The new Shariah compliant ESG index scheduled for launch on the 30th May 2025 in Istanbul by the AlBaraka Forum for Islamic Economy (AFIE) is just the tip of a more extensive analysis tool developed by Pakistani firm Spectreco, based on a dataset that already has over 1.5 billion records.
This AI-powered system handles regulations, laws and a wide range of public information – including latest news developments – for output that can be used from credit management to risk mitigation, Spectreco Co-Founder Sajjeed Aslam shared with IFN Investor.
The project leverages off the technology foundation crafted with Spectreco’s establishment in 2022 to address issues raised by many firms in relation to ESG-compliance. After presenting at some forums, “business leaders approached us … (as) their main challenge was not knowing where to start”.
Delving deeper into this problem, Sajjeed found that consulting firms were often providing just paperwork – which wasn’t helping these businesses implement any real changes. “That is when we started exploring how to digitize these laws and use technology to simplify the process.”
Within a year, Spectreco secured a real estate client from the US – and the firm soon expanded to have branch outfits in the UK and Portugal. It was also during this period that Spectreco had frequent engagements with AFIE because of the close alignment between ESG and Shariah principles.
Forging a closer partnership, they had been working to develop this new ESG Shariah index for over a year because it was felt that there was a shortfall in currently available Shariah and ESG indices.
“Except for one or two cases, there isn’t really an index that integrates Shariah and ESG as core components together. Ours combines four key components of Shariah compliance, ESG criteria, financial performance and liquidity to be all integrated into a single index,” Sajjeed noted.
“This system provides flexibility for organizations to use all these benchmarks at once, rather than in a step-by-step or hierarchical manner where you first create an index and then add sub-indexes. The latter step-by-step process may allow errors or omit nuances,” Sajjeed said.
Another key point is that this new Shariah index will initially focus primarily on Saudi stocks, rather than being heavy on US equities. “Adaptations are planned for later, there will be opportunities to add more stock exchanges over time.”
