Compatibility of the CSR practices of Islamic banks with the United Nations SDGs amidst COVID-19: a documentary evidence

Abstract

Purpose This study aims to establish whether the corporate social responsibilities (CSR) practices of Islamic banks are compatible with the sustainable development goals (SDGs) of the United Nations. Design/methodology/approach A documentary research method was applied by examining the annual reports of selected Islamic banks from Bangladesh, Indonesia, Pakistan, the UAE and Malaysia for 2020, which coincided with the COVID-19 pandemic. Findings The results indicate that Islamic banks discharged various CSR activities and contributed huge funds toward achieving the SDGs of the United Nations. Specifically, the banks prioritized the following CSR sectors: education, health, environmental protection and disaster relief and management. Besides, they provided support to micro and small businesses toward poverty alleviation. Research limitations/implications This study examined only CSR reports of the selected Islamic banks for 2020. Practical implications The findings have practical implications that may enable Islamic banks across the globe to improve their CSR initiatives, activities and reporting toward realizing the SDGs. They are also helpful to policymakers and regulators for the provisions of policies and regulations to motivate or mandate Islamic banks to effectively improve their CSR practices. Social implications CSR practices of Islamic banks can significantly support the SDGs toward mitigating many economic and social problems. Originality/value This study applied a relevant but rarely used method to explore the role of CSR practices of Islamic banks in achieving the SDGs.

Gender diversity, foreign directors and sector-wise corporate philanthropic giving of Islamic banks in Bangladesh

“…Besides, foreign directors also become valuable human resources that induce Islamic banks to create and maintain a good relationship with society by providing donations that improve the welfare of society. This is confirmable by the findings of a study by Umar et al (2022c), which indicated that Islamic banks carried out different CSR activities and spent huge funds to support the attaining the SDGs by giving priority to issues related to education, health, environmental protection, disaster and humanitarian relief and giving assistance to the micro and small businesses to eradicate poverty.…”

“…First, Islamic religious values have a holistic approach to CSR activities that entirely differs from conventional practice, indicating that the two are mutually exclusive (Amran et al , 2017). As Islam advocates, Islamic banks tend to incur more CSR expenditures than their conventional counterparts that do not comply with Islamic law in their operations (Umar et al , 2022c). The advocacy of Islam towards CSR encourages Islamic banks to improve their charitable activities irrespective of financial performance (Umar and Musa, 2021).…”

“…There are a number of reasons that make Islamic banks increase CSR expenditures more than their conventional counterparts. One of the reasons is that Islamic banks and other Shariá-compliant businesses must pay zakat (Islamic tax) for the welfare of the poor and the needy (Umar et al , 2022c). Islamic banks often use zakat to finance their philanthropic activities and improve economic growth and prosperity (Asiyah et al , 2019).…”

Islamic Banking Performance: How Far has It been Reviewed?

“…Mohd Sofian & Muhamad (2020) unraveled the relationship between the integrated Islamic CSR index and the financial performance of Malaysian Islamic banks. Other studies in this line of research that are more updated can for example be seen in Khemiri et al, (2024), Umar et al, (2023), Chouaibi et al, (2023), Aslam et al, (2023), andBhuiyan et al, (2022).…”

Corporate Social Responsibility from an Islamic Perspective: An Overview

“…For instance, CSR can benefit areas such as education, health, environment, disaster relief, small and micro businesses, Sharia governance, communities, customers, employees, and poverty reduction (Zafar & Sulaiman, 2020;Jaiyeoba et al, 2018;Umar & Musa 2021). Umar et al (2023) explains that another important benefit is that the Islamic bank will simultaneously achieve the Sustainable Development Goals (SDGs) of the United Nations by increasing their CSR interventions. More studies of an empirical nature have reported a positive and significant relationship between CSR and financial performance, which indicates that Islamic banks who engage in CSR also benefit financially (Migdad, 2017;Zafar et al, 2022).…”