IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i4p1582-d1591318.html
   My bibliography  Save this article

ESG Disclosure and Financial Performance: Survey Evidence from Accounting and Islamic Finance

Author

Listed:
  • Hebah Shalhoob

    (Department of Business Administration, The Applied College, King Abdulaziz University, Jeddah 21589, Saudi Arabia)

Abstract

This study examines the relationship between Environmental, Social, and Governance (ESG) disclosures and perceived financial performance within the context of Islamic finance, with a focus on Maqasid al-Shariah—the overarching goals of Islamic law. Using a quantitative approach, the study surveyed 350 stakeholders in Saudi Arabia’s Islamic finance sector, including corporate managers, investment professionals, and financial analysts, over a six-month period (May to October 2024). The findings indicate that stakeholders perceive a positive relationship between ESG disclosures and financial performance, particularly when companies align their ESG practices with Islamic finance principles. However, the study does not measure actual financial performance; rather, it assesses stakeholders’ perceptions of ESG’s influence on corporate governance, risk management, and investment attractiveness. Results suggest that companies integrating ESG principles with Maqasid al-Shariah foster greater stakeholder trust, enhance corporate responsibility, and promote long-term sustainability. However, variations in trust and investment decisions exist based on industry type, ESG disclosure levels, and demographic factors such as experience and familiarity with ESG practices. The study provides novel insights into how Islamic finance principles shape ESG disclosure practices, offering practical recommendations for improving corporate governance and sustainability. By emphasizing transparency, ethical investment, and regulatory alignment, these findings contribute to ongoing discussions on sustainable finance and the role of ESG in shaping Islamic financial institutions.

Suggested Citation

  • Hebah Shalhoob, 2025. "ESG Disclosure and Financial Performance: Survey Evidence from Accounting and Islamic Finance," Sustainability, MDPI, vol. 17(4), pages 1-26, February.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:4:p:1582-:d:1591318
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/4/1582/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/4/1582/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Muhammad Yar Khan & Anam Javeed & Ly Kim Cuong & Ha Pham, 2020. "Corporate Governance and Cost of Capital: Evidence from Emerging Market," Risks, MDPI, vol. 8(4), pages 1-29, October.
    2. Roszaini Haniffa & Mohammad Hudaib, 2007. "Exploring the Ethical Identity of Islamic Banks via Communication in Annual Reports," Journal of Business Ethics, Springer, vol. 76(1), pages 97-116, November.
    3. Kamla, Rania, 2009. "Critical insights into contemporary Islamic accounting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(8), pages 921-932.
    4. Herenia Gutiérrez-Ponce & Sigit Arie Wibowo, 2023. "Do Sustainability Activities Affect the Financial Performance of Banks? The Case of Indonesian Banks," Sustainability, MDPI, vol. 15(8), pages 1-17, April.
    5. Burhanudin Harahap & Tastaftiyan Risfandy & Inas Nurfadia Futri, 2023. "Islamic Law, Islamic Finance, and Sustainable Development Goals: A Systematic Literature Review," Sustainability, MDPI, vol. 15(8), pages 1-21, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Akrum Helfaya & Amr Kotb & Rasha Hanafi, 2018. "Qur’anic Ethics for Environmental Responsibility: Implications for Business Practice," Journal of Business Ethics, Springer, vol. 150(4), pages 1105-1128, July.
    2. Riaz, Umair & Burton, Bruce & Fearfull, Anne, 2023. "Emotional propensities and the contemporary Islamic banking industry," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 94(C).
    3. Osman, Mohamed & Gallhofer, Sonja & Haslam, Jim, 2021. "Contextualising and critically theorising corporate social responsibility reporting: Dynamics of the late Mubarak Era in Egypt," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 74(C).
    4. Kaouther Toumi Lajimi & Rana El Bahsh & Serge Agbodjo, 2017. "The determinants of bank profitability, do Islamic ethics perspective matter ? A comprehensive study on Islamic banks vs. conventional ones," Post-Print hal-04109833, HAL.
    5. Elasrag, Hussein, 2015. "Corporate social responsibility in Islam," MPRA Paper 63670, University Library of Munich, Germany.
    6. Yasser A. AL-Rawi & Yusri Yusup & Essa Ahmed & Ali F. Ali & Sofri Bin Yahya, 2023. "An examination of environmental taxes from the Islamic and Shariah perspectives," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 13(1), pages 141-155, March.
    7. Amin Jan & Mário Nuno Mata & Pia A. Albinsson & José Moleiro Martins & Rusni Bt Hassan & Pedro Neves Mata, 2021. "Alignment of Islamic Banking Sustainability Indicators with Sustainable Development Goals: Policy Recommendations for Addressing the COVID-19 Pandemic," Sustainability, MDPI, vol. 13(5), pages 1-38, March.
    8. Billah, Mabruk & Alam, Md Rafayet & Hoque, Mohammad Enamul, 2024. "Global uncertainty and the spillover of tail risk between green and Islamic markets: A time-frequency domain approach with portfolio implications," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1416-1433.
    9. Muzanenhamo, Penelope & Power, Sean Bradley, 2024. "ChatGPT and accounting in African contexts: Amplifying epistemic injustice," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 99(C).
    10. Ismail, Abdul Ghafar & Zali, Nor Azmidah, 2015. "Ethics in Relation to Islamic Finance Activities," Working Papers 1435-7, The Islamic Research and Teaching Institute (IRTI).
    11. Muhammad Ali & Syed Ali Raza & Chin-Hong Puah & Mohd Zaini Abd Karim, 2017. "Islamic home financing in Pakistan: a SEM-based approach using modified TPB model," Housing Studies, Taylor & Francis Journals, vol. 32(8), pages 1156-1177, November.
    12. Ismail O. Fasanya & Adegbemi B.O.Onakoya, 2013. "Does Corporate Social Responsibility Improve Financial Performance of Nigerian Firms? Empirical Evidence from Triangulation Analysis," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(3), pages 22-36, June.
    13. Ali, Muhammad & Syed ali, Raza & Chin-Hong, Puah, 2015. "Factors affecting intention to use Islamic personal financing in Pakistan: Evidence from the modified TRA model," MPRA Paper 66023, University Library of Munich, Germany.
    14. Elnahas, Ahmed M. & Kabir Hassan, M. & Ismail, Ghada M., 2017. "Religion and mergers and acquisitions contracting: The case of earnout agreements," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 221-246.
    15. Chaudhry Ghafran & Sofia Yasmin, 2020. "Ethical Governance: Insight from the Islamic Perspective and an Empirical Enquiry," Journal of Business Ethics, Springer, vol. 167(3), pages 513-533, December.
    16. Sofia Yasmin & Roszaini Haniffa & Mohammad Hudaib, 2014. "Communicated Accountability by Faith-Based Charity Organisations," Journal of Business Ethics, Springer, vol. 122(1), pages 103-123, June.
    17. Ahmed Hassanein & Mohamed M. Mostafa, 2023. "Bibliometric network analysis of thirty years of islamic banking and finance scholarly research," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 1961-1989, June.
    18. Elena Platonova & Mehmet Asutay & Rob Dixon & Sabri Mohammad, 2018. "The Impact of Corporate Social Responsibility Disclosure on Financial Performance: Evidence from the GCC Islamic Banking Sector," Journal of Business Ethics, Springer, vol. 151(2), pages 451-471, August.
    19. Ghareeb M. Almutairi & Mohammad H. J. Almarri & Ahmad S. Alsamhan, 2020. "Differences in CSR Disclosure in the Annual Reports of Islamic and Conventional Banks: Evidence from Kuwait," Asian Social Science, Canadian Center of Science and Education, vol. 16(12), pages 1-8, December.
    20. Arnone, Massimo & Leogrande, Angelo, 2024. "The Sustainability Of The Factoring Chain In Europe In The Light Of The Integration Of Esg Factors," OSF Preprints 753gf, Center for Open Science.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:17:y:2025:i:4:p:1582-:d:1591318. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.