Abstract
Islamic Finance, among its other features, figures as a financial and economic model based on principles and ethical values in which sustainable development and social responsibility play an essential role. The aim of this study is to illustrate the concept of Corporate Social Responsibility (CSR) with specific reference to Islamic financial institutions, their principles, values and objectives, in order to understand the underpinning dynamics and identify the convergences between the principles underlying conventional CSR and those of Islamic Finance. Specifically, the ultimate purpose of the comparison is to highlight how CSR may constitute a significant factor of convergence between Islamic and conventional finance systems, going beyond the logic of sustainability in short-term marketing policy and implementing medium- and long-term sustainability. This approach aims at increasing the potential for value creation and the pursuit of economic, social and environmental results for all stakeholders. This convergence should, finally, create conditions favourable to the harmonisation of the regulations and directives relative to CSR in the different countries, and therefore a better integration between Islamic finance institutions and conventional ones in the economic contexts.
Highlights
The financial crisis of 2008, which began in the United States and later in Europe, was attributed to fraudulent and speculative managerial conducts that are miles away from the real economy
The theoretical studies into the religious principles underlying the concept of Corporate Social Responsibility (CSR) held by Islamic finance institutes, and the analysis of the definition of CSR formulated by Auditing Organisation for Islamic Finance Institutions (AAOIFI), show strict convergence between the social responsibility of companies as structured in conventional economic systems and the social responsibility of financial institutes generated from a religious standpoint (Table 2)
The main objective of this analysis was that of verifying whether there is any convergence between the religious principles of Islamic Finance and the principles of Corporate Social Responsibility proposed for conventional companies
Summary
The financial crisis of 2008, which began in the United States and later in Europe, was attributed to fraudulent and speculative managerial conducts that are miles away from the real economy. Analyses of the causes of the crisis have focussed attention on the centrality of the issues of corporate governance, Corporate Social Responsibility, and the business management based on sustainable development in the medium to long term. Attraction towards the exploration of other models of finance oriented towards balancing the economic dimension with the ethical and moral dimension was inevitable. Alternative finance models include Islamic Finance, which is inspired by an economic model founded on the religious principles and values of Islam. The Islamic finance model has its foundation and origin in the Koran and in the sunna (the sources of sharia, i.e., the Islamic law). Its application (except for a few cases) is bound by a conventional body of rules and regulations as well as the historical, social and economic context of the country (Muslim and otherwise) in which the model has been implemented
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