If an index has already been screened against sustainability criteria, how much more does a Shariah screen change?
At first glance, one may assume there is not much of a difference. The two approaches rule out some of the same business activities, such as tobacco, and point the same way on some measures. So, as of Aug. 31, 2026, the S&P 500® Shariah had a carbon intensity 28.7% below that of its benchmark index; this reflects differences in sector composition rather than any carbon screen or the shared principles themselves.
However, the number of companies excluded suggests otherwise. Of the 503 S&P 500 constituents, sustainability screening removed 177 and Shariah screening removed 237, while only 84 were removed by both (as measured by the S&P 500 Scored & Screened Index and S&P 500 Shariah, respectively, as of Aug. 31, 2026). Those 84 matching exclusions are close to what would be expected if the two screens operated independently of one another.
1. What the Screens Test
Both indices begin with the same 503 constituents. Neither index uses an optimizer, although the Scored & Screened Index applies a sector-neutrality mechanism by design. Each excludes companies and reweights what is left, so any difference between them comes down to the rules that determine which companies remain.
Shariah screening assesses whether a company is compliant with Islamic law. Two ideas do most of the work: certain business activities are impermissible, and the prohibition of riba, or interest, means that conventional interest-bearing debt and interest-bearing assets are problematic irrespective of what a company does. Compliance is a determination rather than a ranking, so a company either satisfies the rules or it does not. The S&P Shariah Indices apply two kinds of considerations. Business activity exclusions cover areas such as alcohol, gambling, pork products, tobacco and conventional financial services. Accounting ratios then examine debt, cash and interest-bearing securities relative to an average market value of equity. Shariah compliance is assessed monthly by Ratings Intelligence, whose Islamic researchers work directly with a Shariah Supervisory Board of Islamic scholars that approves compliance determinations. The leverage test requires total debt divided by the 36-month average market value of equity to be below 33%. These accounting-based screens do not apply to companies run on a fully Shariah-compliant basis. A company can satisfy every activity rule and still fall outside the accounting thresholds. The S&P 500 Shariah Index applies these tests to the S&P 500. Shariah standards are not uniform. Standard setters, index providers and national Shariah boards apply closely related but distinct thresholds and denominators, so the same company can be compliant under one index family and non-compliant under another without any change in its fundamentals. The analysis that follows therefore describes the S&P Shariah Indices methodology rather than Shariah screening in general.
The S&P 500 Scored & Screened Index also excludes certain business activities, including specified involvement in thermal coal, tobacco and controversial weapons. The index also assesses conduct against the United Nations Global Compact principles, and it takes S&P Global Sustainable 1’s Media and Stakeholder Analysis of company controversies into consideration. Then, it ranks the remaining companies. Companies with low S&P Global ESG Scores relative to their benchmark industry group are removed, and selection works down the remaining ranking within each industry group until a target share of that group's market capitalization is reached. The target is 75% of the float market capitalization of each GICS industry group, helping maintain broadly similar industry group weights to the parent index. The index therefore combines two distinct steps—exclusions that set the eligible universe and score-based selection within industry groups—so it is not an exclusions-only framework. Therefore, a company can pass every exclusion and still be left out because higher-ranked names filled the target first.
In this report, we will compare three S&P Shariah Indices (Shariah) and three S&P Scored & Screened Indices (Scored & Screened). Each respective pair starts from the same benchmark index, and observations are as of Aug. 31, 2026, with the exception of the Scored & Screened exclusion reasons cited in Section 4, which are as of April 23, 2026.
