Shari’ah investing is ESG adjacent by design

Shari’ah and environmental, social and governance factors (ESG) are frequently discussed as parallel concepts. In reality, they are partially overlapping systems that approach risk from different starting points. Both exclude activities associated with clear social harm – such as alcohol, gambling, adult entertainment, tobacco, and weapons. ESG frameworks often extend further into fossil fuels, controversy monitoring, and composite scoring. In contrast Shari’ah investing adds two decisive constraints: the exclusion of conventional financial services and explicit limits on leverage through financial ratio screening.