Corporate Social Responsibility from an Islamic Moral Economy Perspective: A Literature Survey

Abstract

Islamic finance re-emerged in modern times as an alternative ethical financial proposition shaped with the norms and principles of Islam. In this new construct not only the ‘form’ or the legality of the financial instruments and operations are considered, but Islamic moral economy foundations of Islamic finance necessitates that Islamic norms must be integrated as ‘substance’ in financial activity. This is considered as the distinguishing point of Islamic finance, and is also the meaning of the suffix ‘Islam’ in Islamic finance. The substance, hence, refers to real economic activity, observing social good, contributing to human and economic development, and enhancing and protecting individual, society and environment. In modern times, this is considered as ‘corporate social responsibility’ (CSR), which has always remained an integral part of the Islamic moral economy as an inevitable ontological reality. This paper, hence, aims to explore and identify the CSR nature of Islamic finance; and also argues that Islamic finance institutions, therefore, have to pay due importance to social and developmentalist objectives in their operations; and therefore should be concerned with the ‘consequences’ of their financings with the objective of mitigating or moderating the ‘observed’ social failure of Islamic finance and banking institutions.

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