Abstract
This study aims to establish the link of key Islamic banking sustainability indicators with the United Nations’ Sustainable Development Goals (UN SDGs) as a policy recommendation for sustainable development and to mitigate the distressing impacts of the COVID-19 pandemic on the triple bottom line (people, planet, and profit). To identify the key Islamic banking sustainability indicators, the authors selected the most cited sustainability measurement indexes in Islamic banking. Initially, the indexes were divided into 10 broader themes, and then the key Islamic banking sustainability indicators were shortlisted from each theme based on their high-frequency distribution. The shortlisted sustainability indicators were then ratified to be in line with Islamic philosophy based on “Maqasid al-Shariah” (objectives of Shariah) and were subsequently grouped into the three dimensions of economic, environmental, and social sustainability based on the axial coding method. Finally, the categorized sustainability indicators were aligned with the relevant UN SDGs through the axial coding method for policy formulation, and respectively 12 propositions were developed for policy formulation. This study labeled the methodological process of this study as the ECA method (exploration, categorization, alignment). The new ECA method offers a reverse extension in the “SDG compass” developed by the Global Reporting Initiative (GRI) for aligning business policies with the UN SDGs. The process of aligning Islamic banking sustainability indicators with the UN SDGs will provide a roadmap to recovery from the COVID-19 pandemic in terms of economic, environmental, and social issues. Due to the diversity of the UN SDG framework, it covers multiples aspects for sustainable development. Therefore, considering the UN SDGs in terms of various banking instruments will mitigate the multiple distressing impacts of COVID-19 on the triple bottom line (people, planet, and profit), it will also promote a sustainable development agenda.
Highlights
COVID-19 started as a health crisis but swiftly turned into an economic crisis and is continuing to evolve into a humanitarian crisis
Fund (IMF) report titled “World Economic Outlook” the global economy is projected to contract by 3% in 2020 with an accumulative loss of around USD 9 trillion, which is worse than the financial crisis of 2008
In line with the humanitarian crisis, according to Nicola, et al [3], the COVID-19 has affected more than one billion children in schools, which accounts for about 67% of total enrolled students globally
Summary
COVID-19 started as a health crisis but swiftly turned into an economic crisis and is continuing to evolve into a humanitarian crisis. This instrument is incorporated into environmental sustainability based on the principle of Maqasid al-Shariah, since Islam commands every Muslim to conserve the ecosystem [53] This instrument of Islamic banks may serve multiple UN SDGs related to the environment. The proposed alignment will support the sustainable development agenda of Islamic banks based on the UN SDGs related to the environment. This item relates to the environmental sustainability dimension based on the Islamic philosophy of humans as stewards of the earth This philosophy triggers the banks to distribute donations to environmental awareness. This item and category are related to each other based on the Islamic concept of stewardship
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