The Global and Islamic Representation of the Social Pillar in Environmental, Social, and Governance (ESG)

This paper aims to study the representation and significance of the Social ‘S’ pillar in Environmental, Social, and Governance (ESG) rating and reporting systems to later examine how Islam embodies the Social pillar. This will be done through an in-depth analysis of existing rating systems and definitions of ESG to set forth the general understanding and criteria's used to assess the social performance of corporations. Following the overview on ESG, this study will delve into the Islamic narrative of social financing and the importance of ethical investments in Islamic Finance. The comparison between conventional western ESG guidelines and Islamic principles will allow for a comprehensive understanding of how Islamic Finance aligns with ESG principles and puts emphasis on the Social pillar specifically. While many organizations, guidelines, and corporations stress the Environmental pillar; Islam emphasizes on the importance of the S pillar categorizing E as a subset of ethical investing and financing. This study will highlight the potential of having a global and universal ESG framework-focused on the Social pillar- based on Islamic Financing principles which promotes justice, economic growth and environmental responsibility of humans as a social obligation. This thesis will contribute by offering a holistic view of the Social pillar in ESG and Islamic principles while stressing the importance and potential of integrating Islamic principles into a global Social -ESG- framework.