Dr. Maqbouleh HammoudehAmman – JordanJune 12-13, 2011

The CGR Forum is an ongoing engagement from Schema, your Sustainability Partner

Governance , Corporate Social Responsibility,and Sustainable Development:

An Islamic Perspective Presented

by

Definitions:

Sustainable Development: “The most beloved actions by God are the sustainable ones, no matter how small it was,”

Prophet Mohammad (PUH)قلت ” ” • وإن ، أدومها الله الى األعمال أحب

وسلم عليه الله صلى الرسول

• Sustainable Development:

“It is about ensuring a better quality of life for everyone , now and for generations to come.”

Dept. of Environment , UK . 1999

Definitions:

• Corporate Social Responsibility (CSR):

“ Every one of you is a leader and is responsible for his subordinates”

• Prophet Mohammad. (PUH).

رعيته ” عن مسؤول وكلكم راع ” كلكموسلم عليه الله صلى الرسول

Definitions:

Corporate Social Responsibility ( CSR ):

“ CSR means open and transparent business practices that are based on ethical values and respect for employees , communities, and environment. It is designed to deliver sustainable value to society at large, as well as the shareholders.”

IBLF, 2005

Quality : ITQAN , to do the best, in everything we do. “ Allah Loves to see one’s job done at the level of Itqan.” Prophet Mohammad (PUH)

يتقنه” ” أن عمال أحدكم عمل إذا يحب الله إنوسلم عليه الله صلى الرسول

Cont..

(WBCSD 1998) identified CSR as follows:

“ Continuing commitment by business to behave ethically and thus contributing to economic development while improving the quality of life , of the workforce,and their families as well as of the local community and Society at large.” That means:

CSR CS Quality of Life

Governance

Governance means regulations and monitoring to guarantee good corporations management to look after the stakeholders interests .

It limits the incorrect attitudes and behaviours of the executive managers , and gives the board members an effective role.

This definition is aligned with the original Islamic perspective, not modern expression .

Preserving and protecting capitals is one of the five pillars in Islam.

All the Islamic Regulation organized the Relationships between Corporations’ management and all shareholders.

Governance

Globalization Outputs:

- changes for Share Holder - Open Global Financial Markets - Executive managers control over the company to

serve their - High Competition between companies - Bankruptcy of big companies - Corruption

Governance

- Organization of Economic Co-operation and Development ( OECD) put an integrated structure for Governance system in 1999.

- It is accepted by most of governments and Business sectors , and investments , or financial markets.

This Governance system covers:

a. Shareholders

b. Board members and managers

c. People with interest ( Clients, Suppliers, banks , depts.)

d. Company’s Community

Governance

How each party will have his rights and

give his commitments ?

From an Islamic Perspective : We go to the Value System

1. Justice Justice is the basic Value.

It is an ultimate Value for any society , organization , and Life in General

Governance / Justice

• All our relationships and corporate systems should be governed by Justice.

• With Justice in Human Resources Systems implementation , we will have the employees’ satisfaction.

Governance / Justice

• With Justice Value ,we can implement the law in public servants asking them :” From where did they make such fortunes or asking them about their illegal earnings were achieved by forbidding illegal earning in Islam.

Governance

Justice / cont…

1. ((O ye who believe! stand out firmly for justice, as witnesses to Allah )) Women / 135

لله” ” شهداء ، بالقسط قوامين كونوا آمنوا الذين أيها / 135ياالنساء

2. ((Whenever ye speak, speak justly )) Alanam/Cattle 152

فاعدلوا ” قلتم األنعام / 152وإذا3. ((O ye who believe! fulfill (all) obligations)) Table 1

بالعقود” ” أوفوا آمنوا الذين أيها المائدة / 1يا

2. Responsibility :For each party :

From an Islamic perspective it is honesty

and trust.

Responsibility , is not only in front of party ,

but it is in front of God .

ALTAQWA:• It Means It is a Life and Work Address in the corporations.

Each employee should behave with himself, his supervisors, his subordinates, his instruments, tools and the owners realizing faith of God to be as standard of behavior.

• So we should behave with self control not police control, and self responsibility

3. Accountability :

For each responsible for his commitments.

It is a Reward system for each positive and negative actions .

Will a just Judicial system in each country.

4 Transparency

Honesty, trust, and accuracy of information about the company for all parties , that can’t directly supervise their interest in the company.

These are 4 important Islamic Values that should used in any Governance system

Corporate Dimensions Towards Sustainability: Governance , Corporate Social Responsibility and Corporate Sustainability

VALUES

Governance

Corporate Sustainability

Corporate Social Responsibility

Quality

CSR from an Islamic Perspective

• First: Social Dimension:• 1- The importance of work in the society is such as

worship.) • “Never any body has eaten a food better than that

which earned by his hand.” Prophet Mohammad (PUH)

• Islam does not see it sufficient to work: for worldly gain, it adds to it the touch of the worship and devotion to God.

• Also the management should give the employees all their rights to meet their objectives.

Human Resources Development:

• Selection: based on strength and honesty. (Quran Ref.)

• Recruitment: permanent employment, contractual appointment

• Pyramidal structuring and gradation scale:I. theory confirms that variation in employment does not necessarily mean social variation and does not touch the spirit of social equality.

• Promotion: based on faith and knowledge. (Quran Ref.)

• Wages and salaries: based on justice• Incentives: focused on satisfaction, not fulfillment,

and grouping motivations, in addition to individual motivations

Al Zakat ..

• Al Zakat as a specified payable right in money or wealth that meats certain conditions . It is a major pillar in Islam, It is a wide bridge on which both the rich and the poor stand in harmony and full respect of each other.

Charities:

• In addition to AL Zakat, Islam has made provisions for a number of desirable charities as a means of social responsibility.

• The legislation of these charities gives an opportunity to the rich to help the poor , the indigent, the petitioners, the refugees, the homeless and the wayfarers without restricting assistance to the particular time or amount.

Al Wakf :

• The most that Islam made it followers want to do, is the continuous virtue

• ( meaning that which continuous after one’s death, which is clear in the frozen assets for good virtues, wakf).

• It shows the care hood in the Islamic society and shows the nobleness of the giver, and the true noble feelings in the Islamic Nation.

• Al Wakf and Sustainability: "If the son of Adam dies, his work was lost except three: ongoing charity, beneficial knowledge or a righteous son who calls him “ Prophet Mohammad PUH

ثالث” : • من اال عمله انقطع ، آدم ابن مات جارية إذا ينتفع صدقة علم أو ،والصدقة ” . ) وسلم عليه الله صلى الرسول له يدعو صالح ولد أو ، به

العلماء ( عند الوقف على محمولة الجارية

Second : Economic Dimension:

• Islam encourages the Investment of one

fortune in order to increase it in a legal

manner, and forbids them to freeze or delay its

investment.

Third : Environmental Dimension

• SR means Conserve Environment

“ Clearing the Roads of Hazards is Charity”

Prophet Mohammad ( PUH)

Naturedly: “ Leave birds sitting in their eggs”

Prophet Mohammad ( PUH)

Natural Resources such as water resource, it is the most vital element, “ We made from water every living” thing” sura Alanbeia,30. And Conservation is a fixed concept in Islam “ Eat and Drink but waste not by excess for Allah loveths not wasters.” Al-Araf ,31

How to build Your Corporate Sustainability Abe, Joseph. and others 1998, Business Ecology

• 1- Create A Value Based Organisation:• Build Your Social DNA ( Vision, Mission, Values and Core

Value).

• 2-Adapt and Thrive:• Applying Business Approach Systematically:• (Create a Learning Organisation, Strategically Positioned with Vision,

Foresight, Self Knowledge and System Thinking).

• 3- Use a New Language for Success:• (A sustainable organisational success is defined by how efficiently it

uses life sustaining flows, time ,and space of optimize value for stakeholders. It is value creation and its success, is measured by the extent to which quality of life genuinely improved.)

Cont…

• 4- Develop Vital Flows and Relationships:• (It helps the O.D. from “Cash Flow” to “Life Flow” and from

“Accountability to Shareholders” to “Accountability to stakeholders”.

• 5- Merge Art and Science:• (It incorporate the ability to see patterns ,(Artist point of view)

systemic relationship, different perspectives, and express creative imagination.

• (Science)It draws conclusions , creates models for organistion based on natural system)

Cont…

• 6- Learn From Natural System:• (Emulate natural systems design , organization's core

genetic code such as core purpose and values, life cycle thinking, resource exchange relationships, and models for organizational design that encourage innovation, resiliency, and adaptability).

• 7- Put Community Back in Business:• (Community lies at the heart of healthy life –

sustaining organization, it is the essence of our spiritual well-being. We have to build community in our organization by identifying and committing to core values, and the profits will follow).

Corporate Sustainability Based on Islam (Comparison)

Abe 1998

Value based org.

Adapt and Thrive

New language for success

Develop vital flows/Relatio-n ships

Merge Art and Science

Learn from Natural System

Put community back in Business

Islamic Approach before 1400years

I Theory Values TAQWA,Justice,Cooperation

Aim and improve come closer

Al-Thikr (Sustainable little verbal actions)

The future is better for you than the immediate

The Mind and the Heart

Questioning the Universe Nature

“The best among you is the best to his folks”

Conclusion

Governance and CSR Lead to Sustainability

Social DNA Means Org. ID ( Values and Core Value)TAQWA, JUSTICE , RESPONSIBILITY , CO-OPERATION

CSR is a mandatory work for all people in all

Dimensions : Social, Economic, and Environment.

To have quality of life, focus on prophet Mohammad (PUH) saying :

”Allah loves to see one’s job done at the level of Itqan”

Thank You لكم شكرا

عليكم والسالم