Welcome to the first in a series on articles on Sikh views on ethical finance
In the present climate where the financial sector across the globe increasingly finds itself under scrutiny, it is useful to explore what the Sikh perspective might be on ethical financial behaviour. The guidance to Sikhs on wealth creation, use of wealth, and its distribution is implicit in the faith’s teachings. More specifically, direction comes from two sources which offer the moral context as well as some practical how-to guidance for our daily conduct :
- the notion of ‘dharamsal’ which is fundamental to the pursuit of social justice and social responsibility and;
- the ‘Rehat Maryada‘, the Sikh code of discipline which guides the Sikh way of life from both the individual perspective and the responsibilities a Sikh has as a member of the Sikh community (‘saadh sangat’ or the ‘Panth’).
The term dharamsal is composed of two words:
- ‘dharam’ denotes religious, ethical and social obligations, upholding the law and duty to the community;
- ‘sal’ means a place of abode.
According to Sikh beliefs, the world is a dharamsal established by God/Waheguru and humans are part of that system. This automatically establishes the interdependency between mankind and all life on the planet.
At the same time, the Rehat Maryada demands that Sikhs must earn their living through:
- hard work through honest means (‘kirat karna‘),
- share what is created with others (‘wand ke chhako’). Kirat karna and wand ke chhako are two of the three main pillars of the Sikh faith.
The notion of dharamsal and the Rehat are wholly consistent with the current principles of responsible corporate and institutional behaviour with its emphasis on good governance, and on ethical social and environmental action.
The principle of ‘dharma’ contains precepts relevant to good business, humanitarian and environmental conduct, but also the implicit requirement of mindfulness about the sources of wealth — and therefore responsible investing. On the one hand, it informs the behaviour of corporate Sikhs in terms of how they treat their employees, customers, communities, shareholders and the environment.. On the other, it informs their decisions on how they create, use and invest their wealth. Implicit in this would be the notion that if they only consider the profit motive of any investment without recognising how that profit was generated and at what cost to other human beings or the planet, then they are failing to live by the codes of dharamsal and Rehat.
Faith-based investment would have a natural appeal for Sikhs. In reality, the demand for faith-based investment is still untapped. The idea of investment in financial markets, let alone faith-based investment, is relatively new to Sikhs around the world. When growth comes, it will be organic, pushed by individuals – investors and thought leaders alike – and from entrepreneurs offering faith-based investment services. That may take the debate on how modern Sikhi applies its values and doctrines to a wider forum.
Currently, there are no specific Sikh values-based investment institutions.
In January 2008, the Dow Jones announced that it would be launching its ‘Dharma indices’. Created in partnership with a private faith-based Indian firm, the aim of the indices was to track the stocks of over 3,400 companies globally that observed the values of dharmic religions such as Hinduism, Jainism, Sikhism, and Buddhism. Similar Dharma indices were also created for the U.S., Britain, Japan and India.
The Dharma indices rewarded companies that worked to improve the welfare of the world, whether in terms of environmental preservation, sustainability, or acting for the good of society. The indices excluded companies that had negative impacts in any of these areas. Companies were screened for factors such as corporate governance, financial management, labour relations and human rights, resource management, environmental policies, and corporate social responsibility.
Companies from business sectors which were not deemed dharmic, such as defence, tobacco, pharmaceuticals (if they use animal testing or promote genetic modification, for example), food production (where it involves animal slaughter or meat processing), casinos and alcohol, were excluded from the indices.
Sadly, the Dharmic indices were abandoned in late 2008 due to the economic crash, and no product was ever launched which followed those indices. However, it is hoped that similar indices will be launched in the future, thus enabling Sikhs to invest in stocks that are in sync with their religious beliefs.
Article by Dr Surinder Hundal – Founder & Director at Rippleseed