It integrates Shariah compliance and ESG principles to achieve sustainable financial returns
by AKMAR ANNUAR
FICUS Capital has been on a journey to encourage responsible investment in small and medium enterprises (SMEs) and start-ups.
With over 70 years of expertise in banking, investment, technology and entrepreneurship, it operates on a Quadruple Bottom Line (QBL) approach — emphasising people, planet, profit and principle.
Shariah compliance and environmental, social and governance (ESG) principles are deeply embedded in this strategy to ensure sustainable financial returns while maintaining high ethical standards.
Ficus Capital’s co-founders Abdullah Hidayat Mohamad (picture) and Rina Neoh discussed the integration of ESG and Shariah compliance in their investment strategy.
“ESG is not just about green practices but a holistic approach to management.
“As awareness of social and environmental issues grows, so does the demand for sustainable investment options adhering to Islamic finance principles,” Abdullah told The Malaysian Reserve (TMR).
Ficus Capital’s flagship fund, Ficus SEA, focuses on accelerating the growth of high-potential tech start-ups in South-East Asia.
The fund consists of Shariah principles, ESG and sustainable growth.
Neoh said this approach allows the team to coach start-ups not only on product-market fit and fundraising but also on governance and social practices, which are often the weak points for start-ups.
Ficus Capital has developed an ESG investment assessment tool in collaboration with INSEAD University to help start-ups benchmark their ESG performance.
This tool facilitates better compliance and sustainability practices, ensuring that start-ups are not only viable but also attractive to future investors.
Addressing ESG challenges, Abdullah said young companies often prioritise immediate survival over compliance due to limited resources.
“We educate them on the importance of ESG compliance for attracting future investments and accessing broader markets,” he added.
Based on the notion that ESG factors are deeply rooted in Islamic economics and investment ethics, Ficus Capital has introduced the Ficus ESG-Islamic (ESG-i) framework.
Abdullah said merging Shariah principles, ESG and sustainable growth is not new but has yet to be fully contextualised.
Current scenarios such as climate change, global social interaction, structured risk governance and measurable growth have highlighted the importance of consolidating these values.
Abdullah said SMEs will benefit the most from this framework, which stresses on gradual adoption, in line with the Islamic principle of tadarruj (gradual).
Ficus Capital has also partnered with the International Centre for Education in Islamic Finance (INCEIF) University to refine the framework.
INCEIF connects Ficus Capital with industry, government officials, regulators and academia to obtain feedback and ideas for the Ficus ESG-i framework.
Compliance assessment will be carried out on an outcome basis through screening business practices, questionnaires and interviews in accordance with the QBL parameters and other established frameworks such as the United Nation Sustainable Development Goals (UNSDG) and Global Reporting Initiatives.
The assessment ranks companies into three tiers, namely ESG-i Entry (No Harm), ESG-i Intermediate (No Harm with Foundation) and ESG-i Advance (No Harm and Do Good).
As part of its commitment to ESG-i principles, Ficus Capital has invested RM2 million in Klean, a sustainable recycling business operated by Janz Technologies Sdn Bhd.
The investment, channelled through the Ficus SEA Fund, aims to bolster Klean’s container recovery initiatives and expand its network of reverse vending machines across Malaysia, Indonesia, Singapore and Fiji.
By integrating ESG and Shariah principles, Ficus Capital continues to advocate for responsible investing, creating a positive impact on both society and the environment.
