Kuala Lumpur: Islamic financial institutions are going to have their own framework of corporate social responsibility as a general framework for Islamic Corporate Social Responsibility (i-CSR) is being prepared by an accounting research institute in Malaysia.
Researchers at the Accounting Research Institute (ARI) of Universiti Teknologi Mara (UiTM) are developing an Islamic Corporate Social Responsibility (i-CSR) General Practice Framework for Islamic institutions.
Associate Professor Dr. Faizah Darus said in an interview, “The framework will provide a more appropriate guidance for Islamic institutions as compared to the mainstream CSR which is based on Western experience.”
The development of the i-CSR framework is the ultimate aim of a research project under the Islamic finance and muamalat domain undertaken by a group of ARI’s researchers headed by Faizah at the UiTM-ACCA Asia-Pacific Centre for Sustainability (APCeS).
APCeS was set up in collaboration with Association of Chartered Certified Accountants to promote the development and application of global sustainability principles within Asia-Pacific.
Faizah said that in order to develop a holistic i-CSR framework that was applicable not only in Malaysia but internationally this project was also jointly undertaken with Universiti Sains Malaysia (USM) and Indonesia’s Sebelas Maret University and Universitas Muhammadiyah Surakarta.
She said that at the initial stage of formulating the framework, the project will focus on Islamic banks.
The increasing stakeholders’ pressure for companies to act responsibly towards the community and the environment has translated into companies engaging in CSR activities and incorporating them into their overall business-society relationship, she added.
“This new trend of doing business is also affecting Islamic banks,” she said.
Faizah observed that the main factor underlying the establishment of Islamic banks was the desire to run an economic system based on shariah values and principles.
“The Islamic banking sector is currently using the conventional CSR framework and dimensions to guide their CSR strategies and policies despite the fact that they were set up with the desire to manage the banking sector based on shariah values,” she said.
She said the the current CSR framework, which was developed in isolation of Islamic inputs, might not offer full guidance for Islamic banks.
“Islamic banks worldwide are unsure of what kind of CSR is expected of them based on Islamic prescriptions due to the lack of a structured i-CSR framework,” she added.
According to her, the proposed i-CSR General Practice Framework will incorporate the concept of “tawhid” and “ibadah” with the principles of Maqasid al-Shariah and Maslahah in order to provide guidelines and prioritization of CSR policies and activities in accordance with shariah principles.
Faizah said, “The axioms of Islamic ethical philosophy, which comprises the concept of unity (Tawhid), justice or equilibrium (al-‘adl), freewill or freedom (ikhtiyar), responsibility (fard) and benevolence (ihsan), are also incorporated into the proposed framework.”
“The influence of the protected elements based on Maqasid al-Shariah and the levels of protection based on Maslahah principles as well as the axioms of Islamic ethical philosophy is used to formulate and prioritize business CSR policies and activities into two main shariah values, namely, obligatory (wajib) and recommended (mandub),” she concluded.