Bahrain's CSR standard for Takaful firms soon

The Kingdom-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is developing a governance standard on corporate social responsibility (CSR) for Islamic financial institutions.

The Auditing and Governance Standards Committee consisting of high-level executives from the international Islamic finance industry, met recently at the Bahrain Institute of Banking and Finance to finalise the details of the standard, which will highlight the importance of CSR from an Islamic perspective and give guidance to Islamic financial institutions in carrying out its CSR functions.

The CSR standard complements AAOIFI's 68 existing international standards on Shari'a, accounting, auditing, ethics, and governance.

AAOIFI's standards are adopted in leading Islamic financial centres across the world including Bahrain, Dubai Islamic Financial Centre, Qatar, Qatar Financial Centre, Sudan, and Syria as well as by the Islamic Development Bank Group.

Given that the Islamic financial institutions can play a significant role in contributing towards economic as well as social development, the standard on CSR is a positive initiative for the international Islamic finance industry.

Development of the CSR standard is carried out by AAOIFI's Auditing and Governance Standards Committee, which is part of its Accounting and Auditing Standards Board.

The Centre for Islamic Finance at the Bahrain Institute of Banking and Finance assisted in drafting the specific provisions of the standard.

"With substantive provisions on CSR conduct and disclosure, this standard will open the way for Islamic financial institutions to be recognised for their positive ethical and social activities and further differentiate them from other financial organisations as direct contributors to society," said Sayd Farook, R&D Manager, Centre for Islamic Finance.

"Our research indicates that Islamic financial institutions all over the world are already engaged in numerous socially responsible activities.

This standard is to ensure a standard application of social responsibility and to show the way forward to all new Islamic financial institutions, based on an Islamic perspective derived from divine sources."