The Iranian Association of Islamic Finance held its annual conference online this year. It made an opportunity to provide access to thinkers around the world.
Mr. Saeed Homayoun was one of the invitees who gave his speech about recently released S&P500 Shariah compliant index for adopting companies for IPO. S&P500 released a guideline for Sharia Advisory Committees in line with corporate governance and business ethics.
This guideline focuses on the other aspects of investigating a company for listing and IPO. At present, Sharia Boards and Sharia Advisory Committees are just investigating companies’ financial position and going concern status, while there are other aspects such as governance in business ethics, social responsibility and environmental care. There are also no criteria or categorized items for these topics. S&P500 guideline has highlighted ESG factors and has classified criteria. it has also suggested Sharia Advisory Committees to specify mandatory and voluntary requirements. For the next step, companies should be ranked according to the level of their compliance with voluntary requirements.
There is no doubt that authorities in Sharia Boards and Sharia Advisory Committees are investors’ representatives to protect their rights. Hence, adopting precise and comprehensive criteria mitigates downside risks.
Since the outbreak of COVID-19, businesses with minimum social and environmental role have been damaged seriously. Specially those businesses contaminated environment. Provided existing excusive criteria for defining social and environmental aspects could assist companies coping with the virus and its consequences,he added.
At the end, he recommended Iran should have an outstanding presence and collaborate with international expert forums, association and research institutes in Islamic finance. He suggested that our Sharia Committees initiate and adopt social, environmental and governance (ESG) indices. .