Islamic Financial Institutions and Corporate Sustainability: A Study of Oman, Dubai and Malaysia
In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, 2019), Chapter 35.
Posted: 8 May 2019 Last revised: 15 Jun 2020
Date Written: May 6, 2019
The Islamic finance industry has grown significantly over recent decades and become a contender in the financial market. The defining feature of this industry is its Sharia underpinning, which provides its institutions with a different business model based on profit-loss sharing. This chapter argues that although Islamic governance does not, per se, have an equivalent term to corporate sustainability, it offers a number of key concepts that map onto the overarching themes of corporate sustainability. Salient among these concepts are: the notions of ‘khilafah’, which encompasses vicegerency and trusteeship, and the idea of social unity. However, the existing Sharia governance frameworks of Islamic financial institutions in a number of jurisdictions have some deficiencies that may undermine the advancement of the industry’s sustainability agenda. This argument will be advanced by referring to three key jurisdictions, namely, Oman, Dubai and Malaysia. The Chapter also makes some suggestions to overcome these governance challenges.
Keywords: Islamic finance, Sharia governance, Vicegerency
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