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1.2.10

Social Responsibility Trends at Islamic Financial Institutions

DinarStandard and Dar Al Istithmar, have just announced the release of a first-of-its-kind report on Corporate Social Responsibility (CSR) in Islamic Finance Institutions as well as recognizing social responsibility leaders from within the respondents with the Maqasid Al-Shari’a Awards. In fact it was in mid-2009 that we first encountered this survey (blog post here) and we look forward to its future editions. It is refreshing that the actual report is being disseminated upfront (in this space there seems to be an over-supply of press releases disguised as news) and most importantly we should note that the awards are based on a defined and objective set of criteria (i.e. not a popularity contest). This is a very positive signal which others in the industry will hopefully follow.

The full report is available here (pdf document).

Excerpt: The Social Responsibility Trends at Islamic Financial Institutions Report presents the aggregate results of an extensive survey on Social Responsibility at Islamic Financial Institutions (IFIs) carried out during summer and fall of 2009.

Some key findings of the survey:

Charity: 76% indicated that they had polices for charitable activities whilst 17% had none. Charitable activities remains a strong priority for IFIs, but most do not consider utilising their fund mobilizing capabilities to raise funds for charities or emergency causes (only 34% said they do.)

Responsible Investments: 55% responded yes to having some policy in investment quotas on social, developmental and environment orientated investments, whilst 38% did not have such policy. However, amongst the three types, environmental related investment quotas had the least focus (38%).

Clients: 100% of respondents answered yes to having a policy to screen prospective clients which is actively implemented. Similarly 97% have an organizational policy that deals with client responsibly.

Employees: 83% of respondents’ state having policies that provide equal opportunity to all their employees, 93% have policies that ensures merit-based salary and promotion, and 86% having policies that specifically prohibits any kind of discrimination. However, when it comes to having policy to monitor employees from different backgrounds and gender, the response was mix with only 52% admitting to having such a monitoring policy and 48% not having any such policy.

A sincere thanks to Dr. Sayd Farook for providing the report.

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