Appraising the Determinants of ESG towards Maqasid Shariah in Enhancing Financial Inclusion
Abstract
The purpose of this study is to evaluate the key determinants of Environmental, Social, and Governance (ESG) factors about the principles of Maqasid Shariah and their role in advancing financial inclusion. Most Islamic banks and Shariah-compliant firms have started promoting sustainability through their financing and initiatives many years ago, which puts them ahead in terms of ESG. There are still many obstacles that need to be overcome to get best results from the integration of ESG and Islamic Finance, as well as offering insights into Islamic finance models such as ESG investment from Islamic perspective, especially with regard to concepts of Maqasid Shariah, so that ESG and Maqasid Sharia can be applied in all institutions, especially Islamic banking and also Sharia-compliant firms. The integration of ESG principles within Islamic finance offers holistic framework that aligns ethical and sustainable practices with objectives of Shariah, particularly in promoting economic justice, social welfare, and financial accessibility. By appraising the synergies between ESG dimensions and five pillars of Maqasid Shariah—protection of religion, life, intellect, progeny, and wealth. This study explores how these determinants contribute to inclusive financial systems. Using conceptual framework analysis methods approach that includes qualitative analysis and evaluation, the study provides insights into how ESG-aligned strategies can be instrumental in reducing financial disparities, fostering trust, and promoting responsible investments in accordance with Islamic values. This study contributed to literature by expected to offer policy recommendations and practical frameworks for stakeholders seeking to leverage ESG criteria to enhance financial inclusion in Shariah-compliant economies.
Downloads
References
Al-Qaradawi, Y. (2007), Dirasah fi fiqh maqasid al-Shari’ah: Bayna al-maqasid al-kulliyyah wa al-nusus al-juz’iyyah, Dar al-Shuruq, Al-Qaherah
Apeh, C. E., Odionu, C. S., Bristol-Alagbariya, B., Okon, R., & Austin-Gabriel, B. (2024). Reviewing healthcare supply chain management: Strategies for enhancing efficiency and resilience. International Journal of Research and Scientific Innovation (IJRSI), 5(1), 1209-1216. DOI: https://doi.org/10.54660/.IJMRGE.2024.5.1.1209 -1216
Asim, A. & Ullas, R. (2022). Making a Compelling Case for ESG & Islamic Funds: An Empirical Investigation in Comparison With Conventional Funds. Indian Journal Of Finance And Banking, 9(1), 230-239.
Chapra, M. U. (1992). Towards a just monetary system. The Islamic Foundation, Leicester
Chukwuma-Eke, E., Ogunsola, O., & Isibor, N. (2025). Developing financial inclusion strategies through technology and policy to improve energy access for underserved communities. International Journal of Scientific Research in Science, Engineering and Technology 12(2), 324-366.
Cicchiello, A. F., Kazemikhasragh, A., Monferrá, S., & Girón, A. (2021). Financial inclusion and development in the least developed countries in Asia and Africa. Journal of Innovation and Entrepreneurship, 10(1), 49.
Daramola, O.M., Apeh, C.E., Basiru, J.O., Onukwulu, E.C., & Paul, P.O. (2025). Sustainable packaging operations: Balancing cost, functionality and environmental concerns. International Journal of Social Science Exceptional Research, 4(1), 79-97. https://doi.org/10.54660/IJSSER.2025.4.1.79-97
Dusuki, A. W., & Abdullah, N. I. (2005). Maqashid al-Shari’ah, maslahah, and corporate social responsibility. The American Journal of Islamic Social Sciences, 24(1), 25–45.
Dusuki, A.W., & Abdullah, N.I. (2007) Maqasid al-shari'ah, Maslahah and corporate social responsibility, The American Journal of Islamic Social Sciences, 24 (1), 25- 45.
Eliwa, Y., Aboud, A., & Saleh, A. (2021). ESG practices and the cost of debt: Evidence from EU countries. Critical Perspectives on Accounting, 79, 102097.
Erlando A, Riyanto DF, Masakazu S (2020). Financial inclusion, economic growth, and poverty alleviation: evidence from eastern Indonesia. Heliyon 6(10):e05235. https://doi.org/10.1016/j. heliyon.2020.e05235
Haq, M. and Wahab, N (2019). The Maqasid Al-Shariah and the sustainability paradigm: Literature review and proposed mutual framework for asnaf development. Journal of Accounting and Finance in Emerging Economies 5(2).
Kasbani, A. (2018). Sustainable Development Goals and Islamic Financing. Presented at 1st Global Conference on Islamic Economic and Finance (GCIEF), Kuala Lumpur.
Khan, T. (2019). Reforming Islamic Finance for Achieving Sustainable Development Goals. Journal of King Abdulaziz University-Islamic Economics. JKAU: Islamic Econ., 32(1), 3-21.
Malik, A. H., Jais, M. B., Md Isa, A. H., & Rehman, A. U. (2022). Role of social sustainability for financial inclusion and stability among Asian countries. International Journal of Social Economics, 49(9), 1324-1348.
Miskam, S., & Abdullah, M. (2021). Integrating Environmental, Social and Governance (ESG) Into Shariah Compliant Fund Investment Portfolios: Legal and Regulatory Initiatives in Malaysia, Proceedings of International Conference on Syariah & Law (ICONSYAL).
Monzur-E-Elahi, M. (2010). The objectives and intents of Islamic Shari’ah as a paradigm of development strategies and policies (Issue 7).
Moosa, E. (2016). [Review of The Reconciliation of the Fundamentals of Islamic Law (al-Muw?faq?t fi U??l al-Shar?’a), vol. 1. The Great Books of Islamic Civilization, by I. ibn M?s? Ab? Is??q al-Sh??ib?, I. A. Nyazee, & R. M. Rammuny]. Islamic Law and Society, 23(3), 318–322. http://www.jstor.org/stable/43997272
Nasir, M. N. S. & Seman, J. A. (2022). Sustainability And Islamic Social Banking: A Review of Literature. The 10th Islamic Banking, Accounting and Finance International Conference 2022 (iBAF2022). https://www.proquest.com/wire-feeds/islamic-finance-sdgs-framing-opportunity
Omowole, B. M., Olufemi-Philips, A. Q., Ofadile, O. C., Eyo-Udo, N. L., & Ewim, S. E. (2024). Barriers and drivers of digital transformation in SMEs: A conceptual analysis. International Journal of Frontline Research in Multidisciplinary Studies, 5(2), 019-036.
Paltrinieri, A., Dreassi, A., Migliavacca, M., & Piserà, S. (2020). Islamic finance development and banking ESG scores: Evidence from a cross-country analysis. Research in International Business and Finance, 51, 101100.
Park, C.Y. and Mercado, R. (2018). Financial inclusion, poverty, and income inequality, The Singapore Economic Review, 63(1), 185-206.
Qoyum, A. (2020). The Environmental, Social, And Governance (ESG) Criteria and Its Impact on The Portfolio Performance: In Search Of Integration Between Islamic And ESG Screening In Indonesia And Malaysia,”. Doctoral thesis, Universitas Islam Negeri Sunan Kalijaga.
Sairally, B. S. (2015). Integrating Environmental, Social and Governance (ESG) Factors in Islamic Finance: Towards the Realisation of Maqaa?id Al-Shari?ah. ISRA International Journal of Islamic Finance, 7(2), 145-154.
Sam-Bulya, N. J., Oyeyemi, O. P., Igwe, A. N., Anjorin, F., & Ewim, S. E. (2024). The intersection of green marketing and sustainable supply chain practices in FMCG SMEs.
Siswanti, I., Salim, U., Sukoharsono, E. G. & Aisjah, S. (2017). The Impact of Islamic Corporate Governance, Islamic Intellectual Capital, and Islamic Financial Performance on Sustainable Business in Islamic Banks. International Journal of Economics and Financial Issues, 7(4), 316-323.
Stafford-Smith, M., Griggs, D., Gaffney, O., Ullah, F., Reyers, B., Kanie, N., O’Connell, D. (2016). Integration: the key to implementing the Sustainable Development Goals. Sustainability Science, 12(6), 911–919. doi:10.1007/s11625-016-0383-3
Copyright (c) 2025 Norhasimah Shaharuddin, Mohd Hafiz Wahab, Adibah Alawiah Osman, Sharul Shahida Shakrien, Nurul Hilmiyah
This work is licensed under a Creative Commons Attribution 4.0 International License.
Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of revised paper in the light of suggestions of the reviewers, the editorial team edits and formats manuscripts to bring uniformity and standardization in published material.
This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.
