The Forbidden Industries of Islamic Finance - dummies

By Consumer Dummies

Most of the industry investments that Islam prohibits seem pretty obvious; you probably aren’t shocked to find that prostitution isn’t sharia-compliant. Here’s an overview of the industries Islamic investors must steer clear of:

  • Gambling: Muslims can’t invest in companies or activities that support gambling. In addition to prohibiting investments that would themselves involve too much risk, this criterion also means that an investor can’t support the construction of a casino; the operation of a lottery; or the promotion of horse and dog racing, Internet gambling, and so on. Leasing an investment property to a company that conducts a gambling-related business is also banned.

  • Pornography, prostitution, and the adult-entertainment industry: Islam considers the pornography, prostitution, and adult-entertainment industries to be harmful to society. Therefore, an investor can’t put money into a venture that involves products or businesses in these fields.

  • Specific food and beverage products: Some products in the food and beverage industry are prohibited because Islam prohibits their consumption. Foods and beverages that Muslims can consume are called halal. Forbidden items include

    • Pork: The Quran (the holy scripture of Islam) prohibits consuming pork and pork-based products (as well as any other meat that isn’t slaughtered according to Islamic principles), so investing in companies dealing with pork-based products isn’t acceptable.

    • Alcoholic beverages: Investing in companies involved in alcoholic products is also banned because the Quran specifically bans “intoxicants.”

  • Tobacco: Islamic scholars hold the opinion that tobacco isn’t good for personal health and therefore believe that Islamic standards prohibit investments in tobacco-related business.

  • Illegal drugs: Investing in any company or activity that supports the sale, distribution, or use of illegal drugs is also prohibited. (In fact, investing in a way that promotes any illegal activity goes against Islamic law.)