Reporting under Islamic Practices, a Path forward to Environmental, Social, and Corporate Governance (ESG) Considerations

Purpose – Islamic principles are heralding a variety of implications for business and accounting. Reflecting upon Islamic practices, this study engages with the notion of ESG conduct and its disclosure in accounting reports. While drawing from key Islamic texts and relevant prior literature, the present research elaborates and discusses key Islamic principles of relevance and delineates what they suggest for ESG reporting.Design/methodology/approach – Afterwards, a grounded theory method was performed for data collection phase. Online in-depth semi-structured interviews were deployed to ۱۶ specialists of Islamic “finance and accounting”. Primary data analysis was done with MAXQDA. In the next step, three-step encoding method was accomplished.Findings – The survey revealed ۵۳ reporting implementation codes in three dimensions comprising of environmental, social, and corporate governance. In addition, a comparative views of corporate governance under Islamic and non-Islamic economic schools was illustrated. The execution of ESG accounting practices might be beneficial to overcome the problem of traditional accounting which fails to incorporate environmental, social and ethical hidden costs.Research implications – The conclusion discusses the perspective of Islamic view in ESG reporting by incorporating the concept of Tawhid which provides a holistic guidance based on Islamic beliefs, values and concepts. The obtained framework contributes to Islamic accounting at the intersection of sustainable strategies.

Keywords:

Islamic finance , Sustainability , Accounting , Shari’ ah Compliant , ESG