Middle Eastern Businesses Working to Define Sustainability in Islamic Terms
Sunday, June 24, 2007 / KW
With a major CSR Summit opening this weekend in Dubai, it's a good time to glance at the fascinating and complex issues surrounding sustainability in the Muslim world, particularly in the Middle East.
Over a year ago, Dow Jones and Sam Group--the people who brought you the Dow Jones Sustainability Indexes--launched the Dow Jones Islamic Market Sustainability Index, a new index that tracks the performance of 105 companies whose operating methods meet both the requirements of Islamic Sharia law and the principles of sustainability. The index excludes producers of alcohol and pork-related products, providers of conventional (i.e., non-Islamic) financial services, tobacco manufacturers, weapons suppliers, and providers of entertainment services (hotels, casinos/gambling, movies, music, and so on). Stocks are also subjected to a series of financial-ratio screens to remove companies characterized by high debt and interest income levels.
As this list of screens suggests, the DJIMSI illustrates how the values implicit in the concept of sustainability are shaped by cultural considerations. Many in the socially responsible investment communities in the United States and Europe would join the DJIMSI in shying away from cigarette makers and arms dealers, but relatively few would consider bacon or pork sausages problematic products (except, perhaps, to the extent that they contribute to obesity--as my wife likes to remind me).
On the other hand, much in Sharia law resonates with concerns embraced by sustainability advocates the world over. Here's how a special report on financial sector responsibility sponsored by Pricewaterhouse Coopers and published in Ethical Corporation magazine put it last November (link via the World Council for Sustainable Business Development):
By contrast with the problem of global climate change, even the deeply troubling moral, political, and social challenges posed by the ongoing Palestinian-Israeli conflict may one day appear minor.
As forces ranging from Islamic fundamentalism to U.S. military might battle for influence throughout the region, we can hope that the movement toward sustainable economic development will play an increasing role in encouraging modernization, transparency, environmental responsibility, and social liberalization on the part of both governments and businesses in the Middle East. The fact that more and more Muslim-run companies are signing on to the sustainability movement is an encouraging trend.
Meanwhile, the complexity of the issues involved in sustainability Islamic-style means that managers of firms elsewhere in the world that are involved in business in the Middle East need to think long and hard about how they define corporate responsibility so as to ensure that their values are truly in synch with those of their partners in the region.
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Add a comment - Over a year ago, Dow Jones and Sam Group--the people who brought you the Dow Jones Sustainability Indexes--launched the Dow Jones Islamic Market Sustainability Index, a new index that tracks the performance of 105 companies whose operating methods meet both the requirements of Islamic Sharia law and the principles of sustainability. The index excludes producers of alcohol and pork-related products, providers of conventional (i.e., non-Islamic) financial services, tobacco manufacturers, weapons suppliers, and providers of entertainment services (hotels, casinos/gambling, movies, music, and so on). Stocks are also subjected to a series of financial-ratio screens to remove companies characterized by high debt and interest income levels.
As this list of screens suggests, the DJIMSI illustrates how the values implicit in the concept of sustainability are shaped by cultural considerations. Many in the socially responsible investment communities in the United States and Europe would join the DJIMSI in shying away from cigarette makers and arms dealers, but relatively few would consider bacon or pork sausages problematic products (except, perhaps, to the extent that they contribute to obesity--as my wife likes to remind me).
On the other hand, much in Sharia law resonates with concerns embraced by sustainability advocates the world over. Here's how a special report on financial sector responsibility sponsored by Pricewaterhouse Coopers and published in Ethical Corporation magazine put it last November (link via the World Council for Sustainable Business Development):
The Islamic faith creates an entire social order. While private property is defended, individual rights are subject to the rights of others in the community to benefit from environmental resources such as water, forests, air and sunlight. These are held in common by all members of society. If you degrade a resource, you are accountable for its use and liable for its repair.These are elements of Islamic business that everyone from Greenpeace to child labor protestors could admire. Yet at the same time, it's clear that there are major challenges facing Middle Eastern businesses that are eager to embrace sustainability--starting with the fact that the economy of the region is mainly based on the production and marketing of fossil fuels that are deeply implicated in what appears to be the greatest environmental threat in the history of our planet.
There is even a process in Islam akin to the assessment of impacts on stakeholders and the resolution of conflicts between them so as to maximise the overall public interest, known as maslahah mursalah. Special care is taken to prioritise the interests of the weak and vulnerable.
Islamic finance is expected to follow suit. More than one commentator has suggested that Islamic banking could establish a model by which modern banking could be re-imbued with ethical norms.
By contrast with the problem of global climate change, even the deeply troubling moral, political, and social challenges posed by the ongoing Palestinian-Israeli conflict may one day appear minor.
As forces ranging from Islamic fundamentalism to U.S. military might battle for influence throughout the region, we can hope that the movement toward sustainable economic development will play an increasing role in encouraging modernization, transparency, environmental responsibility, and social liberalization on the part of both governments and businesses in the Middle East. The fact that more and more Muslim-run companies are signing on to the sustainability movement is an encouraging trend.
Meanwhile, the complexity of the issues involved in sustainability Islamic-style means that managers of firms elsewhere in the world that are involved in business in the Middle East need to think long and hard about how they define corporate responsibility so as to ensure that their values are truly in synch with those of their partners in the region.
Labels: Dow Jones Islamic Market Sustainability Index, Finance and Investment, Sharia law
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By 
AS, on
June 24, 2007 6:42 PM
Andy, you mention the "incremental approach." I would think that those are crucial words. When dealing with some as big and deeply ingrained as societal mores reinforced by religious beliefs, patience and steady, strong, non-confrontational leadership are key to creating the possibility of positive change.
By KW, on
June 24, 2007 6:56 PM
Gender equality is also big issue for businesses operating in fundamentalist countries. Procter & Gamble has invested time and resources to advance the cause of gender equality which, in certain Mid-East countries includes simply being allowed to bring P&G women executives to certain meetings. DuPont has also wrestled with probibitions on women working at night in certain Indian regions. They have female night shift workers who are not able to work in come cases.
These companies are taking an incremental approach, working in small steps to move towards a more equitable, efficient and productive business environment.
Andy