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Development of a comprehensive sustainability performance index for takaful operators: integrating Maqasid Al-Shariah and stakeholder perspectives

Fahru Azwa Mohd Zain, Wan Amalina Wan Abdullah, Muhamad Nasyat Muhamad Nasir, Mohd. Faharizan Hassan

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 20 January 2025

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Abstract

Purpose

This study aims to develop a comprehensive sustainability performance index tailored for Takaful operators. It integrates Maqasid Al-Shariah’s principles with key stakeholders’ expectations, ensuring a holistic evaluation of sustainability practices.

Design/methodology/approach

The index is formulated through a multi-step process, beginning with a thorough literature review to identify pertinent economic, social, environmental and religious indicators. Using a Multi-Attribute Utility Theory approach, the process incorporates expert consultations, stakeholder workshops and the analytical hierarchy process. The framework amalgamates diverse sustainability attributes, focusing on regulatory compliance, financial performance, customer satisfaction, workplace environment and community engagement. The final index is tested with data from various Takaful operators to validate its reliability and robustness.

Findings

The newly developed index effectively captures the multifaceted aspects of sustainability specific to Takaful operators, offering a balanced assessment across economic, social, environmental and religious dimensions. Findings suggest that while Takaful operators excel in community welfare and ethical compliance areas, there are notable gaps in integrating environmental and social governance factors. The index successfully highlights these gaps, providing a structured framework to enhance the sustainability practices of Takaful operators. Initial applications of the index reveal significant variability in sustainability performance among Takaful operators, pointing to areas needing improvement.

Research limitations/implications

The development of the index is limited by the availability and quality of data from Takaful operators. Future research should aim to improve data collection methods and expand the index’s application to a broader range of operators.

Practical implications

Takaful operators can use the index as a transparent and objective tool to evaluate and improve their sustainability practices, facilitating better decision-making and strategic planning towards achieving sustainable development goals.

Social implications

By incorporating Maqasid Al-Shariah and stakeholder perspectives, the index promotes socially responsible and ethically sound business practices within the Takaful industry, aligning with broader societal values and expectations.

Originality/value

This paper introduces the first comprehensive sustainability performance index specifically designed for Takaful operators, integrating religious principles with conventional sustainability metrics. The index provides substantial value for researchers, practitioners and policymakers dedicated to enhancing sustainability in the Islamic finance sector.

Keywords

Acknowledgements

The authors wish to express their gratitude to the Ministry of Higher Education Malaysia (MOHE) for funding this research project through the Fundamental Research Grant Scheme (FRGS) (FRGS/1/2023/SS01/UNISZA/02/9) and Universiti Sultan Zainal Abidin (UniSZA) for their administrative support.

Citation

Mohd Zain, F.A., Wan Abdullah, W.A., Muhamad Nasir, M.N. and Hassan, M.F. (2025), "Development of a comprehensive sustainability performance index for takaful operators: integrating Maqasid Al-Shariah and stakeholder perspectives", International Journal of Islamic and Middle Eastern Finance and Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IMEFM-07-2024-0343

Publisher

:

Emerald Publishing Limited

Copyright © 2025, Emerald Publishing Limited

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