Integration between ESG Goals and Value-Based Intermediation Approach within the Paradigm of Islamic Finance
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Environmental, Social, and Governance (ESG) goals is a trending topic for scholarly discussion around the globe because of their emphasis on the social and environmental impact of human activities on the society. They are also linked with the performance of institutions and governance effectiveness. A Shariah-compliant Islamic finance structure or governance framework contributes to achieve sustainability and tackle global issues and challenges. From the ESG perspective, there is no doubt there are many barriers and challenges in implementing these goals, especially in financial institutions. Apart from other approaches, the Value-based Intermediation (VBI) approach is introduced to achieve the common objectives within the Islamic financial system. This research aims to integrate the ESG goals and VBI approach in the Islamic finance paradigm. It is a qualitative research that includes a bibliometric analysis, where the secondary data was extracted from the available literature comprising research papers, books, and institutional and organizational reports. Simulataneously, statistical information extracted from the Scopus database was used for bibliometric analysis. We found that there are a lot of commonalities between these concepts like sustainability is one of them that is linked with ecological footprints and social impacts and governance efficiency. Islamic banking needs to transform from profit-oriented to value-oriented, as it is closer to the fundamental principles of the Shariah and global objectives. In this regard, the implementation of ESG screening with Shariah screening and VBI element in Islamic finance products and services is important.
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