How is ethical finance different to conventional finance?

Unlike traditional corporate structures, where there can often be a disconnect between shareholder profit maximisation and corporate social responsibility, ethical financing puts the emphasis on society at large as a key stakeholder.

Ethical considerations will drive investment criteria, so finance will not be extended to activities that are deemed harmful, such as gambling, alcohol, tobacco, and weapons. 

For Islamic finance providers like Offa, our ethics are primarily shaped by Sharia principles, which not only consider the environment and social issues, but also adds a sense of fairness to transactions. Sharia prohibits the charging or receiving of interest, and the profiting from another’s misfortune, such as when a customer is loss-making. 

That means we will not take a draconian approach to late payments and will instead try to make a genuine effort to understand the customer’s circumstances before taking action. In the case where we do charge default penalties, this will go to charity and not be used for our own profit.

Another important difference is that ethical finance customers always know exactly how much to pay, and this does not deviate because of external market conditions. Everything is agreed in an open and transparent manner from the outset.

Ethical finance firms like Offa also donate a share of our profits to good causes, in our case charities such as WaterAid, Cancer Research, Islamic Relief and Donate to Educate.