Report on Social Responsibility Trends at Islamic Financial Institutions

The report on Social Responsibility Trends at Islamic Financial Institutions presents the results of an extensive survey on Social Responsibility at Islamic Financial Institutions (IFIs) carried out during summer and fall of 2009 by DinarStandard and Dar Al Istithmar with the support of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

Some key findings of the survey were:

Clients: 100% of respondents answered yes to having a policy to screen prospective clients which is actively implemented. Similarly 97% have an organizational policy that deals with client responsibly.

Employees: 83% of respondents’ state having policies that provide equal opportunity to all their employees, 93% have policies that ensures merit-based salary and promotion, and 86% having policies that specifically prohibits any kind of discrimination. However, when it comes to having policy to monitor employees from different backgrounds and gender, the response was mix with only 52% admitting to having such a monitoring policy and 48% not having any such policy.

Charity: 76% indicated that they had polices for charitable activities whilst 17% had none. Charitable activities remains a strong priority for IFIs, but most do not consider utilising their fund mobilizing capabilities to raise funds for charities or emergency causes (only 34% said they do.)

Responsible Investments: 55% responded yes to having some policy in investment quotas on social, developmental and environment orientated investments, whilst 38% did not have such policy. However, amongst the three types, environmental related investment quotas had the least focus (38%).

Zakah/ Waqf Management: Only 10% of respondents said they had a policy to manage Waqf properties on behalf of clients, while only 33% said they managed Zakah on behalf of clients

A set of socially responsible programs shared by the respondents and profiled in this report include a Charitable Takaful Savings plan, a social impact based investment program, and a Sharia compliant micro-finance initiative amongst others.

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