Sustainable by Faith: bridging ESG, SDG, and Maqasid Shariah in corporate Malaysia

Malaysia stands at a critical juncture between economic growth and sustainability. With over 80% of capital market firms in Malaysia designated as Shariah-compliant, one would expect their Environmental, Social, and Governance (ESG) performance to reflect the ethical foundations of Islamic principles. Yet, many of these firms lag behind their non-Shariah counterparts in ESG scores. This paradox underscores a missed opportunity to align Maqasid Shariah-the Islamic objectives of justice, welfare, and stewardship-with global sustainability frameworks such as the ESG standards and the United Nations Sustainable Development Goals (SDGs). Figure 1 presents average ESG scores for the top 100 public listed companies in Malaysia in 2022. Shariah-compliant firms recorded an average score of 64.73, while non-Shariah firms scored 72.71. Despite their ethical underpinnings, Shariah-compliant firms may lack robust ESG frameworks, systematic reporting practices, or strategic emphasis on sustainability. This gap highlights the need to integrate Maqasid Shariah more effectively with contemporary ESG benchmarks. Enhancing board governance, strengthening director networks, and institutionalising ESG reporting are essential steps toward closing this performance gap.