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Investing in non-compliant companies

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Tue, 2002/02/05 - 12:00 by Muslim Investor

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.

Question:: My question is, even though certain companies, ie CitiBank, GE, AOL become un-investable in due to the Shariah screen, dont you think that if Muslims are going to change the way these companies do business, then they should become shareholders andhelp steer the direction of companies that do conduct Haraam activities. Also, don't youthink that by investing in companies like GE, and Disney etc etc, Muslims can help theUmmah because we all know what kind of clout these large multi-nationals have over USForeign policy?

Answer: I understand your concern, and I agree with your point that participation is required for change. But there are conditions to participation, and these are represented by our Shari`ah screens. The way that non-compliant companies will get the idea is through our investing in the competion, i.e., in companies that are Shari`ah-compliant. As Islamic funds grow in numbers and size, the market is certain to take note. Thus, to begin with, the important thing is to build our foundations, so to speak, in Shari`ah-compliant funds. Thereafter, normal market factorswill take over and, Allah willing, corporations will take note and begin to make the necessary adjustments. This is something which will not take place overnight. But the good news is that a beginning is being made, and the future is in your hands!

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