The Role of Sharia-Based Financial Reporting in Promoting Corporate Sustainability
Keywords:
Corporate sustainability, ESG, Islamic finance, Maqasid al-Shari'ah, Sharia-based financial reportingAbstract
This study investigates the pivotal role of Sharia-based financial reporting as a distinct mechanism for enhancing corporate sustainability. While the literature extensively links Islamic finance principles to resilience and ethical conduct, a significant gap remains in exploring how a formalized reporting framework rooted in these principles translates into measurable sustainability outcomes. Guided by a literature study, this research posits that Sharia-based financial reporting, underpinned by the objectives of Maqasid al-Shari'ah, acts as a critical tool for accountability and transparency. The findings reveal that this reporting framework positively influences corporate sustainability metrics by fostering trust and aligning firm activities with broader ethical and social imperatives. Furthermore, the analysis indicates that it strengthens governance by formalizing the oversight function of the Sharia Supervisory Board (SSB). These results suggest that Sharia-based financial reporting is not merely a compliance exercise but a strategic instrument for building social capital, enhancing environmental and social performance, and contributing to the United Nations Sustainable Development Goals (SDGs). This research provides valuable insights for policymakers, Islamic financial institutions, and stakeholders aiming to integrate ethical principles with robust reporting standards for a more resilient and responsible financial ecosystem.
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