A Socially Responsible Islamic Finance (eBook)

Umar F. Moghul is a corporate and finance lawyer. For nearly fifteen years, he has assisted financial institutions, asset managers, and investors seeking to bring their businesses into compliance with Islamic law. He has designed a number of cutting edge Islamic investment vehicles and financial products in private equity and real estate. He presently teaches Islamic Law and Islamic Finance at University of Connecticut School of Law, USA; Islamic Business Ethics at Hartford Seminary, USA; and Halal Food Laws at Michigan State University College of Law, USA.

Dedication 6
Acknowledgments 7
Contents 8
Introduction 9
Note 11
Chapter 1: Islamic Spirituality: An Impetus to Responsibility and Impact 12
The Shari’ah 13
The Spiritual Environment 15
Purpose 17
The Heart 17
A Cycle of Tazkiyyah 20
Sustenance and Work 27
Renunciation (Zuhd) 29
Excellence (Ihsan) 31
Renunciation and Excellence in Business 32
Analysis and Recommendations 34
Transforming Business Spiritually 34
The Purpose of Business 36
Notes 38
Chapter 2: Congruence and Convergence: Contemporary Islamic Finance and Social Responsibility 49
Introduction 49
Islamic Finance 50
Introducing Islamic Legal-Ethics 50
Legal Values 53
Some Principles of Commerce 54
Stakeholders 56
Who Are They? 57
What Are They Owed? 58
What Do They Want? 61
Sustainability and Islamic Ethics 63
Convergence 66
Bringing Responsibility to Islamic Finance 67
Providing Determinacy to Responsibility 72
The Irresponsibility of Debt 74
Analysis and Recommendations 76
Notes 79
Chapter 3: Sketching Consciousness: Natural and Built Environments 92
Islam and the Natural Environment 94
Spiritual Foundations 94
Islamic Environmental Law 97
Land Pollution 97
Water Pollution 98
Air Pollution 98
Resource Conservation 99
Minerals 99
Plants and Animals 100
Liability and Sanction 103
Coloring Finance Green 104
Contemporary Practice: Sukuk 105
Soft Law 107
Classifying Soft Laws 108
Sketching a Framework 112
Finding Congruence 115
Responsible Built Environments 115
Islam and Built Environments 117
Islamic Built Environment Law 119
Cities 122
Homes 124
The Shari’ah as Soft Law? 126
Natural Environment Standards 127
Built Environments Standards 128
Fatwa Criteria 130
One Report 132
Analysis and Recommendations 136
Notes 137
Chapter 4: Fatwas as Feedback Loops: Authenticity, Education, and Dialogue 164
Fatwas 165
Then and Now 165
Contemporary Islamic Finance Fatwas 172
The DJIMI Fatwa 175
Islamic Finance: Contemporary Practice as a System 178
Systems Thinking: A Brief Precis 178
Sukuk and the Critique of Authenticity 180
The Authenticity Loop 183
Consultation 187
Analysis and Recommendations 193
Evolving Fatwas 193
Consultative Fatwas 196
Mitigating Risk 200
Fatwas and Feedback Loops 202
Notes 204
Chapter 5: Designing Mindful Contracts 217
Vigilance 220
Transparency 222
Islamic Finance Contracts 226
Legal Overview 226
Descriptions and Prescriptions 230
Smoothing Returns 232
Tawarruq 233
Bifurcated Structure 234
Home Finance and Governing Law 236
Four Corners 239
Reintroducing Spirituality to Contract Governance 240
Gatherings 241
Mindful Contracts 242
Ownership 245
Designing Forbearance 247
Stakeholder Responsibilities 251
Improving Governance 252
Notes 253
Chapter 6: Structuring Philanthropic Partnerships, Mission Lock, and Impact Investments 266
Responsible Capital and Business 268
Mission Risk 268
Exiting Responsibly 271
Catalytic Capital 272
Measurement 273
Two Examples 273
A History of Giving 275
Institutionalizing Giving 277
Analysis and Recommendations 280
A Paradigm Shift 280
Lessons from an Ice Cream Maker 282
Beyond Islamic Finance 286
Notes 290
Chapter 7: Returning 302
Notes 303
Select Bibliography 304
Index 311