Rumaisah Azizah Al Adawiyah, Fitranty Adirestuty, Syaiful Muhamad Irsyad, Indah Nur Chazanah, Yunita Sri Mulyani, Rachma Indrarini
Purpose: This study aims to assess the level of sustainability reporting and Sharia compliance in Islamic Financial Institutions (IFIs), specifically focusing on emerging and developing economies. Design/methodology/approach: This study uses qualitative content analysis to examine sustainability reporting in IFIs in emerging and developing countries. The primary case studies are four IFIs: Bank A, Bank B, Bank C and Bank D. The Bank’s annual and sustainability reports from 2019 to 2022 undergo content analysis to gain insight into their sustainability practices. For clarity, Bank A represents an IFI from Indonesia, Bank B from Malaysia, Bank C from Pakistan and Bank D from Bangladesh. Findings: The study found that sustainability practices scores varied but tended to increase between 2019 and 2022, with governance and ethics being the most disclosed indicators, while product and service disclosures remained the least. Bank A and Bank B (emerging economies) achieved the highest performance in sustainability scores, outperforming Bank C and Bank D (developing nations). The need for more debate on incorporating Sharia principles into sustainability practices is highlighted by the finding that, when compared to Sharia compliance, sustainability activities had higher disclosure. Research limitations/implications: This study has limitations on the reliability and validity of the framework due to the absence of a standardized framework for sustainability and Sharia compliance framework, which future studies could develop and validate a comprehensive framework that is in line with Islamic finance principles. Practical implications: In practice, IFIs should adopt specific sustainability reporting standards that reflect Islamic values and ensure consistency within the industry. Other than that, in the case of developing countries, capacity-building programs for IFIs staff are essential to improve their understanding and implementation of these standards as regulations and practices in developing nations are still limited. Social implications: For society, improving transparency and trust through robust sustainability reporting aligned with Sharia principles can further the credibility of IFIs. Originality/value: This study has originality in assessing and comparing the level of sustainability practices incorporated in IFIs in emerging markets and developing countries and comparing their compliance with Sharia principles. © 2025, Emerald Publishing Limited.
Department of Islamic Economics and Finance, Universitas Pendidikan Indonesia, Bandung, Indonesia; Department of Islamic Economics, Universitas Negeri Surabaya, Surabaya, Indonesia
