Islam and corporate environmentalism: the case of Shariah-compliant public listed firms in Malaysia

Open Access

Abstract

With rapid industrialization and urbanization, environmental degradation has become a major threat to the wellbeing of mankind and the environment. Despite concerted efforts by governments around the world, deteriorating environmental condition remains a major problem for the global community. While environmental issues have been studied from a wide range of perspectives, from scientific to health and wellbeing, however, there is scarce literature on the role of religion on the corporate environmental management and practice. Islam, one of the major religions of the global community has clearly articulated in the Quran and the Hadith that protection of the environment is a sacred duty before Allah. Islam emphasizes the relationship between humans and other elements of the environment, apart from individual obligation to perform rituals to Allah. However, despite the call for mankind to protect the environment under the Shariah, the environmental condition in Islam dominated countries suggests that mankind has neglected the duty to give due attention and care to the environment. This study explores the gap between Islam's call to protect the environment and the actual corporate practice within Islam dominated countries. Malaysia, the chosen context of the study, is a multiracial society with Islam as a dominant religion. The Islamic influence among the majority of its population (Malays) is very significant to the extent that Islamic rituals are practiced as an integral part of the Malay ethnic culture. Islam also influences other aspects of the Malaysian setting, including economy and politics. However, deterioration of the environment in Malaysia over the past three decades, suggests that Malaysia has a poor record of protecting and preserving its natural environment and habitat. Much of the environmental degradation can be traced to the rapid industrialization of the economy since the 1980s. This study examines the environmental perception and practices of managers of the Shariah-compliant public listed firms in Malaysia. The primary objective of the study is to assess whether managers' personal beliefs influence their perception on corporate environmentalism. In this study, a sample of respondents from the firms was chosen, covering three hierarchical levels of managers - top, medium and operational. These managers were selected as they have the capacity and capability to influence corporate environmental practices of the firms. In this thesis, the social constructivist epistemology, symbolic interactionism and grounded theory method were used as the research design. The chosen research design allows for the development of new theory on factors influencing managers' perception and actual practice of corporate environmentalism in a country where Islam is the main religion. The findings reveal that managers' perspective is not influenced by Islamic theology or Shariah principles, but by secular worldview of environmental best practices and regulations. The component of trust among firms as proposed by the Shariah is almost non-existent. Secular regulation requirements were found to have strong coercive, mimetic and normative isomorphic pressures for firms to engage in corporate environmentalism to gain legitimacy. The study contributes to the corporate environmentalism literature from the perspective of Islam. Findings of the study reveal that Islamic religious authorities in Malaysia have failed to incorporate economic and social changes based on Shariah principles pertaining to environmental protection. Islamic environmental theology has not been translated into tangible rules, tracking mechanism, enforcement and punitive measure for violators of environmental rules. The absence of an effective Islamic environmental regulatory system is due to the traditionalist stance adopted by religious institutions in charge of Islamic affairs in Malaysia. Many of these institutions did not incorporate socioeconomic changes that have taken place over time and thus resulted in the preservation of environmental belief and practices from earlier generations who lived in an era whereby environment was not a major concern for the society. Lack of an effective Islamic environmental regulatory system, has resulted in firms relying on secular legislations for adherence to environmental protection and control. This will lead to firms meeting minimum standards for environmental protection as stipulated by regulators and that the environmental practice is not holistic, natural and sustainable over a longer period of time. In view of the findings, a new Shariah Environmental Framework that incorporates the non-material and spiritual dimensions of social reality is proposed to give support to corporate environmental initiatives in Malaysia. This includes ensuring the new framework is able to adapt to structural changes in the economic system and that the economic activities do not adversely impact the environment. In this context, fatwa, enforcement and punitive measures on environmental care and offences from an Islamic perspective should be developed, implemented and continually reviewed to ensure corporate Malaysia is not only at the fore-front of environmental protection and preservation in Malaysia, but also contribute to global best practices on environmental management.