Shariah Screening and Islamic Indices. The last century has seen an acceleration and unimaginable growth in the way investments are made. All due to the intertwining of finance technology and better infrastructure. Muslims have invested and traded since the initial days of revelation. While the Quran encourages trade and investment and provides guidance for how muslims should approach these activities, formalized financial processes did not begin to develop until the mid 20th century. The first Shariah compliant mutual fund was launched in Malaysia in 1979 and it was one of the world's first attempts to get Shariah screening guidelines for such investments. Preliminary guidelines were developed by scholars. However this was just the beginning of the journey. Over the last 40 years, the Shariah screening guidelines have continue fully developed and enhanced as scholars continuously seek to apply the teachings of the Quran and the Sunnah in every facet of life in the most accurate manner. In 1986, the famous Amanah Income Fund was launched in the US. This became the second Shariah compliant fund that was launched in the world. Despite this monumental milestone, the Shariah guidelines for screening are still not formerly developed. Then in 1990, several Islamic financial institutions from across the globe gathered to develop and issue industry standards which gave birth to the Accounting and Auditing Organization for Islamic Financial Institutions, AAOIFI. In 2004, AAOIFI issued Shariah standard number 21 on Financial Paper which offered comprehensive Shariah investment guidelines and screening criteria. On the other hand, Malaysia was experiencing tremendous growth in Islamic finance and as a result the Securities Commission Malaysia developed early screening criteria. In 2013, they revised their Islamic guidelines to be more rigorous illustrating the iterative process required for maintaining such standards. To identify which stocks are Islamic the industry created new capital markets indices to capture Shariah compliant stocks according to different screening methodology is. The first Islamic index introduced, by Dow Jones in 1997 introduced Islamic investing to a much wider audience. Today the industry counts a handful of Islamic Indices under Standard and Poor's Dow Jones islamic, FTSE and MSCI All of the islamic indices are composed of two different screening stages qualitative screening and quantitative screening. The first stage of qualitative screening excludes businesses and sectors which are involved in Shariah non compliance activities such as conventional financial services gambling pork and unlawful food production. alcohol production tobacco dissemination etc. These industries go against the teachings of Islam and investing in any such area goes against the values and visits by Islam for society. The industry uses different references when it comes to Shariah screening. These are the top ones AAOIFI Dow Jones Islamic FTSE Shariah MSCI Islamic Securities Commission Malaysia S&P 500 Shariah At the first stage of qualitative screening each of these focuses on either the industry sector or business activity of the company to identify it's involvement in the prohibited activities. For some, they screen out companies have any prohibited activity is their core business. While others put a threshold to determine the partial involvement of companies in any prohibited activity before considering them Shariah non-compliant. Then comes the second stage of quantitative screening which varies among the different indices. This screening considers the financials of companies such as 1 cash and interest-bearing receivables 2 interest bearing debt and 3, impermissible income. Going back to the main references used by the industry globally each screening standard or Islamic Index uses specific ratios to determine the maximum threshold tolerated of impure money in the company's financials. This is a snapshot of the different ratios used by each index or Shariah screening standard. Most of the indices are in consensus when it comes to cash and interest receivables that the maximum allowance is somewhere between 30 and 33 per cent. This is similar to the interest bearing receivables in the conventional debt filter which also ranges from 30 to 33 per cent One goal of a Shariah compliant portfolio is to have as little conventional debt as possible. Islamic investment funds originally looked for issue which was with zero debt but that limited the universe of investment options to severely criteria how to develop over time and a 33 percent debt to total assets or total market capitalization ratio opened up the greatest opportunity for investments while still limiting potential downsides. One of the main differences between these standards and indices in the ratios used is the denominator they use for their calculations. Total assets vs market capitalization Opinions on how to best evaluate company have differed over time. The difference comes down to whether a companies should be evaluated based on the value of its goods or based on the value the market is willing to pay. When it comes to the impermissible income filter, it varies among the indices. The lowest tolerated figure is 5 per cent while the highest is 25 per cent under certain circumstances. This commonly accepted rules stipulates that any revenues a company receives from haram prohibited sources such as selling alcoholic products must be limited to 5 per cent or less of their total revenue. The threshold was established in the belief that any percentage of a business activity above 5 per cent changes the character of the company. These rules have gone through many decades of evaluation and reevaluation and illustrates how standards are recursive They can evolve over time while maintaining allegiance to god's intentions As the Islamic finance industry develops, these standards will continue to be reviewed and develop. At present most Shariah screenings practice a process of negative screening which is the exclusion of specific industries In fact the negative screening process is also used among Social and Responsible Investing Strategies (SRI). It wasn't until 2010 that SRI began to gain momentum among mainstream investors. The new familiarity with SRI strategies grew in tandem with the increase in Environmental Social and Governance data ESG available to investors. When ESG data is considered alongside financial analysis in the investment process is known as ESG Integration. Simultaneously SRI has evolved to include more nuanced forms of investing and now frequently stands for Sustainable Responsible and Impact Investing. If forbidding what is wrong in one's investments is only half of one's duties, it follows that Muslim investors should also seek to enjoining good as the verse of the Quran states. Just as negative screening allows investors to exclude impermissible activities from their portfolios, positive screening allows asset managers to use ESG data to identify companies with strong values and positive social and environmental impacts.