Maqasid al-Shari`ah, Maslahah, and Corporate Social Responsibility

Abstract

The doctrine of corporate social responsibility (CSR), which has emerged and developed rapidly as a field of study, is a framework for the role of business in society. It sets standards of behavior to which a company must subscribe in order to impact society in a positive and productive manner while abiding by values that exclude seeking profit at any cost. Despite the many attempts to construe CSR initiatives, it remains open to wide criticism for its inherent problems via-à-vis justification, conceptual clarity, and possible inconsistency. These problems are more acute when it comes to implementing and operationalizing CSR on the ground, especially in a situation that involves trade-offs. This paper offers an instructive understanding of CSR from an Islamic perspective. In particular, the implication of maqasid al-Shari`ah (the Shari`ah’s objectives) and the application of maslahah (the public good) to CSR are discussed in detail to shed light on how Islam’s holistic and dynamic perception of CSR take into consideration reality and ever-changing circumstances. These principles also provide a better framework that managers can use when faced with potential conflicts arising from the diverse expectations and interests of a corporation’s stakeholders.

Socially responsible investment: insights from Shari'a departments in Islamic financial institutions

“…In contrast to the Western views of social responsibility that are often based on legitimacy (Suchman ), social contracting (Moir ) and instrumentalism (Lantos ), the concept of social responsibility is infused with a more holistic agenda in the context of IFIs (Dusuki , ). According to Dusuki & Abdullah (), IFIs should always aspire to achieve the objectives of Shari'a, that is the public good, an attribute of many mutual funds. They further argue that financial institutions based on Shari'a principles are not allowed to achieve their economic objectives by inflicting harm on society.…”

“…Maslaha means public welfare, public good or public benefit. It is recognized in Islam as an important principle guiding the conduct of all Muslims, and is commonly divided into three categories: Daruriyat (or essentials), Hajiyat (or complementary) and Tahsiniyat (or embellishments) (Dusuki & Abdullah ). The Daruriyat are the essentials upon which human life depends, including faith, life, intellect, posterity and wealth.…”

“…In contrast to conventional investment institutions, IFIs are perceived as being more balanced in the sense that they are more concerned with public, community benefit and social welfare and less obsessed with economic interests and pure profit maximization considerations. IFIs are indeed generally assumed to adopt an Islamic view of corporate social responsibility (CSR) guided by Shari'a, which tends to be more holistic and absolute in orientation (Dusuki & Abdullah ). In the context of Shari'a, the economic aspects of doing business cannot be separated from the moral and spiritual aspects, and IFIs are expected to comply with basic Shari'a values that revolve around compassion, justice and promoting the public good (Dusuki & Abdullah ).…”

“…IFIs are indeed generally assumed to adopt an Islamic view of corporate social responsibility (CSR) guided by Shari'a, which tends to be more holistic and absolute in orientation (Dusuki & Abdullah ). In the context of Shari'a, the economic aspects of doing business cannot be separated from the moral and spiritual aspects, and IFIs are expected to comply with basic Shari'a values that revolve around compassion, justice and promoting the public good (Dusuki & Abdullah ). Strict compliance with Shari'a translates into concrete guidelines for IFIs in relation to balancing economic and social interests, pursuing humane benevolent actions and avoiding the blind, relentless pursuit of power and profit.…”

Is it costly to be both shariah compliant and socially responsible?

“…Islamic finance and SRI share similarities in their objectives claiming for the promotion of social welfare while emphasizing on ethics. Several studies have highlighted the compatibility of Islamic ethics with classical business ethics theory (Beekun & Badawi, 2005; Brammer, Williams, & Zinkin, 2007; Dusuki, 2008; Dusuki & Abdullah, 2007; Rice, 1999; Williams & Zinkin, 2010). Its proponents agree however that a strategy focusing solely on excluding “illicit” activities is insufficient to comply with all the positive ethics and social prescriptions extracted from Islamic sources.…”