Transcript Corporate Governance , Social Responsibility and Sustainability

Governance , Corporate Social Responsibility,
and Sustainable Development:
An Islamic Perspective
Presented
by
Dr. Maqbouleh Hammoudeh
Amman – Jordan
June 12-13, 2011
The CGR Forum is an ongoing engagement from Schema, your Sustainability Partner
Definitions:
Sustainable Development: “The most beloved
actions by God are the sustainable ones, no matter
how small it was,”
Prophet Mohammad (PUH)
‫ وإن قلت ” الرسول صلى هللا عليه وسلم‬، ‫• ” أحب األعمال الى هللا أدومها‬
• 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).
‫الرسول صلى هللا عليه وسلم‬
” ‫” كلكم راع وكلكم مسؤول عن رعيته‬
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)
‫الرسول صلى هللا عليه وسلم‬
” ‫”إن هللا يحب إذا عمل أحدكم عمال أن يتقنه‬
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
‫ النساء‬/ 135 ” ‫ شهداء هلل‬، ‫” يا أيها الذين آمنوا كونوا قوامين بالقسط‬
2. ((Whenever ye speak, speak justly )) Alanam/Cattle
152
‫ األنعام‬/ 152 ” ‫وإذا قلتم فاعدلوا‬
3. ((O ye who believe! fulfill (all) obligations)) Table 1
‫ المائدة‬/ 1 ” ‫” يا أيها الذين آمنوا أوفوا بالعقود‬
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
Quality
Governance
VALUES
Corporate
Social
Responsibility
Corporate
Sustainability
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
‫ أو ولد صالح‬، ‫ أو علم ينتفع به‬، ‫ صدقة جارية‬: ‫ انقطع عمله اال من ثالث‬، ‫” إذا مات ابن آدم‬
( ‫ )والصدقة الجارية محمولة على الوقف عند العلماء‬. ‫يدعو له ” الرسول صلى هللا عليه وسلم‬
•
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
communi
ty back in
Business
Islami
c
Appro
ach
before
1400y
ears
I Theory
Values
TAQWA,Jus
tice,
Cooperatio
n
Aim and
improve
come
closer
Al-Thikr
(Sustainabl
e little
verbal
actions)
The
future is
better for
you than
the
immediat
e
The Mind
and the
Heart
Questio
ning
the
Univers
e
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
‫شكرا لكم والسالم عليكم‬