A Shariah-based blueprint for ethical finance takes shape in Malaysia - SC

Unveiled during the third SC Nadwah of Shariah Advisers, the 40 Hadiths series seek to cultivate a deeper understanding of sustainability and ethical transactions from an Islamic lens. - May 26, 2025

A Shariah-based blueprint for ethical finance takes shape in Malaysia - SC

The Securities Commission’s latest initiatives mark a thoughtful turn toward embedding Islamic ethical frameworks in capital market practices

AT a time when global markets increasingly contend with the moral dimensions of finance, the Securities Commission (SC) is seeking to anchor its Islamic Capital Market (ICM) more firmly within a values-based framework rooted in Islamic ethics.

Through two new initiatives — the launch of the 40 Hadiths book series and the formation of a dedicated task force — the SC is signalling its intention to align the market’s evolution with the higher objectives of Islamic law, or Maqasid al-Shariah.

Unveiled during the third SC Nadwah of Shariah Advisers, the 40 Hadiths series seek to cultivate a deeper understanding of sustainability and ethical transactions from an Islamic lens.

The publication, which is freely available online, draws on Prophetic traditions to offer guidance on responsible commerce, environmental stewardship, and fair dealing — ideals that resonate far beyond the Muslim world.

According to SC Chairman Datuk Mohammad Faiz Azmi, these teachings offer more than theoretical guidance; they represent a practical framework for reforming financial conduct.

“Internalising the guidance encapsulated in these hadiths contributes to the development of a just, inclusive and sustainable economy,” he said.

That framing is especially significant. Much of the discourse on sustainability in finance is dominated by secular ESG (Environmental, Social and Governance) principles.

By contrast, Maqasid al-Shariah offers a distinctly spiritual yet actionable path toward ethical investment and corporate behaviour — one that has its roots in the protection of faith, life, intellect, lineage, and wealth.

What is particularly noteworthy is that this initiative is not limited to philosophical aspiration. The SC has also launched a Maqasid al-Shariah Task Force for the ICM, a body that will work to embed these ethical principles into policy, regulatory coordination, and market practice.

Its members include Bursa Malaysia, key industry associations, Islamic banking bodies, and Shariah education institutions — a clear sign of the SC’s intention to rally the full ecosystem behind this agenda.

“More importantly,” said Faiz, “the SC is committed to making Maqasid al-Shariah a fundamental framework for business dealings in ICM.”

It is a bold ambition in an era of greenwashing and short-term financial thinking — but one with deep historical legitimacy.

The Nadwah, launched in 2023, is already gaining traction as a platform for applied Shariah scholarship and innovative thinking. Its role in shaping future ICM strategies — with contributions from both scholars and practitioners — will be crucial in ensuring that these ideals are not just preached, but practiced.

As global finance begins to reckon more seriously with questions of equity, sustainability, and purpose, Malaysia’s turn to its Islamic intellectual heritage offers a compelling model — one in which religious ethics are not a constraint, but a compass. - May 26, 2025