islamic finance vs. sustainability – commonalities and difference
DESCRIPTION
Presentation by Michael Gassner, Islamic Financial Engineer.TRANSCRIPT
Sustainable Swiss Private Banking since 1841.
Islamic Finance vs. Sustainability – Commonalities and Difference
Amsterdam, 13 November 2009Michael Gassner, Islamic Financial Engineer
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Vatican Newspaper
„L‘Osservatore Romano“
Professor Willem Buiter,
London School of Economics
International Monetary Fund
Islamic Finance intensively discussed …
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Sustainability and Islamic Finance in Harmony
“Sarasin defines Sustainable Management as “the production of goods and services with broad social acceptance using
production methods with a low potential for conflict.”
Reducing risks Seizing opportunities
Sustainability=
+
Ecology
Economy
Society
SustainableInvestments
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Islamic Wealth Cycle and the Products
Disposal
Creation
Preservation
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Islamic Finance, SRI and Sustainability - time to join each other …
Negative Industry Screens
In Common: Do not sin yourself!
Islamic: Alcohol, Interest, Pornography
SRI: Landmines, Child Labour, etc.
Negative Financial Screens
Strength of Islamic Finance
Interest Bearing Instruments
Stocks highly affected by Interest
Derivatives
Financial Weakness, Lack of Liquidity
Positive Screens
Strength of Sustainability
Social Investing; Poverty Alleviation
Energy & Climate, Water, Health,
Consumption, Mobility, Smart Housing
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Bank Sarasin: Financial Screening Criteria (Islamic)
Financial Ratios:
Leverage Compliance: Total Debt / market capitalisation (12 m average) < 33 %
Cash Compliance Level 1: Account receivables / market capitalisation (12 m average) < 33 %
Cash Compliance Level 2: (Cash + Cash Equivalents) / market capitalisation (12 m average) < 49 %
Interest Income to Total Income below 5 %
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Negative Industry Screens Compared
Islamic Finance Sustainability
Pornography Pornography
Tobacco Tobacco
Alcohol Nuclear Energy
Gambling Armaments
Financials (Interest prohibition) Chlorine & agrochemicals
Porc Genetic engineering
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Bank Sarasin Islamic Screening Process
Global Investment Universe
Portfolio Construction
Filtered for accordance with Sharia Law by Islamic Finance team, Bank Sarasin, in conjunction with our Sharia Board consisting of:
Sheikh Dr. Mohamed Elgari, Dr Imran Usmani and Dr Monzer Kahf
Output = Sharia Compliant Global Investment Universe List
Investment strategy of
Sarasin Sustainable Investment®
Risk Controlling:• Style• Tracking error • Security risks• Liquidity
Investment Decision Process
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Consistent Investment Decision Process
Investment Universe
Investment Decision Process
Portfolio Construction
Filter in accordance with
Sharia
Islamic Portfolio
Inconsistent Investment & screening process
Investment Universe
Investment Decision Process
Portfolio Construction
Filter in accordance with
Sharia
Islamic Portfolio
Investment & screening process of Bank Sarasin
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Two sided coin:Islamic Finance, SRI and Sustainability
Negative Industry Screens
In Common: Do not sin yourself!
Islamic: Alcohol, Interest, Pornography
SRI: Landmines, Child Labour, etc.
Negative Financial Screens
Strength of Islamic Finance
Interest Bearing Instruments
Stocks highly affected by Interest
Derivatives
Financial Weakness, Lack of Liquidity
Positive Screens
Strength of Sustainability
Social Investing; Poverty Alleviation
Energy & Climate, Water, Health,
Consumption, Mobility, Smart Housing
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Contact Details
Bank Sarasin & Co. LtdMichael GassnerLoewenstrasse 118022 ZurichSwitzerland
Phone +41 (0)44 213 9306Fax +41 (0)44 213 9291
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Important Information
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