Freehold Royalties Ltd. Is Islamic Finance Compliant and ESG Approved With A+ Ethical Score

Freehold Royalties Ltd. matters to ethical investors because it sits at an unusual intersection: a sizeable oil and gas royalty business that also carries strong ESG credentials and a Shariah/halal compliance designation. For conscious investors asking “Can I hold energy exposure without compromising my values?” Freehold offers a test case — a Canadian OOTC-listed company with a clear royalty model, published sustainability reporting, and independent ESG recognition.

In this article I examine three ethical pillars that most matter to faith-based and values-driven portfolios: human rights and conflict exposure, formal ESG compliance and governance, and Islamic finance (Shariah/halal) suitability. Together these make up the basis for a practical, fact-based investability verdict.

Company Overview

Freehold Royalties Ltd. is a Calgary-headquartered royalty company focused on oil, natural gas, natural gas liquids (NGLs), and potash. Instead of operating wells, Freehold acquires and manages royalty interests that give it rights to production revenue while passing operating responsibilities to third-party producers. This model gives the company exposure to exploration and production activity without the same capital and operating cost profile as an operator.

• Products/Services: oil, natural gas, NGLs, potash
• Market: Canada (primary) and the United States
• Market Cap: CAD 2.33B
• Exchange: OOTC
• Headquarters: Calgary, Alberta, Canada
• Land holdings: ~6.1–6.2 million gross acres (Canada) and ~1.1–1.2 million gross drilling acres (U.S.)
• Founder / Key Official: David Michael Spyker
• Website: freeholdroyalties.com

Metric	Detail
Company	Freehold Royalties Ltd.
Sector	Oil & Gas Royalties / Natural Resources
Country	Canada
Stock Exchange	OOTC
Market Cap	2.33B
ESG Rating	Sustainalytics 17.5 (Low Risk) — May 2025
EI Investability Score	A+ (Investable)

Freehold’s business model and scale make it a recognizable name in Canadian energy royalties. But for ethical investors the key question is whether scale and commodity exposure are balanced by policies, governance and conflict-free credentials. Below I walk through those three core checks.

Human Rights Safety: Genocide & War Crime Involvement Check

Freehold Royalties Ltd. shows no public ties to conflict financing, war crimes, genocide support, or human rights violations based on the available data. There are no reported allegations implicating the company or its named key official in such activities. That’s the first and most critical filter for war-free investing and genocide-free companies.

How does a royalty company’s model affect human rights exposure? Unlike operators, Freehold typically does not control on-the-ground workforce, security forces, or direct infrastructure construction. It holds rights to receive royalty payments while third-party producers operate the wells. This structure reduces direct operational exposure to human rights abuses tied to field operations, but it does not eliminate downstream or partner-related risk.

Supply chain and partner screening matter. Freehold’s published ESG / Sustainability Report (January 16, 2023) and its formal ESG Policy emphasize responsible development and integration of ESG best practices when evaluating lands and operators. That suggests the company performs due diligence on the operators who actually conduct drilling and production — a crucial mitigant to human-rights risk. However, detailed supplier or customer lists are not provided in the dataset, so complete chain-of-custody transparency is not verifiable here. Information not available: granular disclosures on operator-level human rights audits, third-party compliance certifications, or a public list of operator partners.

Customer base screening: royalty payments flow from production operators rather than direct product sales by Freehold, so the company’s exposure to selling into oppressive regimes is indirect. The dataset contains no evidence of sales to sanctioned or oppressive states. That supports the “war-free investing” claim, but again lacks operator-level proof.

Product/service use verification: Freehold’s revenues are linked to oil, natural gas, NGLs and potash production. These commodities can feed both civilian and industrial supply chains and have no intrinsic link to armed conflict on Freehold’s part. No data indicates these commodities were sold for military or oppressive ends by Freehold or via its disclosed operations.

Business integrity and ethics: The assessment flags a positive integrity score and an EI Investability Score of A+. The company is described as “Not affiliated in any non-ESG activities, or human rights violations.” That institutional positioning, together with Sustainalytics’ Low Risk rating, is reassuring for investors focused on genocide-free companies.

“How by not investing in Unethical companies, rather investing in ethical companies like this creates a positive and powerful economic impact in the world by by an ethical investor”

In short: Freehold’s business model and disclosures point to low direct human-rights risk, and the company appears to apply ESG screens to its operator relationships. However, investors seeking absolute assurance should request operator-level audits and supplier lists — information not available in the current dataset.

ESG Compliance: Environmental, Social & Governance Standards

Freehold’s ESG position is unusually strong for an oil & gas industry participant. The company has published a formal ESG / Sustainability Report and states that it is prepared according to recognized frameworks such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). That indicates a structured approach to measurement and public disclosure — a key expectation for ESG compliant firms.

Environmental initiatives: Freehold reports achieving “net zero” for its Scope 1 & 2 emissions across 2021–2023. For a royalty company, Scope 1 and 2 typically reflect emissions from owned facilities and office operations; scope 3 (emissions from operators’ production) is usually larger but often harder to control. The company’s emphasis on evaluating operators for ESG performance suggests it seeks to influence lower-emitting practices indirectly. Specific technical measures (e.g., methane mitigation clauses, emissions intensity targets with named operators) are not provided in the data. Information not available: detailed emissions intensity metrics and scope 3 reduction targets.

Social responsibility: Freehold’s ESG reporting and governance statements include commitments to social factors and to integrating best practices when evaluating lands and operators. The Management Information Circular (2024) lists ESG as a standing Board agenda item and ties senior management accountability to ESG/climate-related risks. That governance attention is important for sustained social and stakeholder responsiveness.

Governance and accountability: Governance practices appear robust for its industry. Sustainalytics assigns Freehold an ESG Risk Rating of 17.5 (Low Risk) for Oil & Gas Producers as of May 2025 — a quantitative signal that the company’s policies and practices materially reduce ESG-related risk compared with peers. The Board-level focus and management accountability cited in the circular indicate reasonable governance structures.

Limitations and balance: The company is ESG compliant and publishes reporting in line with major standards. Yet important specifics — like the quantitative breakdown of scope 3 emissions, operator contractual requirements for human-rights or methane controls, and independent verification of net-zero claims — are not present in the dataset. For ethical investing that prizes transparency, those missing details matter.

Here’s why this matters: in today’s market, ESG compliant energy firms that can credibly reduce operational emissions and influence partners offer a pragmatic route for ethical investors who want energy exposure without funding unchecked harm.

Islamic Finance Compliance: Shariah & Halal Investment Status

Freehold Royalties Ltd. is identified in the dataset as Islamic Finance Compliant — Sharia Compliant — Halal. For Muslim investors and halal-focused funds this is a primary filter, and the company’s business model helps explain why it can pass Shariah review.

What typically makes a stock halal? Key criteria include:

• Primary business activities must not involve prohibited (haram) sectors such as alcohol, gambling, pork, conventional banking/interest banking, weapons/defense contracting, or adult entertainment.
• Financial ratios must meet Shariah thresholds (low leverage and limited interest-bearing income).
• Revenue from prohibited sources must be negligible.

How Freehold fits those rules:

• Primary activities: Freehold’s revenue is derived from royalties on oil, gas, NGLs, and potash. Energy and basic materials are generally permissible provided their end-uses aren’t explicitly haram.
• No involvement in prohibited industries is reported. The company is not affiliated with non-ESG or human-rights-violating activities.
• The royalty model is finance-light compared with heavy-leveraged operators; royalties are cash flows derived from production rather than interest-bearing loans. This business profile often aligns well with Shariah screens.

Gaps to note: The dataset confirms Shariah/halal compliance but does not include audited financial-ratio checks (e.g., debt/equity thresholds, interest-bearing income percentages) that many Shariah boards require. Information not available: a named Shariah advisory board opinion or the specific arithmetic used for Shariah screening. Nevertheless, the explicit compliance label plus absence of prohibited activities in the record supports halal-stock status.

Why this matters for Muslim and ethical investors: Shariah-compliant stocks allow investors to participate in capital markets while avoiding impermissible activities. For many ethical investors beyond faith-based communities, the Shariah criteria (focus on real economic activity, low leverage, and ethical conduct) provide a meaningful due-diligence shortcut aligned with broader ESG goals.

Overall, Freehold’s designation as Islamic Finance Compliant, combined with its royalty model and lack of prohibited-sector involvement, makes it a plausible halal candidate — with the caveat that investors seeking the strictest Shariah endorsements should obtain the formal Shariah certification or review documentation that underpinned the compliance label.

Final Investability Verdict

✓ ESG Compliance:	ESG Compliant — Sustainalytics 17.5 (Low Risk)
✓ Islamic Finance:	Shariah / Halal — Compliant (per dataset)
✓ Human Rights Safe:	Positive — No links to war crimes/genocide; low direct operational risk
✓ EI Score:	A+ (Investable)

Overall recommendation: Investable (A+)

Key strengths:

• Royalty business model reduces direct operating liabilities and some operational ESG risks.
• Published ESG reporting aligned with GRI and SASB frameworks and Board-level ESG oversight.
• Independent Sustainalytics score of 17.5 (Low Risk) for the oil & gas industry.
• Explicit Shariah/halal compliance label and no reported ties to human-rights abuses.

Key caveats:

• Missing public detail on scope 3 emissions and operator-level human-rights audits.
• No dataset-provided copy of formal Shariah certification or the financial-ratio checks used.
• Exposure remains tied to fossil-fuel commodity markets and their transition risks.

Ideal investor profile:

• Conscious investors seeking exposure to energy through a lower-operational-risk royalty model.
• Faith-based (Muslim) investors who require halal stocks but will seek the formal Shariah certification.
• ESG-focused investors who accept pragmatic engagement with energy companies that publish credible ESG disclosures.

Conclusion & Call-to-Action

Freehold Royalties Ltd. presents a compelling case for conscious investors who want energy exposure without direct operational entanglement. It is ESG compliant with an independent Low Risk score, carries an A+ investability rating, and is labeled Shariah/halal compliant. However, prudent investors should request operator-level human-rights audits, scope 3 emissions detail, and the formal Shariah screening report before committing large allocations.

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