A newly published academic article, entitled ‘Is Islamic Banking and Finance Doing Enough? Shaping the Sustainable and Socially Responsible Investment Community’, recognizes the potential of the Islamic Reporting Initiative (IRI) in the context of addressing sustainability in the Middle East. The article was published by Malaysian scholar Dr Amiruddin Ahamat of the Universiti Teknikal Malaysia (UTeM) in collaboration with the Canadian Center of Science and Education.
“My research has shown that the Islamic Reporting Initiative has great potential to foster significant sustainable development and growth for the Islamic Banking and Finance sector, in a context that is aligned with Islamic values and principles. I have concluded that the IRI is indeed essential to enable Islamic businesses worldwide to report on and measure more effectively their social and environmental impact.”
Dr Amiruddin Ahamat, Universiti Teknikal Malaysia
‘‘Islamic finance assets advanced at double-digit rates during the past decade, from about US$200 billion in 2003 to an estimated US$1.8 trillion at the end of 2013 (Ernst & Young 2014; IFSB 2014; Wyman 2009). Hence, despite this growth, Islamic finance and its related products are still focused in the Gulf Cooperation Council (GCC) countries and Malaysia, and represent less than 1% of global financial assets. […] This study draws on the triple bottom line concept (people, planet and profit), by developing standards equivalent to triple bottom line (TBL) reporting for Islamic banking and financial institutions, and disseminating independent and objective research to relevant stakeholders. This includes examining the potential positive or negative social impact of Islamic Banking and Finance on the financially sustainable and responsible community.’’
Specifically, the article addresses the great potential for sustainability through values that are inherent to Islamic banking and finance. The article then recognizes the Islamic Reporting Initiative (IRI) for its efforts to realize this potential:
‘’From the Middle East perspective, the potential in sustainable business and socially responsible investing is great. One of the principles of Islamic banking is not to invest in projects that are detrimental to society, which exhibits the extent to which Islamic finance contributes to a broader values-based social system. The Islamic principles that lead Islamic finance include the concept of humankind as trustees of nature. This instils a level of responsibility to safeguard society and environment, and demonstrates the potential for the region to seek these principles even further in a business situation. Taking these distinctions into account is the Islamic Reporting Initiative (IRI), which delves to promote the use of triple bottom line reporting as an instrument for business development and growth, in a context that is regulated with Islamic principles. Additionally, the favourable geography of the region prepares it with great renewable energy resources, such as solar power. This may serve as a major competitive advantage in the field of sustainable development, with consumers increasingly scrutinizing the social and environmental impact of organizations.’’
In its conclusion, the effectiveness of triple bottom line reporting is discussed and the IRI is again acknowledged for recognizing the important role of Islamic Financial Institutions:
‘’…this paper suggests more innovative efforts to integrate TBL reporting in shaping sustainable and responsible investment. The proposed triple bottom line framework helps unleash the critical people, planet and profit in building more sustainable and responsible investment community. The role of Islamic Banking and Finance institutions is eminent. Taking this notion into account is the Islamic Reporting Initiative (IRI), which seeks to promote the use of triple bottom line reporting as a mechanism for business development and growth, in a context that is aligned with Islamic values and principles.
[…] One main issue with the triple bottom line is that the three separate contexts cannot easily be integrated. It is challenging to examine the planet and people accounts in the same terms as profits—that is, in monetary terms. […] However, the Islamic Reporting Initiative (IRI) is essential to enable businesses to report and measure their social impact.’’
The full article can be found here: https://doi.org/10.5539/ass.v13n3p170
