Corporate Social Responsibility

EXECUTIVE SUMMARY

Corporate social responsibility (CSR) has become an important part to the organization and community. Maximizing profit to the shareholder is the ultimate goal but at the same time organization should contribute to the community who contribute to the profit of the organization. It’s also played an important factors is establishing the company image and reputation.

According to World Business Council for Sustainable Development, CSR is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families, as well as of the community and society at large. CSR looks beyond profit and instead focuses on how business can benefit the greater community (Harris, 2016).

Over the years, the obligation to perform CSR is said to have arisen due to various reason. Some cited that the pressure of prevailing humanistic, religious and democratic value and attitude as the important factor (Frederick, 1994). The idea of social responsibility exists in most of the religions and philosophy in the world.

Financial Institute whether Islamic or conventional also similar to other organization which does CSR to the community. In fact, Islamic financial institutions have greater responsibility and expectation to give more to community. It can be seen as a collective religious obligation (fardh kifayah). Conventional financial institution does not have this obligation.

This paper will evaluate contribution by both Islamic financial institution and conventional in term of their contribution and activities. Bank Muamalat and Public Bank have been selected for this study. Although Public Bank have Syariah window in their group, the analysis will look at the group activities rather than the entities itself.

Bank Muamalat Malaysia Berhad

Bank Muamalat is one of the two independent full-fledged Islamic financial institutions. The Bank was established on 1 October 1999 from the Islamic banking divisions of the former Bank Bumiputra Malaysia, Bank of Commerce (Malaysia) and BBMB Kewangan. The shareholders comprise DRB- HICOM, with 70% shares in the bank while Khazanah Nasional owns the remaining.

Being among the pioneer of Islamic banking, the Bank is strongly supported by Shariah’s scholars who are highly qualified and experienced in the Islamic jurisprudence, advising not only in issues pertaining Shariah products and services but also as advisors to parties that are planning to raise Islamic Capital Issues or other new innovative products.

Bank Muamalat like other organization also performing CSR consistently. Since 2010 Bank Muamalat does not stop from organizing or contribute to various organizations. Profitability is not the only objective but Bank Muamalat also stated that their contribution to the society is important in line with what has been stated in the Quran: