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Waqf and Sustainable Development: The Role of ESG in Strengthening Socio-Economic Impact

Author

Listed:
  • Rohayati Hussin

    (Department of Law, University Technology MARA (UiTM), Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Kedah, Malaysia.)

  • Nurul Mazrah Manshor

    (Department of Law, University Technology MARA (UiTM), Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Kedah, Malaysia.)

  • Nur Irinah Mohamad Sirat

    (Department of Law, University Technology MARA (UiTM), Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Kedah, Malaysia.)

  • Farahdina Fazial

    (Academy of Contemporary Islamic Studies (ACIS), University Technology MARA Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Kedah, Malaysia)

  • Indra Fajar Alamsyah

    (Department of Management, Faculty of Economics and Business, Universitas Islam Bandung, Bandung City, Indonesia)

Abstract

The integration of Environmental, Social, and Governance (ESG) principles into waqf management offers a promising yet under explored approach to enhancing socio-economic development. Although waqf has historically functioned as a sustainable financing mechanism, its potential remains constrained by weak governance, lack of standardization, and limited alignment with modern sustainability frameworks. To address these challenges, this study develops a conceptual framework examining how ESG integration mediates waqf's socio-economic outcomes. Using a narrative review methodology, it synthesizes findings from peer-reviewed articles, theoretical papers, and policy reports retrieved from the Scopus database. Key themes identified include waqf’s contribution to sustainable development, benefits of ESG integration, and barriers to implementation. Findings suggest that ESG incorporation can strengthen waqf’s impact by promoting environmental stewardship, advancing social equity, and reinforcing governance practices. This alignment connects traditional Islamic finance with contemporary sustainability goals. The proposed framework emphasizes stakeholder collaboration, standardized metrics, and regulatory mechanisms to ensure transparency and accountability. Theoretically, the study highlights the complementary relationship between waqf and ESG principles, offering a new perspective on sustainable development within Islamic finance. Practically, it provides actionable insights for policymakers and practitioners to optimize waqf’s role in promoting socio-economic growth. However, reliance on existing literature presents a limitation, indicating the need for empirical validation. Future research should examine case studies and regional differences to evaluate the feasibility and scalability of ESG-integrated waqf models, contributing to a more inclusive and resilient society while addressing global challenges such as poverty, inequality, and environmental degradation.

Suggested Citation

  • Rohayati Hussin & Nurul Mazrah Manshor & Nur Irinah Mohamad Sirat & Farahdina Fazial & Indra Fajar Alamsyah, 2025. "Waqf and Sustainable Development: The Role of ESG in Strengthening Socio-Economic Impact," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 7879-7888, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:7879-7888
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    References listed on IDEAS

    as
    1. Defang Ma & Liangwei Li & Yuxi Song & Mengkai Wang & Qiaowen Han, 2023. "Corporate Sustainability: The Impact of Environmental, Social, and Governance Performance on Corporate Development and Innovation," Sustainability, MDPI, vol. 15(19), pages 1-16, September.
    2. Farea Alharbi, 2024. "The Impact of ESG Reforms on Economic Growth in GCC Countries: The Role of Financial Development," Sustainability, MDPI, vol. 16(24), pages 1-15, December.
    3. Muhammad Ayub & Khurram Khan & Mansoor Khan & Muhammad Ismail, 2024. "Waqf for accelerating socioeconomic development: a proposed model with focus on Pakistan," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 16(5), pages 937-961, February.
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