Principles of Islamic Accounting

CHAPTER 9Social Responsibility Accounting

Learning Outcomes

At the end of this chapter, you will be able to:

1. Demonstrate an understanding of the importance of sustainable development of businesses.
2. Discuss the development of corporate social responsibility (CSR).
3. Deliberate on the concept of accountability in Islam and its impact on sustainable development.
4. Evaluate the various sustainability reporting guidelines.
5. Assess the sustainability reporting framework from Islam's perspective.

Traditionally, a business organisation's primary objective is on its economic sustainability. Accordingly, profitability is the main focus. However, this is slowly but surely changing. Organisations and their stakeholders are becoming increasingly aware of the need for socially responsible behaviour. More important, there are benefits for companies that put social responsibility as one of its core values. Hence, the focus of companies now is broader. Many are familiar with the 3 Ps (profits, people, and planet) of a business and its relationship to sustainable development. Besides profits, companies are now focusing on people as well as the planet. Thus, the need to report on the social and environmental impacts of a business entity is paramount.

Essentially, corporate social responsibility (CSR) reporting or sustainability reporting is concerned with trying to present a comprehensive picture of the full extent of the organisation's interactions with its external environment. More specifically, ...