Hazara Islamicus (Jun 2019)
Impact Investment in Islam: A Review of Social, Environmental and Financial Motives
Abstract
The objective of this study is to discuss the Islamic perspective of Impact Investment, and to analyze its characteristics and requirements in the light of the guidelines given by the Islam. There are very limited studies that focus on the investment with the intention to achieve measurable social and /or environmental impact along with financial return in accordance with Islamic principles. Islamic principles provide a complete guideline for investment to generate wealth. The guidelines according to Sharia rules include: income from legitimate sources, business activities must be performed under the scope of social and environmental benefits, and equivalent sharing of risk and return. Impact Investment recently identified as a possible solution by academic researchers that propose various methods to solve the economic, social and environmental issues with the intention of measurable impact alongside financial return. How ever, to motivate Muslim entrepreneurs in this particular field, it is necessary to align the objective of impact investment with Islamic principles (Maqasid-al-Shariah). The objective of this effort is to present a workable model to Muslim entrepreneurs to transform simple investment into Islamic impact investment. The paper is divided in different parts; in the next section we briefly introduce the basic notion of impact investment, its purpose and different motives. In the following section, the detailed literature on the notion of Impact investment is discussed. After the literature review, the Islamic point of view is presented in the light of Quran and Hadiths. Conclusion of the paper is presented at the end of the paper.
