Institutionalizing Sustainability within Islamic Banking: Ethical Alignment and Practical Application in Responsible Finance
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Abstract
This literature-based study investigates the alignment between Islamic banking principles and sustainable finance practices. It critically examines how Islamic banks interpret, implement, and govern sustainability within their operational structures. Through a review of academic literature and institutional practices, the study identifies theoretical consistencies between Shariah and ESG principles, while highlighting gaps in application, governance, and policy support. The findings reveal that although Islamic finance is conceptually aligned with sustainable objectives such as social justice, environmental stewardship, and ethical investing, practical integration remains fragmented. Issues such as regulatory misalignment, limited stakeholder participation, and lack of standardized ESG reporting hinder progress. The study underscores the need for greater institutional commitment, scholarly engagement, and educational reform to enable Islamic banks to lead in shaping a sustainable financial future. The paper contributes to the ongoing discourse on faith-based ethical finance and offers recommendations for enhancing the synergy between Islamic banking and global sustainability frameworks.
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References
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