| June 15
June 15 Saudi Arabia's Sedco Capital said on
Thursday it has launched an investment strategy combining
environment-conscious and sharia-compliant principles, as
Islamic financial firms gradually embrace socially responsible
The move by Jeddah-based Sedco, an Islamic firm managing
$1.8 billion worth of Luxembourg-listed funds, could help
develop green investing in the Middle East and make Islamic
finance appeal to a wider client base.
The two areas of investment share several characteristics,
such as excluding investment in tobacco, alcohol and gambling.
Green finance is increasingly important for Islamic firms
seeking to differentiate themselves from peers, the
Bahrain-based General Council for Islamic Banks and Financial
Institutions said in a December report.
Sedco, in a statement on Thursday, said its new strategy,
dubbed Prudent Ethical Investing, would focus on due diligence
and transparency around investment structures, while integrating
environmental, social and governance (ESG) criteria.
"We want to expand our relationships globally and one of the
most important elements is the awareness of responsible
investing," Chief Executive Officer Hasan Aljabri said in an
interview ahead of the announcement.
"For our Luxembourg funds we see some clients which are
conventional gradually trickling in," he said, referring to
investors who do not traditionally put money into Islamic funds.
The firm launched two ESG funds in 2012 and has published
research which it said showed how a combined investment approach
can outperform conventional funds.
According to its research, such a strategy can lead to
investments with lower financial leverage and better cash
conversion qualities, adding a prudential element to those
Islamic fund managers have predominantly followed passive
filters that exclude prohibited sectors, but ESG can encourage
them to take a more active approach.
"We are a lot more focused on energy efficiency, water
preservation and management, and we are also looking into social
factors like labour relations," Aljabri said.
In 2014, Sedco became the first Saudi asset manager and
first fully sharia-compliant asset manager to become a signatory
of the United Nations Principles of Responsible Investing.
(Reporting by Bernardo Vizcaino; Editing by Christopher