The Journal of Muamalat and Islamic Finance Research Vol. 19, No. 1, June 2022, Pp. 34-46 ISSN: 1823-075X e-ISSN: 0126-5954 A ROBO-ADVISORY FRAMEWORK FOR ISLAMIC AND ESG COMPLIANCE – A BENCHMARK STUDY ON THE S&P 500 STOCK INDEX Klemens Katterbauer Department of Management, Euclid University Philippe Moschetta Singapore Management University ABSTRACT The last decade has brought a revolution in the financial sector, enabling more individuals and institutions to access the stock market. Islamic finance has similarly gained considerable interest from the growing Muslim population that is looking for Shariah-compliant investment options. Furthermore, a growing number of investors are looking for investment options that are environmentally sustainable and adhere to ethical values. While there are various Shariah advisory services, these services differ widely in their assessments of whether a company is Shariah-compliant. Given the cost of these services, it is typically only available for large institutional investors. The objective of this article is to address the challenges of providing individualized Shariah-compliant investment services automatically while providing a comparison with Environmental, Social and Governance (ESG) compliance to assist both investors who are seeking Shariah and ESG compliant investments. Hence, the study presents a new unsupervised learning framework for the determination of Shariah compliance and evaluates it with ESG compliance. The framework first filters the companies based on whether they have any exclusionary activities and then performs a clustering approach in order to classify them into compliant and non-compliant stocks. The framework was evaluated on the S&P 500 stock index and delivered acceptable and reasonable classifications. This Robo-Shariah advisor framework allows automatized real-time Shariah compliance evaluation based on a data-driven approach. The practical implication of this new framework is the enablement of objective, data-driven Shariah-compliant investment recommendations that can be easily integrated with Shariah expert information. The social implication is the empowerment of retail investors in being able to easily set up their own Shariah-compliant portfolio. Keywords: Artificial intelligence, ESG compliance, Shariah compliance, S&P 500 INTRODUCTION The members of the Organization of Islamic Cooperation (OIC) have experienced significant growth over the last fifty years. The share of GDP is unevenly distributed amongst the member nations, with Indonesia accounting for 15 %, followed by Turkey with 10% and Saudi Arabia with 10.2 %. Specifically, the five largest economies account for more than 50 % of the GDP of these nations (SESRIC, 2021, p. 34). While the COVID-19 pandemic has hit several of these economies rather hard, massive stimulus by the central banks of many Islamic countries has softened its direct impact. The total GDP of the OIC member countries has declined from 7.3 trillion USD to 6.9 trillion USD from 2019 to 2020. By 2021, the increased stimulus is expected to lead to a GDP of 7.7 trillion (SESRIC, 2021,