How to Implement Islamic Banking's CSR in the Society?

Abstract

-The concept of CSR began in the West in the 1970s and discussions on the concept of CSR often focused on the view that is founded on the norms, cultures and beliefs of the West. Western perspective of CSR has become common practice for a corporate to run CSR programs. One of the goals of Islamic banking operations is to increase the economic growth towards a better and just society. Therefore, Islamic CSR in IBIs should be underpinning on Islamic philosophy that differs from western perspective. This study aims to examine the implementation of Islamic CSR in IBIs in society base on underpinning of Islamic philosophy. This study relies on secondary data to explore the basic sources of Islam using content analysis. The study found that the implementation of Islamic corporate social responsibility on IBIs in the society should be guided by two Islamic principles, first, the application of maslahah (the public good) which provides a better framework that managers can use when faced with potential conflicts arising from diverse expectations and interests of any corporation's stakeholders. Secondly, corporate social responsibility program should pay more attention to the importance of social capital in the society. The corporate social responsibility practices in Islamic banking should not only be based on responsibility al kifayah (obligatory upon community) and get a positive corporate image but can also be deemed as a method to alleviate poverty and achieve the true economic goals of Islam. Keywords: Islamic Corporate Social Responsibility, Islamic Banking and Society ABSTRAK -Konsep CSR dimulai di Barat pada era 1970-an sehingga bahasan CSR

Corporate social responsibility of Islamic and conventional banks

“…There are numerous verses in the Holy Qur’an encouraging environmental preservation as a means of protecting God’s creation (Khurshid et al , 2014). This reflects the Islamic sense of responsibility toward the environment (Yusuf, 2012) and the ethical basis that underlies environmental concerns. In turn, some conventional banks are pre-empting environmental regulation by self-abstaining from funding polluting industries.…”

“…Maslahah implies public good or public benefit, whereas Maqasid constitutes the main goal of the Shariah , which is to promote well-being and human development through education, the eradication of poverty (Sairally, 2007) and justice establishment (Amin et al , 2015; Antonio et al , 2012; Shamsudin and Mohammed, 2015). Thus, Islamic banks, as any other Islamic institution, have a sense of social responsibility (Farook, 2007), being urged to respect Maqasid, which may serve as an adequate guide for Islamic CSR (Dusuki and Abdullah, 2007a; Yusuf, 2012). In this manner, the unique and complex context of Islamic banks and their need to comply with the Shariah (Safieddine, 2009) determines that business should be beneficial for both a company and society, in accordance with Maqasid and maslahah .…”

Corporate Social Responsibility from an Islamic Perspective: An Overview

“…Figure 2: Pyramid for Islamic CSR Activities; Source: Dusuki and Abdullah (2007)Yusuf (2012) states that maslahah (the public good) and social capital are important guiding principles for Islamic banks when implementing their CSR programmes. These programmes should aim to alleviate poverty and assist with the achievement of economic goals in accordance with Islam's teachings, and not be implemented for the sake of cultivating a positive corporate image Farook (2007).…”