A fraud investment platform based on options trading, Binomo, had become a significant topic after it had caused a loss of over IDR 80 billion from 144 people. Fraud investments are a significant concern, where the Indonesian Investment Alert Task Force had reported an overall loss of IDR 117 trillion to investment scams since 2011¹. In 2022 alone, the task force had closed 19 illegal robot trading investments and 634 unlicensed commodity futures trading platforms, and the government had blocked 1.222 fraud investment websites in 2021^{2, 3}. Furthermore, this trend is not limited to Indonesia, as the UK (30%)⁴, US(70%)⁵, and Australia (84%)⁶ all reported significant increases in losses due to scams and fraud in 2021.

This issue makes it important to give the overall society a better understanding regarding investment, and how to prevent getting scammed through investments. Going a step beyond, a point to emphasize is regarding sustainable investments, where sustainable investing is an important factor fulfilling the financing gap to finance the SDGs⁷. As a solution, this article promotes Islamic sustainable investment as investments that are not only sustainable, but create positive value for the society.

The Cambridge Dictionary defines the word Investment as the act of putting money, effort, time, etc into something to make a profit or getting an advantage⁸. In finance, investment is more specifically defined as a process of exchanging income during a period of time for an asset that is expected to produce earnings in the future⁹. In a larger sense, investment is part of wealth management in the form of wealth accumulation, where funds that have been saved are invested to create further gains¹⁰. 

Investing differs from saving in that investment products are more risky and usually have less liquidity, but has more return, while savings products are safer and easily accessible, but may not keep up with inflation¹¹. There are many types of investment products with differing characteristics, including bonds, stocks, mutual funds, real estate, and commodities. People should choose between these products based on their financial goals, needs, and risk tolerance¹². Furthermore, people should also find information on the characteristics of these instruments, such as performance within each time frame, administration, and liquidity. 

When we see a potential investment, it is important that we stay vigilant against potential frauds. Investment scams can come in many disguises, including cryptocurrency, business ventures, or trading in shares and property¹³. Many start from a call or an email, offering an unrealistically high return or guaranteed opportunity. When reviewing an investment offer, people firstly should examine its legality and whether there might be fraud risks within it. According to the head of the Indonesian Investment Alert Task Force, some of the main characteristics that should be watched out includes¹⁴:

1. Unrealistically high profit in a short time frame
2. Often gives out bonuses for recruiting new members 
3. Often uses societal or religious figure to entice investors 
4. Claiming that the investment is risk-free 
5. Unclear legality, such as lack of business license

After understanding the characteristics of risky investments, the next step is to take action to protect ourselves. There are several methods of protection based on the internationally renowned Little Black Book of Scams¹³: 

1. Being alert to the existence of scams, especially from uninvited contacts 
2. Knowing with who we are dealing with, take some time to research the investment offer and the person behind it 
3. Not opening and deleting suspicious texts, pop-up windows, or Emails 
4. Securing our personal details, including mailbox, documents, passwords, and pin numbers 
5. Being wary of unusual payment methods, such as steam or cryptocurrency 
6. Securing our mobile devices and computers, using password connection, restricting access towards them, installing security software, and careful WiFi usage, especially public ones 
7. Carefully choosing passwords and updating them regularly 
8. Being wary of requests for details or money, do not send money or give personal information to people we don’t know 
9. Being careful while shopping online, be wary of unrealistic offers and use a trustworthy online service.

Regarding investments, an aspect of importance in the current post-pandemic times is digitalization. This goes with the fact that the pandemic has accelerated overall digital transformation, which includes investments. Survey from Thought Lab shows that investors feel that mobile apps, websites, and virtual conferences would be the main mode of engagement¹⁵. However, it's important to note that face-to-face meetings still have a major role, as almost half prefer this channel when social restrictions fade. Interestingly, there seem to not be much of a difference between millennials, baby boomers, and billionaires in their preferred engagement channels, showing that digitalization is a cross-generational phenomenon.

On the other hand, digitalization of investments creates potential for digital scams. This makes promoting digital literacy essential in protecting the society from investment scams. Indonesia, according to the ministry of communication and information, has had an improving digital literacy index in the last year. However, if we look deeper within the index, its digital safety score is by far the lowest component, and has actually decreased from the previous survey in 2020¹⁶. Moreover, this survey shows that around 40% of Indonesians never back up data, do not use antivirus software, and are unable to differentiate dangerous email. These further show the urgency to increase digital safety literacy in Indonesia.

Sustainability has been an important subject in the global community, as shown by the UN’s SDGs declaration in 2015. However the struggle for sustainability is still ongoing, as according to OECD, there is still a US$4,2 trilion financing gap from achieving the SDGs¹⁷. Therefore, in line with the increasing importance of sustainability and SDGs, there has been increasing interest in considering sustainable values in investing, which goes beyond merely maximizing return. Survey from ThoughtLab shows that 4 out of 10 senior management of investment providers agree that clients expect them to know about ESG and impact investing¹⁵. 

Sustainable investing is an investment approach which considers ESG (Environmental, Social, Governance) factors when managing and selecting an investment portofolio¹⁸. In 2021, ESG investments had reached US$ 35 trillion, and is projected to rise to US$ 50 trillion in 2025¹⁹. To identify companies that adopt better ESG practice, companies are rated by established ESG raters. ESG rating is scored by considering the company’s performance within relevant criterias of each ESG factor. For example, the environment would look at natural resource usage, carbon emission, and pollution; Social would consider workforce issues and societal issues; while Governance would examine board independence and corporate ethics¹⁸. These ESG ratings had been applied to companies representing 80% of market capitalization in 2020²⁰.

In practice, there had been large investor initiatives in supporting sustainable investment. The PRI (Principles of Responsible Investment) is an independent international network of investors supported by the UN, which works to promote sustainable investments. In 2021, PRI had over 4800 signatories who managed over 120 trillion in AUM²¹. Another initiative, Climate Action 100+ is an initiative of 700 investors with 68 trillion in AUM, aiming to ensure the largest greenhouse corporate emitters take necessary action on climate change²². 

Several factors had contributed to this rise in interest for sustainable investment18. Firstly, research indicates that ESG investing may improve risk management and lead to profitable returns. Secondly, there is growing attention on climate change risk, responsible business conduct, and diversity, which influence customers and investors. Thirdly, there is a momentum to focus more on long term sustainability, rather than short term risk and return. 

As part of the overall Islamic Wealth Management sector, Islamic Investments had also emerged to provide investments that comply with sharia principles. The overall Islamic Finance industry is a large sector with a US$3,6 trillion in global assets, and projected to reach US$4,9 trillion by 2025²³. Muslims themselves are also a significant market, being the second largest religion with the fastest projected growth²4.

In Islam, wealth itself is treated as a trust, as Allah is the true owner of all wealth and possessions, as the verse below suggest²⁵:

ءَامِنُوا۟ بِٱللَّهِ وَرَسُولِهِۦ وَأَنفِقُوا۟ مِمَّا جَعَلَكُم مُّسْتَخْلَفِينَ فِيهِ ۖ فَٱلَّذِينَ ءَامَنُوا۟ مِنكُمْ وَأَنفَقُوا۟ لَهُمْ أَجْرٌ كَبِيرٌ

“Believe in Allāh and His Messenger and spend out of that in which He has made you successive inheritors. For those who have believed among you and spent, there will be a great reward.” (Quran 57:7)

Therefore, each individual is merely a trustee which is required to use their wealth in ways that pleases Allah. On one hand, the Quran does acknowledge that humans have immense love of wealth, but on the other hand, true contentment is stated to be found in chasing the reward of the afterlife. Furthermore, wealth is also considered as a test, where people must be grateful for, stay humble, and spend appropriately. 

More specifically regarding investment, Islam encourages investing, as both the individual and the overall  society would benefit. Investing for the individual in Islam is part of his obligation to give earnest effort to earn a living²⁶. On the other hand, the investment itself would help grow the overall economy²⁵. However, it is also important to mention that the investment should comply with sharia principles, as Islam possesses certain principles and prohibition in finance that has to be followed. 

It is important to note that Islamic values go beyond prohibitions. Sharia-compliant investments, as a part of Islamic finance have differentiating values that creates further impact compared to conventional investments²⁷, these include:

1. Based on sources of Islam, which prohibits interest, speculation, and production of goods and services that contradicts Islamic values and bring harm to the society, such as alcoholic drinks and drugs. 
2. Based on Islamic principles which are grounded in ethics. Therefore beyond being lawful, investments must be ethical, as well as an emphasis on risk sharing and partnership contracts. 
3. Embedded in the real economy, such as asset-backed transactions which help develop in financing the real economy. This creates stability through linking financial services and the real economy. 
4. Society oriented and aims to serve the community, with social instruments being an inherent part. 

As a part of social instruments, Islam possesses zakat, a form of wealth tax which also serves as further incentive for the wealthy to invest, to prevent their wealth from being continuously eaten away by zakat²⁸. Also, Islam reframes the concept of investment to include charities, including zakah as an investment for the hereafter²⁵. There are many benefits in the Quran and Sunnah for charities, including being multiplied many times over and appeasing the wrath of god²⁹. As investment is used to receive benefits in the future, receiving benefit in the eternal hereafter should be regarded as an extremely important and attractive investment for a Muslim. 

As previously mentioned, sustainability has been an important subject in the global landscape, including investment. Research from ISRA shows that the concept of sustainability, specifically SDGs, are almost fully in accordance with Islamic Values³⁰. Islam supports all three dimensions of sustainability which are environment, social, and economy through its features such as prohibition of interest, Islamic Social Finance instruments, and prohibition of waste and extravagance. 

In practice, there are several Islamic Sustainable investments offered in the market. Green sukuk are sukuk that complies with green bond standards, being used to finance climate change mitigation, adaptation, and environmental projects. Indonesia had issued the world’s first sovereign green sukuk in 2018, and had issued US$3,5 billion to date³¹. While on a larger scale, global issuance of green and sustainable sukuk in 2021 had reached US$15 billion³².

Another form of Islamic investment is CWLS (Cash Waqf Linked Sukuk)³³, issued by the Indonesian government. This product is a government sukuk which is paid via cash waqf, meaning that its return would be given for philanthropy programs, while the corpus would be returned to the donor at maturity. Therefore, this program is not an investment product in a traditional sense, but an investment in an Islamic sense, which is for the hereafter. To date, this product has raised IDR 89,8 billion since 2020, and in April 2022, the government had started fundraising for issuing another sukuk^{34, 35, 33, 36}. 

Investing is an essential part of managing our wealth. However, investors must be vigilant against scams, through understanding characteristics of potential scams and applying preventive action. Beyond this, sustainability in investing is increasingly an important aspect to consider, and is done through considering ESG factors in choosing an investment. As an impactful and sustainable investment, Sharia-compliant investments represent a solution in choosing an investment product. However, people must still be vigilant regarding Islamic investments, as there are potential scams, whether business-wise or compliance-wise.