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This paper explores how Indonesian Islamic Financial Institutions (IFIs) incorporate Environmental, Social, and Governance (ESG) principles, demonstrating alignment with Indonesian regulatory standards and Islamic ethical values. IFIs engage in carbon footprint reduction and sustainable finance initiatives in the environmental dimension, reflecting regulatory compliance and the Islamic principle of Khilafah (stewardship). In the social dimension, programs supporting community welfare and economic inclusion resonate with Islamic values of justice (adl) and fulfil Indonesia's CSR requirements. Governance practices, such as transparent bidding processes and adherence to Shariah-compliant financial practices, emphasise amanah (trustworthiness) and meet regulatory expectations for ethical management. The study also identifies areas for improvement, including expanded investments in renewable energy, broader community-focused programs, and adoption of international transparency standards. Integrating maqasid al-shariah (objectives of Islamic law) within ESG frameworks could further strengthen IFIs’ commitment to Islamic ethics and Indonesia’s sustainability objectives, enhancing their role as leaders in ethical finance.

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Bridging ESG and Islamic Principles in Indonesia: Toward Sustainable Islamic Finance

  • 会议论文

  • 发表日期：

    2026年

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  • Abdillah Arif Nasution,
  • Risanty,
  • Sambas A. Kesuma,
  • Juwita Agustrisna,
  • Norazita Marina Abdul Aziz

摘要

This paper explores how Indonesian Islamic Financial Institutions (IFIs) incorporate Environmental, Social, and Governance (ESG) principles, demonstrating alignment with Indonesian regulatory standards and Islamic ethical values. IFIs engage in carbon footprint reduction and sustainable finance initiatives in the environmental dimension, reflecting regulatory compliance and the Islamic principle of Khilafah (stewardship). In the social dimension, programs supporting community welfare and economic inclusion resonate with Islamic values of justice (adl) and fulfil Indonesia's CSR requirements. Governance practices, such as transparent bidding processes and adherence to Shariah-compliant financial practices, emphasise amanah (trustworthiness) and meet regulatory expectations for ethical management. The study also identifies areas for improvement, including expanded investments in renewable energy, broader community-focused programs, and adoption of international transparency standards. Integrating maqasid al-shariah (objectives of Islamic law) within ESG frameworks could further strengthen IFIs’ commitment to Islamic ethics and Indonesia’s sustainability objectives, enhancing their role as leaders in ethical finance.