Islamic Reporting Initiative: Difference between revisions

{{Infobox organization

| founded =4 April 2015

| type = [[Nonprofit organization|nonprofit organization]]

| membership = 100+ members in 2021

The '''Islamic Reporting Initiative''' (IRI) is an independent [[nonprofit organization|nonprofit organization]] leading the creation of the IRI Standard: a reporting standard for [[Environmental, social and corporate governance]] (ESG) based on [[Five Pillars of Islam|Islamic principles and values]]. Its objective is to enable organizations to inclusively assess, report, verify and certify their CSR and [[Philanthropy|philanthropic]] programs in support of the [[Sustainable Development Goals|United Nations Sustainable Development Goals]].

According to the Sustainability Reporting Handbook for Employers’ Organisations<ref>{{Cite web|url=https://www.ioe-emp.org/fileadmin/ioe_documents/publications/Policy%20Areas/csr/EN/_2016-03-10__CSR_for_All_Handbook_for_Employers__Organisations.PDF|title = Sustainability Reporting Handbook for Employers’ Organisations}}</ref>, the IRI Standard will provide comprehensive metrics and methods for effectively measuring and reporting on CSR, with a particular focus on short- and long-term investments in extensive and relevant social and environmental aspects, including:

* Health provision and promotion

* Social investment

* Youth engagement

* Empowerment of the local workforce and entrepreneurship

* Development of STEM skills and knowledge transfer

* Environmental sustainability

Founded on4 April 2015, the IRI seeks to make ESG reporting standard practice in organizations across the [[Muslim world|Islamic world]] and [[Organisation of Islamic Cooperation|OIC]] countries in particular. The IRI is headquartered in [[Amsterdam]], [[The Netherlands]], and (as of 2021) has members in more than 50 countries.<ref>{{Cite web|url=https://islamicreporting.org/sign-up/members/list-of-members-per-country/|title = List of IRI members per country}}</ref>

The Islamic Reporting Initiative is an accredited organization (observer) to the governing body of the [[United Nations Environment Programme]] (UNEP), the United Nations Environment Assembly of UNEP.<ref>{{Cite web|url=https://www.unep.org/civil-society-engagement/accreditation/list-accredited-organizations|title = Accredited organizations UNEP}}</ref>

Internal market [[research]] conducted by EMG<ref>{{Cite web|url=https://www.emg-csr.com/|title = EMG}}</ref> in 2014 identified low rates of sustainability and CSR reporting despite a [[prevalence]] of sustainability and CSR practice in organizations where Islamic principles and values are an important element of [[corporate culture]]. The firm concluded that existing sustainability [[Sustainability standards and certification|reporting standards]], such as the [[Global Reporting Initiative|Global Reporting Initiative (GRI)]] and [[International Organization for Standardization|ISO Standards]], among others, were not always as practical or relevant in a local and cultural context.

The Islamic Reporting Initiative was set up with the aim of creating a mainstream reporting standard for CSR based on Islamic principles.<ref>{{Cite news|url=https://link.springer.com/chapter/10.1007/978-3-319-32754-9_3#Fn36|title = From the book "Islamic Marketing" by Čedomir Nestorović}}</ref>

EMG provided the initial fundingofEUR 230,000 (no related party transactions) as part of the firm's own CSR program. Office space was provided through an in-kind contribution by EMG valued at EUR 25,000 for the period 2015-2016. EMG Founder Daan Elffers performed all IRI-related duties pro-bono.<ref>{{Cite web|url=https://www.emg-csr.com/iri/|title = Initial funding Islamic Reporting Initiative}}</ref>

EMG's advisory board is chaired by [[Prince Pieter-Christiaan of Orange-Nassau, van Vollenhoven]].<ref>{{Cite web|url=http://www.diplomatmagazine.nl/2015/09/05/islamic-reporting-initiative-to-transform-csr/|title = Islamic Reporting Initiative to transform CSR|date = 5 September 2015}}</ref> Members of the advisory board include [[Michael Braungart]], Gerrit Heyns, and [[Ida Auken]], former Danish Minister of the Environment.<ref>{{Cite web|url=http://www.diplomatmagazine.nl/2015/04/30/hh-prince-pieter-christiaan-van-oranje-nassau-chairman-of-emg-advisory-board/|title = HH Prince Pieter-Christiaan van Oranje-Nassau Chairman of EMG Advisory Board|date = 30 April 2015}}</ref>

Sustainable Development is not a new concept, but it is embedded in the fundamental codes of conduct in Islamic Societies and Laws through Shari’ah.<ref>{{https://art.torvergata.it/handle/2108/195092|title = Corporate Social Responsibility in Islamic Culture. Case Study: Islamic Reporting Initiative}}</ref> Islamic Law provides a set of key principles, duties and prohibitions related to social responsibility towards people and the environment, and to financial and commercial transactions. They concern both individuals and businesses.<ref>{{https://www.ojs.unito.it/index.php/EJIF/article/view/3065/pdf|title = Corporate Social Responsibility in Islamic Culture. Comparison between Western CSR and Islamic CSR: Focus on Islamic Reporting Initiative and Islamic Financial Institution.}}</ref>

Sustainability standards are expected to carry the social, economic, environmental and ''cultural'' values. Islamic nations have a different mindset from those of the other nations. Member states of the Organisation of Islamic Cooperation (OIC) are, therefore, in favour of using different framework of reporting for sustainability. As a result, with necessary support of the United Nations, Islamic Reporting Initiative has been created to develop standards for use by the Islamic states.<ref>{{https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3769914|title = Sustainability Practices in Agriculture and International Trade: A Study on Select Islamic Nations}}</ref>

The Islamic Reporting Initiative sees the values of peace, compassion, tolerance, justice, environmental management and human dignity as the foundations on which to implement enterprise sustainability and social responsibility on a universal scale.<ref>{{https://www.ojs.unito.it/index.php/EJIF/article/view/3065/pdf|title = Corporate Social Responsibility in Islamic Culture. Comparison between Western CSR and Islamic CSR: focus on Islamic Reporting Initiative and Islamic Financial Institution.}}</ref>

According to Elasrag (2018) and Islamic Reporting Initiative (2018) the IRI Standard guides Islamic-based organizations on integrated social responsibility reporting and corporate social responsibility practices. The application of IRI standards during social responsibility practices is guided by the values of responsibility and accountable for the free will Ikhtiyar on personal action, and the social justice towards the society as guided by Allah through the values of Zakat (charity) and Sadaqah or philanthropy (Buhr & Gray, 2012; IRI Foundation, 2019).

Other vital Islamic values that inform IRI standards includes unity through moral respect and equality on others and the society, and the assuming Khalifah (vicegerent) role by representing Allah on earth through stewardship over nature and other resources in the environment (Elasrag, 2018; IRI Foundation, 2019).<ref>{{https://www.scirp.org/journal/paperinformation.aspx?paperid=112916|title = Emerging Trends in Sustainability Reporting (SR): Comparative Literature Review in Developed, Developing and GCC Countries}}</ref>

Islamic values and principles are shared by nearly a quarter of the world’s population with custodianship for vast reserves of natural resources.

== Significance of Islamic Banking and Finance ==

While the Islamic Reporting Initiative aims to support ''all'' types of organizations, the IRI reporting standard will be compatible with [[Sharia-compliant finance|Sharia compliant finance]].

According to the Islamic Reporting Initiative, "it is essential that the reporting framework is compatible with the method of finance that underpins the organization, of which, in many companies operating in the Islamic world, is Sharia-compliant finance. A recent study showed that Sharia-compliant finance is estimated to grow by an average of almost 20% per year to 2018<ref>{{Cite news|url=https://www.economist.com/news/finance-and-economics/21617014-market-islamic-financial-products-growing-fast-big-interest-no-interest|title = Big interest, no interest|newspaper = The Economist|date = 13 September 2014}}</ref>, making it the fastest growing finance type. In response to this growth in Islamic banking and the trajectory towards integrated reporting, the IRI seeks to be compatible with these principles, making it unique to other reporting standards."<ref>{{Cite web|url=http://www.edie.net/library/Islamic-Reporting-Initiative--A-new-framework-to-transform-CSR-Reporting/6654|title=Islamic Reporting Initiative: Aligning local culture with CSR}}</ref>

One of the principles of Islamic banking is to not invest in projects that are detrimental to society, which exhibits the extent to which Islamic finance contributes to a broader values-based social system. The Islamic principles that lead Islamic finance include the concept of humankind as trustees of nature. This instils a level of responsibility to safeguard society and environment, and demonstrates the potential for the region to seek these principles even further in a business situation.

Taking these distinctions into account is the Islamic Reporting Initiative, which delves to promote the use of triple bottom line reporting as an instrument for business development and growth, in a context that is regulated with Islamic principles. Additionally, the favourable geography of the region prepares it with great renewable energy resources, such as solar power. This may serve as a major competitive advantage in the field of sustainable development, with consumers increasingly scrutinizing the social and environmental impact of organizations.<ref>{{Cite news|url=https://pdfs.semanticscholar.org/8751/7584290f8ce5ce4a1267da0e34ee3c83697b.pdf|title = Is Islamic banking and finance doing enough? Shaping the sustainable and socially responsible investment community}}</ref>

The combination of non-financial and financial metrics provides an additional layer of information important to stakeholders and [[investor]]s in the [[measurement]] and [[Risk management|management]] of [[Business risks|risk]].<ref>{{Cite web|url=https://www.theguardian.com/sustainable-business/eu-non-financial-reporting-how-richard-howitt|title = The EU law on non-financial reporting - how we got there|date = 16 April 2014}}</ref>

* In 2017, the IRI was recognized by the Cambridge IF Analytica Global Islamic Finance Report (GIFR) as one of the leading initiatives in Islamic Finance.<ref>http://gifr.net/publications/gifr2017/contributors.pdf</ref>

* In 2018, the IRI won the Global Islamic Finance Award for the category Sustainable Development Goals. The award was presented during the Global Islamic Finance Awards (GIFA) ceremony held in [[Sarajevo]], in the presence of [[Bakir Izetbegović]], [[Chairman of the Presidency of Bosnia]] and Herzegovina.<ref>https://islamicreporting.org/sustainable-development-goals/|title = SDG award</ref>

The foundation for the IRI (Stichting IRI Reporting Standard) was founded on15 December 2015.<ref>{{Cite web|url=http://www.kvk.nl/orderstraat/product-kiezen/?kvknummer=64758168&origq=Stichting+IRI+Reporting+Standard|title = Bedrijfsinformatie bestellen}}</ref> The [[Trustee]]s/[[board members]] of the foundation for the IRI are its founder Daan Elffers; [[Entrepreneurship|entrepreneur]], thought leader and philanthropist [[Mohamed Amersi]]; entrepreneur Amal Daraghmeh-Masri; financier Gerrit Heyns; and academic Dr Abdel-Aziz Sharabati.<ref>{{Cite web|url=http://middleeast-business.com/foundation-for-the-islamic-reporting-initiative-expands-board-of-directors/|title = Foundation for the Islamic Reporting Initiative expands Board of Directors|date = 23 March 2016}}</ref>

The IRI Advisory Council includes [[Hakima El Haite|Hakima El Haïté]] Delegate Minister in charge of the Environment of Morocco and Host of the UN Climate Change [[COP22]] in Marrakech, and Taher Shakhshir, former Minister of Environment, [[The Hashemite Kingdom of Jordan]]<ref>http://www.jordantimes.com/news/local/environment-minister-selected-advisory-member-int%E2%80%99l-initiative%E2%80%99</ref> (Chair).

The IRI [[Collaboration|collaborates]] with a [[global network]] of governmental, corporate and [[Nonprofit organization|not- for-profit]] organizations worldwide, referred to as members. As of 2021, the IRI has members in more than 50 countries. On7 November 2016, the IRI held its first [[round table (discussion)]] as an official side event of the UN Climate Change Conference COP22 <ref>http://www.men.gov.ma/Ar/cop22/Documents/Youth_CapacityBuilding.pdf</ref>

The Islamic Reporting Initiative (Stichting IRI Reporting Standard) is a signatory of the United Nations Global Compact<ref>{{Cite news|url=https://www.unglobalcompact.org/what-is-gc/participants/89221-IRI-Reporting-Standard-Stichting|title = UN Global Compact registration}}</ref> and is a registered public benefit organisation as defined by the statute in the jurisdiction of the Netherlands (ANBI status).<ref>https://www.belastingdienst.nl/rekenhulpen/anbi_zoeken/|title = ANBI status registration</ref>