Development of a comprehensive sustainability performance index for takaful operators: integrating Maqasid Al-Shariah and stakeholder perspectives

Purpose - This study aims to develop a comprehensive sustainability performance index tailored for Takaful operators. It integrates Maqasid Al-Shariah’s principles with key stakeholders’ expectations, ensuring a holistic evaluation of sustainability practices. Design/methodology/approach - The index is formulated through a multi-step process, beginning with a thorough literature review to identify pertinent economic, social, environmental and religious indicators. Using a Multi-Attribute Utility Theory approach, the process incorporates expert consultations, stakeholder workshops and the analytical hierarchy process. The framework amalgamates diverse sustainability attributes, focusing on regulatory compliance, financial performance, customer satisfaction, workplace environment and community engagement. The final index is tested with data from various Takaful operators to validate its reliability and robustness. Findings - The newly developed index effectively captures the multifaceted aspects of sustainability specific to Takaful operators, offering a balanced assessment across economic, social, environmental and religious dimensions. Findings suggest that while Takaful operators excel in community welfare and ethical compliance areas, there are notable gaps in integrating environmental and social governance factors. The index successfully highlights these gaps, providing a structured framework to enhance the sustainability practices of Takaful operators. Initial applications of the index reveal significant variability in sustainability performance among Takaful operators, pointing to areas needing improvement. Research limitations/implications - The development of the index is limited by the availability and quality of data from Takaful operators. Future research should aim to improve data collection methods and expand the index’s application to a broader range of operators. Practical implications - Takaful operators can use the index as a transparent and objective tool to evaluate and improve their sustainability practices, facilitating better decision-making and strategic planning towards achieving sustainable development goals. Social implications - By incorporating Maqasid Al-Shariah and stakeholder perspectives, the index promotes socially responsible and ethically sound business practices within the Takaful industry, aligning with broader societal values and expectations. Originality/value - This paper introduces the first comprehensive sustainability performance index specifically designed for Takaful operators, integrating religious principles with conventional sustainability metrics. The index provides substantial value for researchers, practitioners and policymakers dedicated to enhancing sustainability in the Islamic finance sector.