Corporate Social Responsibility

The term CSR has been broadly used to refer to a firm’s social obligations discharged on a voluntary basis. The definition of CSR by the European Commission (EC) is: “A concept whereby companies integrate social and environmental concern in their business operation and in their interaction with their stakeholder on a voluntary basis” (EC, 2001, p. 6). Unlike the definition by the EC which is very narrow, the definition of CSR by the World Business Council for Sustainable Development (WBCSD) extends the framework by not limiting it to voluntary forms of CSR. The WBCSD defines CSR as “the commitment of businesses to contribute to sustainable economic development, working with employees, their families and local community and society at large to improve their quality of life” (WBCSD, 2002, p. 6). In the context of IFIs, AAOIFI has issued specific standards of CSR known as Governance Standards No. 7: Corporate Social Responsibility, Conduct and Disclosure for IFIs. For further details see: ISRA, Islamic Financial System; Principles and Operations.

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