_address] </li></ul>
  12. 12. Important Information <ul><li>This publication has been prepared by Bank Sarasin & Co. Ltd, Switzerland, (hereafter “BSC”) for information purposes only. It contains selected information and does not purport to be complete. This document is based on publicly available information and data (“the Information”) believed to be correct, accurate and complete. BSC has not verified and is unable to guarantee the accuracy and completeness of the Information contained herein. Possible errors or incompleteness of the Information do not constitute legal grounds (contractual or tacit) for liability, either with regard to direct, indirect or consequential damages. In particular, neither BSC nor its shareholders and employees shall be liable for the opinions, estimations and strategies contained in this document. The opinions expressed in this document, along with the quoted figures, data and forecasts, are subject to change without notice. A positive historical performance or simulation does not constitute any guarantee for a positive performance in the future. Discrepancies may emerge in respect of our own financial research or other publications of the Sarasin Group relating to the same financial instruments or issuers. It is impossible to rule out the possibility that a business connection may exist between a company which is the subject of research and a company within the Sarasin Group, from which a potential conflict of interest could result. </li></ul><ul><li>This document does not constitute either a request or offer, solicitation or recommendation to buy or sell investments or other specific financial instruments, products or services. It should not be considered as a substitute for individual advice and risk disclosure by a qualified financial, legal or tax advisor. </li></ul><ul><li>This document is intended for persons working in countries where the Sarasin Group has a business presence. BSC does not accept any liability whatsoever for losses arising from the use of the Information (or parts thereof) contained in this document. </li></ul><ul><li>© 2009 Copyright Bank Sarasin & Co. Ltd. All rights reserved. . </li></ul>
  13. 13. For further information please contact us

×