CHAPTER 6 CORPORATE SOCIAL RESPONSIBILITY IN
6.3 C OMMITMENT TO C ORPORATE S OCIAL R ESPONSIBILITY (CSR)
Following the background of the research participants, their organizations’
commitment to CSR in general was enquired. The response to the question was affirmative.
Corporate A
Corporate B
Corporate C
Corporate D
Corporate E
Corporate F
Commitment to
CSR Yes Yes Yes Yes Yes Yes
There was a consensus among all research participants that their organizations are committed to corporate social responsibility. All of them stated that Islamic organizations must be socially responsible because Islam champions the cause of social responsibility and justice. They contend that the core values and principles of an Islamic organization, besides making profits, are to serve its customers and community in accordance with the Islamic belief system.
According to one research participant:
“We (Islamic banks) have twin objectives. First objective is to provide services that conform to Shariah. Second objective is to provide Shariah- compliant products and services at a reasonable cost to our customers in the
community. This way we can fulfil our responsibility to society”.
Another research participant responded similarly:
“We are here not only to make money but also to provide products and services which are essential to those who believe in them. Because in many markets you do not have the luxury of leading an Islamic way of life or doing
Islamic banking and financing”.
Thus, the objective of Islamic banks is to provide products and services, which are Shariah compliant. This enables Islamic banks to serve the community and is considered as part of their commitment to social responsibility. One of the research participants also stated that:
“The main objective of Islamic banks is to follow Shariah. We cannot make money at the cost of Shariah. So our first and foremost mission is to make money by being Shariah-compliant. This is the reason of our existence. If we
have a problem with this, then we might not exist as well”.
All research participants asserted that the raison de ‘etre of Islamic banks is to supply halal products to a community that is under-served for banking products and services in accordance with their belief system (shariah). In absence of such financial products and services, the community would be deprived of their religious practice in financial and economic terms. This is considered as social responsibility of Islamic organizations, which Islamic banks are committed to fulfil.
All research participants pointed out that Islamic banking is driven by religious motivation and is naturally inclined to be ethical and socially responsible according to the business precepts of Islam:
“The key thing for us is that we are stressing at the ethical nature of banking from a particular religious perspective, i.e. Islam. We (Islamic banks) not only
make money but also fulfil our obligations by being socially responsible naturally in accordance with Islamic precepts. This ethical aspect also
attracts non-Muslims to us”.
Islamic banks’ practices in commitment to CSR principles are reflected in their products and services in accordance with the tenets of business transactions in Islam (discussed in chapter-3, sec-3.4.2). All research participants clearly outlined their organizations’ restriction in not to deal with businesses that produce and deal with socially hazardous or harmful products, e.g. tobacco, alcohol, and arms related businesses, as they are socially harmful and thus haram (prohibited), conforming to the Shariah principles. This was clear from the responses of research participants. As one of them stated:
“If somebody comes to us and asks for money to expand his off-licence business that sells alcohol – although the return might look lucrative, we have
a decision to make in accordance to Shariah. In that case, we will not deal with them. Something which is a sure shot profit making proposition but
haram – we can’t deal with propositions (e.g. alcohol or gambling related businesses) that do not conform to Shariah principles”.
Another research participant stressed on a similar issue:
“We don’t finance tobacco related business. There is nothing unIslamic, as tobacco is not considered haram. But we still do not deal with them, as they
are hazardous and harmful. Similarly we don’t deal with any logging businesses because they are harmful to environment”.
Some research participants contend that the financial services they provide, e.g. pawn broking, is part of their commitment to CSR:
“Islamic way of pawn-broking is an essential service that we consider for the community because there are individuals who will fall into the hands of ‘loan- sharks’ (charging high interests on money lent) in absence of such services of
Islamic banks. This way, Islamic banks fulfil their commitment to CSR”.
Liasing with educational institutions and providing students with work experience opportunities is also considered as their way of caring for CSR and contributing to society. Islamic banks are also working on providing ‘interest- free’ loans to students to pursue their education.
It was noted that Islamic banks do not have any department dealing with CSR specifically. Their organizational set up made every one responsible to care for CSR in adherence to Shariah principles. Envisioning the direction of the organization, the senior managers spend a lot of time on CSR issues. The SSB members highlight and point out the CSR principles embedded in Shariah.
This was clear from the responses of all research participants who were CEOs and MDs of their respective organizations. As one research participant stated:
“Commitment toward social responsibility is not restricted to one department or individual in Islamic banks. All of us are responsible in accordance with our belief system (Shariah). I, as head of the organization, spend lot more time
on these issues pertaining to services related to social responsibility. The Shariah Supervisory Board highlights the importance of CSR through
religious injunctions that we follow”.
However, some research participants expressed their concern about matching their CSR practices with their conventional counterparts. They stressed that Islamic banks are committed to CSR but not in a conventional context. They contend that the conventional corporations have a CSR budget that is allocated separately. That budget enables them to conduct their philanthropic activities, e.g. helping schools and charities, etc. The conventional corporations also publicize these CSR activities to gain competitive advantage over their competitors and use it as a tool in their marketing strategy.
A significant difference between conventional and Islamic organizations emerged through this discussion. Islamic organizations are naturally inclined to be socially responsible in adherence to Shariah principles. Hence, they do not publicize their CSR activities, as several business organizations in contemporary business world do.
Thus, it is evident that Islamic banks are committed to corporate social responsibility. However, this is not guided by a higher notion of CSR. Rather, it is in adherence to Shariah, the purpose of which (maqasid al Shariah) is well-being (falah) of society. CSR is an integral part of Islamic banks’
existence in accordance with the philosophy of socio-economic behaviour in Islam. However, when asked if they are aware of an explicit notion of CSR in Islam, the responses from all research participants were negative.