Assalaamu alaykum
Sustainability is massively important to me, (and hopefully all Muslims) and I believe in the efficacy of renewables.
When it comes to renewable energy investments they have long term goals to become profitable (like 5-10 years) (eg wind farm, solar farm, biogas plants)
Generally they take out loans (massive initial investment costs) to build the infrastructure of the company so the company is in massive debt initially, Then when it’s running they grow steadily until debt is eliminated, thereby becoming profitable. Which takes years to acheive
(this is my very limited understanding in this domain)
I understand from shariah compliance perspective this would then not be a permissable investment due to the massive debt:equity
However, how then, would Muslims be able to fund such massive and altruistic endeavours?
To wait until they are out of debt seems rather convenient? That we would allow non Muslims to go into debt then we’d join the company through share ownership after eliminating debt?
How could Muslims realistically create these companies then from ourselves…
I realise its a multifaceted question. I’m asking because I’d like to fund renewable endeavours through investing in their companies for the sake of our planets future.
I apologise if I’m asking it in the wrong place
Shukran
May Allah bless you.
I am also a firm believer of protecting planet Earth and believe, that it is an Islamic duty to do so.
In the UK, I met many Muslims who are sadly ignorant to this fact. We must educate ourself, and our children, about how to protect the environment.
However, the overall green finance industry is kind of obscure. According to The Economist article published on the 20th of June, there is a complete lack of transparency surrounding the green finance industry.They are many firms who claim to be climate-friendly but, who often invest in securities of firms who are big polluters. The Economist claims that green finance, suffer from confused thinking and bad data. They suggested that a far more rigorous approach of green finance is needed and soon, in order to fight climate change.
As far as financial shariah solutions are concerned, by the Grace of God, there are now some initiatives that have been undertaken. There is a good article and report published on this topic (see link below).
In terms of renewable energies, different portfolios fit different countries. The UK has probably the best wind resources in the whole of Europe, while Saudi Arabia has excellent conditions for solar power.
Unfortunately, I don’t think there are any shariah compliant investment for wind resources in the UK, but there is one for solar energy in the Middle East. Hence, for that reason I believe that until we find a halal investment here, we must support other shariah solutions around the world. As ultimately, protecting the planet, is not just a national duty, but a global one.