Beyond Qualitative and Quantitative Shari'ah Screening in Investments: Addressing Companies that Support Genocide

Introduction

In Islamic finance, Shari’ah screening serves as the foundational mechanism for ensuring that investments are compliant with Islamic principles. Traditionally, this screening process involves qualitative and quantitative criteria—prohibiting investments in haram (impermissible) sectors such as alcohol, gambling, pork, and interest-based financial services (qualitative), and ensuring companies do not have excessive levels of debt, interest income, or non-compliant activities (quantitative).

However, as the global ethical investment landscape evolves, Muslim investors and Shari’ah scholars are increasingly called upon to address deeper moral and humanitarian concerns, particularly the role of corporations in supporting genocide, apartheid, human rights abuses, and other forms of systemic oppression.

This article explores the need to go beyond traditional screening models by incorporating ethical red lines that consider a company’s complicity in genocide or oppression—and why this step is not only desirable but necessary for a truly Shari’ah-aligned investment strategy.

1. The Traditional Shari’ah Screening Framework

To understand the proposed expansion, we must first revisit the existing Shari’ah screening framework:

Qualitative Screening:

Islamic investment filters exclude companies directly involved in:

• Alcohol.

• Pork and non-halal food processing.

• Gambling and casinos.

• Pornography and adult entertainment.

• Conventional banking and insurance.

• Weapons and defense (in many jurisdictions).

Quantitative Screening:

Metrics vary by Shari’ah standards (e.g., AAOIFI, DJIM, FTSE Shariah), but they commonly examine:

• Debt-to-equity ratio (usually <33%).

• Non-compliant income (e.g., interest) not exceeding 5% of total revenue.

• Liquidity ratios.

While these standards are essential for financial purification, they do not always reflect the moral, social, or political activities of the companies involved—particularly their actions against oppressed populations.

2. The Limitations of Traditional Screening

While robust, the current framework focuses heavily on financial indicators and sector involvement, rather than the broader ethical footprint of a company.

For instance, a tech company might pass the quantitative test with minimal non-compliant income and may not operate in any haram sector. However, what if this company provides surveillance tools or data infrastructure to a regime involved in ethnic cleansing or genocide?

Would such a company still be deemed Shari’ah-compliant just because it passes traditional filters?

Example:

Several firms—especially in defense, surveillance, and AI—have been implicated in supporting oppressive regimes through:

• Providing tools for mass surveillance.

• Enabling digital apartheid.

• Facilitating illegal settlement expansion.

• Donating to entities involved in human rights violations.

These companies may not directly sell haram products, but their business partnerships, lobbying efforts, and logistical support have made them complicit in oppression. Such complicity violates the Maqasid al-Shari’ah—the higher objectives of Islamic law, which include justice, human dignity, and protection of life.

3. Incorporating Genocide and Oppression as a Red Line

Islamic finance, being rooted in divine ethics, must lead the global conversation in responsible investing by recognizing that Shari’ah Compliance goes beyond technical rules—it includes ethical consciousness and solidarity with the oppressed.

Therefore, there is a growing need to develop an “Ethical Shari’ah Screening” category that assesses:

• Direct and indirect corporate support for genocide or ethnic cleansing.

• Ties with regimes engaged in systemic oppression.

• Investment in illegal occupations, apartheid policies, or settler colonialism.

• Failure to respect international law and human rights norms.

Case for Prohibition:

A company that profits from the suffering and exploitation of vulnerable communities, or that enables oppression, violates the very spirit of Islam, even if it passes traditional screens.

In fact, Qur'anic injunctions and Prophetic traditions emphasize siding with the oppressed (Mustadh’afeen) and opposing injustice. The Prophet Muhammad (peace be upon him) said:

“Help your brother, whether he is an oppressor or oppressed.” When asked how to help an oppressor, he replied: “By preventing him from oppressing.” (Bukhari)

This Hadith serves as the moral compass for Shari’ah-compliant investing: if Muslims invest in companies that empower oppressors, they are failing in their religious duty.

4. Toward a Third Screening Layer: The “Ethical Responsibility Filter”

The solution is to expand the current two-tier screening (qualitative and quantitative) to a three-tier model:

✅ Qualitative Screening

• Sector-based prohibitions (alcohol, gambling, etc.).

✅ Quantitative Screening

• Financial ratios and thresholds.

✅ Ethical Responsibility Filter (Proposed)

• Screens for complicity in genocide, occupation, apartheid, and human rights abuses.

• Utilizes data from independent watchdogs (e.g., UN, Amnesty, BDS Movement, Human Rights Watch).

This layer can be applied through:

• A blacklist of companies supporting known oppressive regimes.

• Screening based on involvement in controversial weapons or surveillance tech used against civilians.

• Avoiding firms that fund illegal settlements or lobby for military occupations.

This layer shifts Islamic investing from ritual compliance to moral leadership—upholding justice, peace, and human dignity.

5. Role of Shari’ah Boards, Asset Managers, and Muslim Investors

Shari’ah Scholars and Boards

• Must integrate social justice principles into fatwas and screening methodologies.

• Issue guidelines on divesting from companies complicit in oppression.

Islamic Asset Managers

• Should adopt enhanced ethical screening tools.

• Develop ESG-Islamic hybrid models that incorporate humanitarian red lines.

Individual Muslim Investors

• Need to become informed and empowered, demanding greater transparency.

• Should ask tough questions about where their funds are invested.

Example:

Funds like the “Global Islamic Ethical Fund” or “Conscious Halal Investment Fund” could become models, ensuring portfolios are:

• Halal in structure.

• Ethical in impact.

• Aligned with Qur’anic values.

6. A Call to Action

The call is clear: in 2025 and beyond, Islamic finance must transition from Shari’ah-Compliant to Shari’ah-Inspired, embedding divine justice and human dignity into every investment decision.

As consumers, scholars, and institutions unite in this cause, Islamic finance can become a Beacon of Hope, showing the world that true Halal Investing is also deeply moral, courageous, and aligned with universal justice.

Let us remember the Qur’anic verse:

“And do not incline toward those who do wrong, lest the Fire touches you…” (Surah Hud, 11:113)

Investing in companies that support genocide, even indirectly, is an inclination toward wrongdoing. It’s time for the Islamic finance community to say ENOUGH!—and to act.