Do We Need Halal or Ethical Investing?

to the Internal Revenue Service; and c) the effects of funding recipients’ work” (http:// www.sacw.net/article9057.html; http://www. sacw.net/IMG/pdf/US_HinduNationalism_ Nonprofits.pdf).

In the California textbook controversy of 2005-2006, the Vedic Foundation and Hindu Swayamsevak Sangh’s educational wing, the Hindu Education Foundation, led an effort to insert edits into California textbooks that foregrounded Hindu nationalist priorities and downplayed gender and caste oppression in Ancient India. d) Since the textbooks controversy, the Hindu American Foundation has become a voice for Hindu nationalist interests to U.S. politicians.

THE STATE DEPARTMENT REPORTS DETERIORATING HUMAN RIGHTS IN INDIA On April 5, leading Indian-origin American civil rights organizations welcomed the State Department’s 68-page Annual Report on Human Rights in India. Released on March 30 by Secretary of State Anthony Blinken, it detailed the Modi government’s massive violations of civil liberties, as well as its failure to prevent such violations and hold the perpetrators accountable.

The statement’s signatories included Hindus for Human Rights, the Dalit Solidarity Forum, the International Christian Concern, the Indian American Muslim Council (IAMC), India Civil Watch International, Students Against Hindutva Ideology and the Federation of Indian Christian Organizations of North America.

This report documents unlawful and arbitrary killings; torture, arbitrary arrest and detention; impunity for police, paramilitary and military violence; persecution of Dalits, Adivasis, Muslims and Christians; attacks on the news media and the internet and site blocking; criminalizing free speech and restricting freedom of expression; excessive curbs on NGOs; and restrictions on academic freedom.

It also highlights the brutal police crackdown on the “legitimate and peaceful protests” by students at Aligarh Muslim University, Jamia Milia Islamia and Jawaharlal Nehru University, which the government “portrayed as terrorist activities.” The Delhi police also “selectively pursued cases against Muslims and anti-CAA protesters.”

Arvind Rajagopal (professor, media studies, New York University; author, “Politics After Television: Hindu Nationalism and the Reshaping of the Public in India” [2001]) said the report was especially significant as it was the new administration’s first such report, adding, “We expect that President Biden will act on this report and raise the issues of human rights abuses with the Indian government.”

Rasheed Ahmed (executive director, IAMC) said, “The Modi government’s discriminatory citizenship law, the persecution of Muslims and other minorities, the pogrom against Muslims in Delhi and the manufacturing of criminal cases against Muslims for the violence, and the judiciary’s failure to provide justice all clearly indicate an alarming decline in civil liberties.”

In its annual report on global political rights and liberties, the U.S.-based nonprofit Freedom House downgraded India from a free democracy to a “partially free democracy” (https://www.washingtonpost.com/opinions/2021/03/11/ india-democracy-freedom-house-narendra-modi-rana-ayyub/; https://freedomhouse.org/report/freedom-world/2021/ democracy-under-siege).

The Sweden-based V-Dem Institute’s latest report on democracy said India had become an “electoral autocracy” (https:// www.v-dem.net/files/25/DR%202021. pdf). And in March, India — described as a “flawed democracy” — slipped two places (to 53) in the latest Democracy Index (published by The Economist Intelligence Unit). The report noted, “The BJP’s ideological approach leans towards Hindu nationalism, mixing social conservatism with a more aggressive foreign and security policy. Its growing dominance of national and state governments has thus challenged India’s secular tradition” (https://country. eiu.com/india).

The US Commission on International Religious Freedom called on the State Department to place India on a list of “countries of particular concern” for the second consecutive year, based on the sharp escalation in violations of human rights and religious freedom there.

One wonders if all of this will cause Biden and Harris to have their administration investigate the complicity of some Hindu Americans and U.S based Hindutva-oriented nonprofit organizations in supporting fascism in India. ih

FINANCE Do We Need Halal or Ethical Investing?

Halal and ethical screens are not the same thing

BY MUSTAFA UMAR

Ethical investing is on the rise in the U.S. “Impact investing,” “socially responsible investing” (SRI) and “environmental, social, and governance” (ESG) screens are now common terms in the finance industry. Today, ethical investing makes up over $1 out of every $4 under professional management in the U.S. This amounts to over $12 trillion in assets under management yearly, according to a 2018 survey by the U.S. Forum for Sustainable and Responsible Investment (www.ussif. org/blog_home.asp?display=118). They also reported a 38% increase from just two years prior.

Muslims have generally focused on halal (a.k.a. Sharia-compliant) investing. With the rise in ethical investing, the similarities and differences between the two models — halal and ethical — need to be understood. Both models forbid investments in pornography, gambling and alcohol. For example, halal models forbid investing in banks; ethical models do not. Ethical models forbid investing in companies that cause massive pollution; halal models do not.

Let’s say that Maryam wants to invest in

Do We Need Halal or Ethical Investing?

Halal and ethical screens are not the same thing

the stock market. She knows she cannot buy bonds, debt securities or money market instruments because they’re based on interest (riba). She also knows that she shouldn’t get involved in day trading stocks regularly, for doing so can result in excessive speculation and moral hazard (gharar). After careful study, she has decided to buy a few stocks in a tech company, the oil industry, a coffee store chain and a bank. Checking the Zoya Finance app on her phone will apply two screens to inform her whether they are halal or not.

First, a “Business Activity” screen will make sure that the nature of the business is not haram and that it does not sell too much (more than 5%) in terms of haram products (e.g., pork, alcohol, pornography, gambling, drugs or weapons). There is some gray area in applying the screens, but the app easily flags the bank as haram since banks primarily deal in interest-based loans.

The coffee shop chain may sell a marshmallow cake with porcine gelatin as an ingredient. However, this is the chain’s only haram product and makes up only a tiny percentage of its total revenue and profits. Therefore, Maryam must give whatever profit she makes from that percentage of “tainted” income to a charity to compensate — some suggest such income should be given to charities like a zoo, not to people.

Second, the “Financial” screen will check to make sure that the company minimizes haram financial activities. The tech company may sell many products and have plenty of cash in the bank, so it is likely loaning that money out on interest, even though that is not the company’s primary business. Islamic teachings about the environment, as well as human and animal rights and labor violations. Islam cares about health and safety breaches and seeks to discourage companies that help destroy society, whether it be in the U.S., Palestine or elsewhere. The fact that these important issues are absent should be addressed by adding appropriate ethical screening factors to the already-existing halal screening process.

However, the practical implementation of such screening factors is not so easy. The var-

THE CURRENT ETHICAL SCREENS DIFFER FROM ONE ANOTHER AND HAVE EVEN BEEN CRITICIZED RECENTLY FOR EITHER BEING TOO STRICT OR TOO LAX. MUSLIM SCHOLARS AND INTELLECTUALS WILL NEED TO DEVELOP THEIR OWN ISLAMICETHICAL SCREENS THAT ARE NOT INFLUENCED BY POLITICAL MOTIVATIONS FROM EITHER THE U.S., THE UN, OR ANY OUTSIDE ENTITY.

The two main ratios checked by the second screen are if the debt-to-market value ratio is less than 30% — otherwise, the company may be paying too much interest — and if cash and interest-bearing deposits are less than 30% of market cap. Otherwise, the company may be receiving too much interest.

Lastly, the app reminds Maryam that she must purify the “tainted” income and attempt to calculate the percentage of income derived from such haram sources so she can give that amount to charity, but without any expectation of reward. This is similar to what average Muslims do when keeping their money in the bank, for they cannot prevent the bank from paying them a small percentage of interest income on it. This charity attempts to make income 100% halal and also acts as an ethical protest against those practices.

The halal screen will most likely not flag the oil company if it meets the other conditions. However, ethical screens are likely to object to it based on its practices and how much environmental damage it causes.

What’s missing from the halal screen is ious ethical screens that exist differ greatly from one another and have been criticized for either being too strict or too lax. Muslim scholars and intellectuals need to develop their own Islamic ethical screens that are not influenced by political motivations from the U.S., the UN or any other outside entity. Perhaps the division of Islamic actions into required (fard), recommended (mustahabb), allowed (mubah), disliked (makruh) and prohibited (haram) can be used to enable Islamic ethical screens to allow some flexibility while developing the framework.

For now, remember that neither the current halal screens nor the ethical screens are enough to make an investment properly Islamic. Muslims need to up their game and expand their understanding of “ethical” beyond the current “halal” screens that exist. In the meantime, they need to review their investments by using a combination of halal and ethical screens so that God will be pleased with them and bless their wealth. ih

Mustafa Umar, founder, and president of California Islamic University, is director of education and outreach at the Islamic Institute of Orange County, as well as an executive member of the Fiqh Council of North America.