Since the turn of the century, there has been a greater emphasis on sustainable development. Is the sustainable development concept foreign in Islam? Fortunately, the sustainable development concept has long existed in the Quran and the Hadith. Nevertheless, the concept itself was adopted only recently in the Islamic world. The question is, how does Islamic finance help in achieving the Sustainable Development Goals (SDGs)?
Definition of Maqasid Shariah
To understand this topic better, understanding the meaning of Maqasid Shariah is the only fair move.
Terminologically, Maqasid Shariah was not defined by other previous Muslim scholars who lived before 1000M. This was due to the terms being fairly known among people. However, literally, the word Maqasid was derived from the word qasada in Arabic, which means heading towards a direction.
Whereas, the word Shariah means water springs where it is the source of drinks, paths, what is sanctioned by Allah in the aspect of aqidah as well as rulings, the religion and the opinions of madhab which are clear and straight.
Despite the absence of a definition from previous scholars, contemporary scholars have provided a variety of definitions of Maqasid Shariah. Maqasid Shariah, according to Sheikh Mohamad Tahir bin A'shur, means:
"Meanings and wisdom focused by syarak comprehensively or in most situations of revelation of the commandments without specifying certain Shariah rulings. "
While, Sheikh Al-A'lal bin Al-Fasi defined Maqasid Shariah as:
"The purposes of Shariah as well as its secrets set by Allah SWT for each rulings. "
There are other definitions of Maqasid Shariah provided by contemporary scholars. However, to summarize, Maqasid Shariah means purposes, meanings and wisdoms set by Shariah Islamiyyah in the sanctioned rulings, as well as the secrets underlying them, with the goal of protecting human welfare.
Sustainable Development Goals and Maqasid Shariah
The Sustainable Development Goals (SDGs) was introduced by the United Nation in 2015. The goals were to plan for a brighter and more sustainable future and to solve the global challenges that people and the world face. It includes seventeen goals that deal with poverty, climate change, and environmental degradation, as well as a wide range of other goals that affect both the environment and the economy.
In Islam, there is a similar concept that match up well with SDGs, known as Maqasid Shariah (Objective of Shariah). Maqasid Shariah is the benchmark to everything as it aims for virtuous people, spreading goodwill, combating harm, and ensuring that people have harmonious relationships with themselves, the society, and the rest of creation. As a result, there are no significant differences between SDG and maqasid Shariah because both aim to establish common advantages and to prevent or remove harm except for its means.
SDG, Maqasid Shariah and Islamic Finance
To answer the above question, SDGs and Maqasid Shariah provide guidance on how financial transactions should be structured in an Islamic economic system. As the concept of sustainable development was introduced, it opened a new door to the Islamic finance industry through the introduction of numerous innovative products such as waqf, zakat, and Islamic microfinance. Aligned with the goals, Islamic finance is able to help the needy and poor people who are struggling to meet basic needs through zakat and waqf. Furthermore, waqf, zakat, and sadaqah have the ability to foster cooperation, solidarity, and alternative funding. As a result, it plays a critical role in achieving the SDGs through lowering poverty vulnerability. Islamic finance also has the potential to improve financial inclusion and the financial sector stability.
In Islamic finance system, there are underlying key ethical principles, such as fostering socio-economic justice, enhancing social well-being and ensuring justice. Through financial frameworks such as Value-Based Intermediation (VBI), Environmental, Social and Governance (ESG) and Socially Responsible Investment (SRI). Islamic finance is able to help to preserve the environment and several socio-economic development issues.
Conclusion
The goal of Islamic finance is to promote socio-economic justice in different dimensions as stipulated by Maqasid Shariah as part of fulfilling human well-being, not merely to create a Shariah compliant financial system. Harmonization in Islamic finance strives to establish clarity, uniformity, and deeper integration between Shariah judgments, national legislation, and global standards, thereby propelling the industry forward and contributing to the achievement of the SDGs.
In Malaysia, the first company to develop a scoring system that includes 17 elements of the Sustainable Development Goals (SDGs) and Maqasid Shariah elements known as ESGm rating is iSaham. ESG and Maqasid Shariah elements are combined and evaluated to form a benchmark for companies. This ESGM assessment is intended to assist investors in making decisions to choose environmentally, socially, and governance-conscious firm decisions in their company operations. For instance, Apex Equity Holdings Berhad ESGM rating is CCC. Thus, it shows that the company has substantially higher unmanaged exposure to ESGM risk factors. To find out more, visit https://www.isaham.my/esg.