Islam provides a basis and guideline for living one's life. ... of social responsibility automatically has a role in Islam. ... APPENDEX3: LIST OF ABBREVIATIONS.
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Corporate governance and social responsibility in Islamic Financial Institutions
Hussein Elasrag
Corporate governance and social responsibility in Islamic Financial Institutions
Islam provides a basis and guideline for living one’s life. Within this, there is a very detailed concept of ethical and social behaviour which allows us to deduce that the concept of social responsibility automatically has a role in Islam. This is a critical point that must be firstly understood as the role of moral ethics has been underpinned in Islam for over 1400 years whilst the concept of CSR remains relatively new for businesses today.The scope of this book is to briefly outline some of the major aspects of Islam which give consideration for businesses and their push towards Corporate Social Responsibility. It considers the belief system of Islam and how this belief has a significant underpinning of social behaviour.
CONTENTS
1 INTRODUCTION 2
FUNDAMENTALS OF THE ISLAMIC FINANCE
SHARI'AH LAW DEFINED QUR'AN SUNNAH HADITH QIYAS IJMA IJTIHAD ISSUES RELATING TO INTERPRETATION AND APPLICATION OF SHARI'AH LAW KEY SHARI'AH PRINCIPLES AND PROHIBITIONS RELEVANT TO FINANCE Prohibition on usury and interest (riba) No uncertainty (gharar) in commercial transactions Making Money from Money is not Permissible REGULATION OF ISLAMIC FINANCE Basic Islamic financial instruments Islamic bonds (Sukuk) : ISLAMIC BANKING LEADING ORGANIZATIONS OF ISLAMIC FINANCE Shari'ah Boards AAOIFI IFSB IIRA IIFM
Corporate governance and social responsibility in Islamic Financial Institutions
59
3 CORPORATE GOVERNANCE IN ISLAMIC FINANCE: BASIC CONCEPTS AND ISSUES 61 A. B. 1. 2. 3. 4. C. D. E. 5. 6. 7. 8. 9. 4
DEFINITION OF CORPORATE GOVERNANCE CORPORATE GOVERNANCE SYSTEM AROUND THE WORLD ANGLO-SAXON CORPORATE GOVERNANCE SYSTEM GERMANIC CORPORATE GOVERNANCE SYSTEM LATIN CORPORATE GOVERNANCE SYSTEM JAPANESE CORPORATE GOVERNANCE SYSTEM SHARI'AH GOVERNANCE IN ISLAMIC FINANCE DEFINITION AND SCOPE OF SHARI'A GOVERNANCE SYSTEM SHARI'AH GOVERNANCE MODEL FROM REGULATORY PERSPECTIVE REACTIVE APPROACH PASSIVE APPROACH MINIMALIST APPROACH PRO-ACTIVE APPROACH INTERVENTIONIST APPROACH EFFECTIVE CORPORATE GOVERNANCE
A. THE BOARD OF DIRECTORS B. SENIOR MANAGEMENT C. REGULATORY AND INTERNAL FRAMEWORKS 1. PROACTIVE APPROACH AND INTEGRATED CORPORATE AND SHARĪ'AH GOVERNANCE 2. SUPERVISION AND ENFORCEMENT 3. DISPUTE SETTLEMENT 4. WELL-CONCEIVED BY-LAWS AND INTERNAL POLICIES D. ATTRIBUTES OF THE SHARI'AH BOARD ON INDEPENDENCE 1. METHOD OF APPOINTMENT
63 71 71 72 72 73 73 77 80 81 82 82 82 83
2. 3. 4. 5.
CODE OF CONDUCT PROFESSIONAL BODY REMUNERATION POLICY ATTRIBUTES OF THE SHARI'AH BOARD ON CONFIDENTIALITY
106 107 108 108
5 SOCIAL RESPONSIBILITY IN ISLAMIC FINANCIAL INSTITUTIONS
110
THE CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY: DEFINITIONS AND HISTORY ISLAMIC CORPORATE SOCIAL RESPONSIBILITY THE CONCEPTS OF BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY CHALLENGES FOR ISLAMIC CORPORATE SOCIAL RESPONSIBILITY
114 115 125 126 132 146
APPENDICES
149
APPENDEX1 : KEY PLAYERS IN CORPORATE GOVERNANCE (CG) OF ISLAMIC FINANCIAL INSTITUTIONS (IFIS) 150 APPENDEX2 :GLOSSARY
153
APPENDEX3: LIST OF ABBREVIATIONS
161
92 95 99 101
APPENDIX 4: G S 7 CORPORATE SOCIAL RESPONSIBILITY CONDUCT AND DISCLOSURE FOR ISLAMIC FINANCIAL INSTITUTIONS 166
