Islamic banks: Sustainability, integrated reporting and religion

Abstract

Over the last few decades a growing awareness of the role of firms in society has emerged and, consequently, a call for a different approach towards accounting and accountability. Among various proposals, Integrated Reporting (IR) represent the more recent and ambitious one, even if some critical matters have to be dealt with by companies involved in its implementation. In effect, some Authors have already highlighted that it is necessary to introduce a cultural change in order to develop a new approach with reference to the measurement and communication (Songini et al., 2015). In this sense, in recent years critical and interdisciplinary research has significantly challenged the predominantly technical and a-political view of business and accounting. This has led to growing consensus that the most valuable insights are gained from studying practices in the organizational and broader social settings in which they operate, i.e. their cultural context. On the basis of the above, Islam does represent a strongly important field of study for the cultural context into which IR could develop. In effect, in Islamic thought, it is believed that Adam, the progenitor of the human race and Islamic prophet-was appointed Trusteeship (khalifa) or guardian of the planet Earth; in addition, a concept unique to man is amana or trust (Rizk, 2014). Allah offers amana to the heavens, to the earth, to the mountains - to the rest of creation - who all refused; only mankind was foolish enough to accept it. A trust entails one who entrusts and a trustee. Qur’an is embodied with the principles of moderation, balance and conservation, which are the core of sustainable development and provide a framework for discernment, without which there would arguably be no limits to waste, extravagance or greed both individual as well as corporate. Further exploration does suggest that the accountant, and hence accounting, is actually given a very key role. The person that is described as accountant or Muhtasib in Islam is the one responsible for making sure that business is not harming the community. Tawheed (unity) stimulates the desiderata of an explicit public commitment to reasonable and comprehensible accounting – full and relevant disclosure – in the public interest, as such an explicit commitment becomes a charge in relation to which those formally regulating accounting can be held accountable. At the same time, Islam encourages humankind to experience lazkiyah (self-correction) through active participation in life, since only behaving ethically in the materialistic life (duniya) Muslims prove their worth to Allah (Hassan, 2016). The paper is mostly theoretical, yet it offers fruitful practical insights since only a truthful assessment of the cultural pattern, as such as Islam, can lead to a conscious approach towards sustainability. This paper offers insights for future research on the broad field of social and environmental issues, as well as Integrated Reporting, since it suggests to take always in account – when addressing issues and potentialities of non financial reporting – the cultural pattern.