Morality is one of the principles governing human lives. It is the compass that points us to our north, to the truth of life. Morality means doing something that benefits others, without losing regard for one’s self and expecting anything in return.
In the late 1970s, businesses started realising that they could benefit from lower costs of labour and environmental standards by shifting their operations to developing countries. The moral and social decay that resulted from the relentless pursuit of wealth brought the ethical conundrum to broad daylight, as they exploited the weak infrastructure and plentiful human resources. This lack of morality led to a rise in the discipline of business ethics. However, it was not as simple as theoretically explained.
From an Islamic perspective, ethics should form the basis of any business activity. Islam encourages truthfulness and condemns exploitation in any form. Islam reinforces the idea that ethics and morality in business dealings is the key to sustainable profitable growth rather than the other way around. We asked professionals their views on what is the most critical moral challenge that businesses face in this day and age.
DR. MUHAMMAD IMAN
SASTRA MIHAJAT
HEAD OF SHARIA – OMAN ARAB BANK
The remarkable achievement of the global Islamic banking sector is likely to continue over the next five years. The rapid development of Islamic Banking Entities (IBEs) is not only getting applause from the stakeholders but also calls for a critical evaluation of the roles of major stakeholders in the industry. Since there are a number of people and nations embracing the Islamic financial system, stakeholders need to collectively address the ethical and moral issues to safeguard the integrity and viability of IBEs.
The challenges faced by IBEs globally, in the next few years, lie in the area of lack of awareness about Islamic banking transactions and activities among the stakeholders, limited supply of qualified human capital, insufficient liquidity instruments in Islamic money market as well as ethical and moral challenges.
These challenges need to be addressed collectively by the stakeholders of Islamic banking in order to achieve sustainable growth of the industry. Especially in the area of Shari’a major players in the IBEs need to incorporate Shari’a governance in their good corporate governance framework. All the products and services of IBEs are Shari’a-compliant as per the guidance and Fatwa of High Sharia Supervisory Authority (at the Central Bank level) and Sharia Supervisory Board (at the Bank level).
Since majority of the contracts in Islamic banking and finance is trusteeship contract, such as Mudharabah, Musharakah, and Wakalah, therefore, the most critical moral and ethical challenge for businesses in our time is the untrustworthiness of the business partner. This issue has been elaborated by the Quran thousands of years ago and is still relevant today. Allah said in Surah Saad 24: “Many partners wrong one another, except those who believe and do righteous deeds— but these are few.” Therefore, in many cases when financee gets financing from the financier, they have an obligation to be transparent in business dealings including in financial statements, and protect their client’s data.
Another challenge is that, the management and employees in Islamic banking and finance need to ensure minimum professional standards in the industry so that the objective of Shari’a can be realised. For the Shari’a governance tools such as the High Sharia Supervisory Authority, the Shariah Supervisory Board, and the Internal Shariah Management should have a minimum Shari’a professional degree from a reputable university as well as Shari’a (fiqh-muamalat) Certification from reputable institutions. Other elements such as CEO, Head of Islamic Banking, and element of Islamic Banking Entities should also be required to have minimum professional requirements such as Certificate of Islamic Banking Professional. As part of the IBEs economic responsibility, IBEs should provide provisions of their goods and services in order to earn profit, and distribute 2.5% from their net profit to charitable institutions.
FOZIA AMANULLAH
CHIEF BUSINESS DEVELOPMENT OFFICER
– ALLIANCE BANK BERHAD
I think the lack of morality is prevalent in our everyday lives. In fact, there is plenty of it, and these practices affect the way we run our businesses.
From the perspective of Islamic banking, the moral challenge we encounter today is probably the biggest stumbling block to the industry’s growth. Islamic banking should be about promoting the greater good (as per Maqasid al-Shari’a), which includes the manner in which we service our customers and recommend products that are in their best interest. It should not be fixated on making profit as it would inevitably results in the promotion of unethical trends in product development. As long as the bank measures success based on the year-on-year financial improvement achieved, there will constantly be conflicts within.
Today however, there has been a shift in the way banks think about profitability and sustainability. Customer satisfaction seems to be the key in achieving loyalty and customer retention. Herein lays the biggest opportunity for Islamic banks to live up to its promise of adopting the Islamic moral framework. Banks should develop products that meet the needs of the customers, encourage the creation of job opportunities and eradicate poverty. These products can be part of the Sustainable Development Goals promoted by many institutions globally. Moving forward in this manner will allow us to catch up with the world on addressing sustainability and social problems.
ESSAM AL-KHASHNAM
CHIEF EXECUTIVE OFFICER – ITS
We are living in a data-first digitally interconnected world, so it is not surprising that Digital Ethics and Privacy is one of the top business trends for 2019. Customer expectations of an ever faster, personalised and seamless consumer experience have businesses fighting to achieve competitive advantage through gaining customer insights to create innovative products and services.
However, businesses must be guided by an ethical and moral compass when it comes to data and customer privacy. Data ethics must be translated into sound business practices and sustainable data ethics codes into enforceable rules. Privacy by Design (PbD) or embedding privacy into the design of the product and not just as an ‘add-on’ is also important. With the advent of revolutionary technologies such as Artificial Intelligence (AI), machine learning models, and connected Internet of Things (IoT), it is more important than ever to know where your information is and how it is being used in today’s digital generational shift.
MAUREEN BADJOERI
CHIEF EXECUTIVE OFFICER – TRUSTBANK
AMANAH
Morals and values are the guiding principles to organise and motivate group attitudes and actions in all areas of human lives, including businesses. Respecting morality and ethics in business could ensure sustainable economic growth in the medium and long term. We think that equitable distribution of wealth, real economy financing and the respect of the environment are the most critical moral challenges of our times. These are also fundamental ethical rules of Islamic finance.
Trustbank Amanah as the first full-fledged primary Islamic bank in Suriname, the Caribbean and Latin America, focuses on sustainable financial growth through ethical banking. In Suriname, the business environment involves different cultures, where Muslims are only approximately 10% of the total population This requires a creative approach to vehicle a new way of banking. Aside from being an ethical bank, our strategy is to be universal and target the whole market with competitive and innovative products and services.
Islamic banking is facing important challenges in applying moral and ethical rules enunciated in the Islamic law. For example, Islamic banking principles based on the profit-sharing models are generally replaced by fixed return and capital-guaranteed modes of financing due to some regulatory and profitability constraints.
We think that research, innovation and courageous decisions, combined with dedicated regulatory framework, are required in order to guarantee more efficient implementation of the ethical principles in businesses.
MOHAMMED IBRAHEEM KHAN
CHIEF EXECUTIVE OFFICER – ONEGRAM
I have been intrigued by the question posed in this piece and it has required self-reflection in order to truly be fair to the statement that follows.
Moral conscience in business is something I believe is the hardest challenge that can face a startup all the way up to a global conglomerate. The challenge is to make profit, achieve growth and at the same time remain sustainable whilst being morally right, as deemed by the consumers.
My personal interpretation of business morality is the ability to deliver on the promises and pledges that define our business existence. Whatever the business sector maybe delivering on, the product and services to be of the highest standard is perhaps the biggest test of our time. We live in an instant digital world that is transforming at a pace that puts all businesses at edge and with this digital transformation arise the challenges of delivery, cost and time. These factors can catch unprepared businesses off guard, which would then result in the moral dilemma of how do we compete, remain competitive, and keep pace? These questions usually result in either a cost-cutting lack-luster performance or investment in transformation.
I believe evolution is the key for all businesses and evolving in a timely manner can eliminate the need for panic transformations, which can result in loss in business or credibility.
