The application of maslahah and maqasid al-shari’ah in corporate social responsibility disclosure practices: the case of Malaysian Islamic banks / Dayang Milianna Abang Naim

There is a growing global interest in Corporate Social Responsibility (CSR) including its disclosure across all sectors and that they have received much attention in the literature since the early seventies. The banking sector has not been an exception. Nevertheless, previous studies have found that various Corporate Social Responsibility Disclosure (CSRD) theories exclude religion in explaining why business corporations such as Islamic banks should disclose social responsibility information in fulfilling their obligation to God. There is also lack of comprehensive studies in CSRD practices in Islamic banks that offer an insight into the nature of CSRD in Islamic Banks, which are influenced by the value of Islam. This study aims to analyse CSRD practices in light of the concept of Maslahah and Maqasid Al-Shari’ah in order to propose an integration of Maslahah and Maqasid Al-Shari’ah with the CSRD practice by which Islamic banks can address their social responsibilities and provide a better banking system for the Muslims, in particular and the communities at large. This study examined the nature and extent of CSRD and the key motivating factors for Islamic Banks in Malaysia. The study also seeks to understand why corporations in Malaysia are disclosing social information. To achieve these objectives, this study conducted a mix of qualitative and quantitative research approaches. In the quantitative phase, 17 Islamic banks were studied by examining the annual reports over the period of 2007 to 2014. The content analysis method was utilised to examine the nature and extent of CSRD for Islamic banks. In the qualitative phase, interviews were conducted to gain the perspectives, attitudes and opinions of the senior executives and shari’ah committee on CSR and CSRD in order to understand the practice of CSR and CSRD by Islamic banks, who are involved in decision making and in charge of producing corporate reports, and also to understand the reasons behind disclosing or non-disclosing social responsibility information. Content analysis demonstrates that Islamic banks are actively disclosing social information with corporate strategy information is the main social theme disclosed. Interviews reveal that all of the Islamic banks are disclosing social information due to compliance with AAOIFI Standards and the pressure from Shari’ah Committee (SC). This study presents evidence that Islamic values have driven the business practice of Islamic banks and consequently influenced CSR and CSRD. The principle of accountability to Almighty Allah was found as the prominent driver for CSR and CSRD in Islamic banks. Overall, the study demonstrates the importance of the concept of Maslahah and Maqasid Al Shari’ah that have significant impact on an Islamic framework for CSR disclosure (CSRD) and greatly distinguish the Islamic framework from the mainstream. The uppermost objectives of Shari’ah rest within the concept of compassion and guidance that seeks to establish justice, eliminate prejudice and alleviate hardship. It promotes cooperation and mutual supports within the family and society at large. This is manifested in the realisation of maslahah (public interest) which the Islamic scholars have generally considered to be the all-pervasive value and objective of the Shari’ah and is to all intents and purposes synonymous with compassion. This findings has therefore contributed to the understanding and knowledge of CSR and CSRD in the business environment of Islamic banks.