Regulatory Governance and the Quality of Islamic Social Reporting: A Comparative Analysis of Islamic Banking Practices in Asia
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This study examines the extent to which government regulation shapes the implementation of Islamic Social Reporting (ISR) within Islamic banking institutions across five jurisdictions: Indonesia, Malaysia, Kuwait, the United Arab Emirates, and Bahrain. As a Sharia-grounded framework for sustainability disclosure, ISR encompasses six principal dimensions, accountability toward fund providers, obligations to employees, contributions to society, environmental stewardship, ethical product and service standards, and adherence to Sharia principles. Employing a qualitative content analysis methodology, the study systematically reviews annual and sustainability reports issued by Islamic banks spanning the period 2014 to 2023. The evidence reveals that regulatory instruments—including Indonesia’s POJK No. 51/2017, Malaysia’s Islamic Financial Services Act (IFSA) 2013 and its accompanying Environmental, Social, and Governance (ESG) guidelines, Kuwait’s Central Bank sustainability directives, the Securities and Commodities Authority (SCA) disclosure framework in the United Arab Emirates, and the Central Bank of Bahrain’s reporting standards—have collectively advanced ISR practices in both procedural adherence and substantive content. Nevertheless, a recurrent tendency toward administrative, checkbox-style reporting persists, with most disclosures failing to authentically embody the values embedded in maqāṣid al-sharīʿa. In response, this study advocates for a new generation of regulatory frameworks that move beyond formal mandates to actively promote the quality, depth, and meaningful integration of Islamic ethical principles into institutional sustainability practices
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