Corporate Social Responsibility (CSR) in Islamic financial Institutions: the Shariah Adoption and Standardization, UAE and Malaysian Model

By Abdul Azeez Maruf Olayemi, Steyn Heckroodt and Schoepp Kevin

Abstract

This paper proposes a standardized ‘Corporate Social Responsibility (CSR)’ framework for the Islamic financial institution queing from the idea of the proposed UAE framework. The development of CSR framework in UAE is  the newest contribution of the country to the growth of Islamic finance, after being the cradle of the industry. The Emirates’ Ministry of Commerce has instructed corporations in the country to register for a mandatory CSR practice, including the Islamic financial institutions. However, the Islamic financial institutions lack a standardized CSR framework. This is also the case with Malaysia. Individual financial institutions use separate framework for CSR.The current study adopts a qualitative approach and it proposes a standardized CSR framework for the Islamic financial institutions. In addition, interviews was conducted to extract valuable information from the Islamic finance practitioners in both UAE and Malaysia on the CSR practice in the countries. The interviewees agree that the Islamic financial institutions are lacking standardized CSR framework and suggest  the development of a unified framework. More so, majority of the interviewees agreed that the Carroll Model of CSR can be adopted and adapted to the Shari’ah practice of the Islamic financial institutions. The current paper highlights areas that require attention while developing a standardized Islamic finance CSR.