A leading financial institution sought to incorporate faith-based principles into their investment strategy through a unique screening framework. The organization aimed to integrate holistic values principles into their Portfolio Management Strategy. Their primary focus was on developing a systematic approach to evaluate and screen companies listed on the Indian stock exchanges according to these faith-based criteria.
The initiative centered on developing a comprehensive framework for screening listed companies using faith-based investment principles. The project involved analyzing listed companies across diverse sectors within a challenging two-week timeline. The scope encompassed thorough reviews of company websites, annual reports, statutory disclosures, and two years of Business Responsibility and Sustainability Reporting (BRSR) data. The primary challenge lay in transforming qualitative faith-based principles into a quantifiable screening methodology while maintaining data consistency and accuracy.
The solution framework was built on three key pillars: quantitative modelling, data validation, and technological integration. The qualitative methodology was transformed into a robust quantitative model, enabling systematic application across any portfolio of listed companies. A comprehensive 10-step implementation process was developed, starting from understanding core principles through to identifying market leaders.
To address data inconsistency challenges, thorough processes with effective checks and validations were implemented. The tight timeline was managed by leveraging Generative AI technology for reviewing statutory disclosures, while maintaining accuracy and depth of analysis. The framework included detailed benchmarks across various parameters, ensuring a consistent and objective approach to stock selection aligned with faith-based principles.
The project delivered significant measurable outcomes. Of the top companies analyzed by market capitalization, a substantial number were included, while others were excluded based on the framework adopted. The included companies represented a significant portion of the total portfolio weight, with excluded companies accounting for a smaller share.
The success of this initiative extended beyond immediate results, establishing a scalable framework applicable to broader markets and international contexts. The project demonstrated the feasibility of transforming faith-based investment principles into a practical, quantitative screening methodology while maintaining high accuracy standards. Furthermore, it laid a strong foundation for future ESG-oriented mandates and expanded screening exercises, showcasing the potential for similar applications in various market contexts.
