Environment, Social and Governance (ESG) Disclosure by Islamic Financial Institutions (IFIs) from Maqasid Syariah Perspective: Role of Shariah Committee

Over the past three decades, the Islamic finance industry has experienced exponential growth, with market sizes ranging from USD 1.66 trillion to USD 2.1 trillion, and projections exceeding USD 5 trillion by 2030. This rapid expansion necessitates comprehensive financial and non-financial disclosures by Islamic Financial Institutions (IFIs) to shareholders, investors, and capital providers. Such transparency is crucial for informed investment decisions. This study examines the significance of IFIs' Environmental, Social, and Governance (ESG) disclosure in the context of Maqasid al-Shariah. It highlights the role of the Shariah Committee (SC) in influencing ESG
disclosure decisions, despite lacking authoritative power. By providing informed recommendations, the SC can guide the Board of Directors (BOD) to ensure decisions align with Shariah principles, promoting a sustainable and ethically balanced financial system. This integration helps IFIs meet growing stakeholder expectations and contributes to a more transparent and responsible financial industry.