Shahnawaz Akhter
Over the years, banking has evolved from a purely commercial enterprise into a sector that bears a profound social obligation. Financial institutions operate at the heart of national economies, shaping livelihoods, enabling enterprise, and influencing the equitable distribution of opportunity. In emerging economies like Pakistan, where financial inclusion is still developing and public trust in institutions can be fragile, the corporate responsibility of banks extends beyond philanthropy and compliance. It demands a strategic, values-driven commitment to societal wellbeing and long-term economic sustainability.
Environmental Social Governance (ESG) is the ask and need of the world today, and till the change in nomenclature happens; to unify all sustainability efforts under ESG, Corporate Social Responsibility (CSR) will continue as the more charity-oriented arm of the same. CSR in banking today must be understood not as a peripheral add-on but as a core strategic function. Banks, by virtue of their reach and role in capital allocation, are uniquely positioned to catalyse social development. Their choices in what they finance, where they invest, and whom they empower, shape the economic and social fabric of their communities. Globally, leading financial institutions have integrated ESG frameworks into their operations to guide ethical decision-making and long-term sustainability. Yet in Pakistan, the responsibility runs deeper, especially for Islamic banks whose business models are inherently rooted in ethics, justice, and shared prosperity.
Islamic banking stands apart due to the embedded principles that shape its conduct. Concepts such as khidmat (service), adl (justice), and maslaha (public welfare) are not just aspirational. They are operational anchors that define what responsible finance should look like. Unlike conventional CSR models that often focus on charitable giving, Islamic finance mandates social stewardship as an intrinsic part of economic activity. The prohibition of interest, avoidance of excessive uncertainty, and emphasis on asset-backed, real-economy transactions reinforce financial discipline while ensuring economic value is genuinely created. But the true social power of Islamic banking lies in its ethos that finance is not only a mechanism to generate profit; it is a means to preserve dignity and promote equitable development.
This ethos carries heightened significance in Pakistan’s current socio-economic environment. With widening income disparities, climate vulnerabilities, rising healthcare demands, and limited access to financial literacy, the banking sector confronts both a challenge and an opportunity. Banks can play a transformative role in areas such as affordable clean energy, water access, community health, and inclusive educational opportunities. They can also support digital and financial inclusion which are critical prerequisites for economic mobility in the 21st century.
A growing number of Pakistani banks have begun to adopt this broader vision of purpose-driven finance, and Islamic banks have often led this shift due to their value-based frameworks. One case study that illustrates this approach is Faysal Bank, which operates on an Islamic banking model and aligns its CSR with the UN Sustainable Development Goals (SDG). Its solar energy initiative for The Citizens Foundation schools demonstrated how environmental stewardship can intersect with educational uplift, reducing classroom disruptions while cutting carbon emissions. Similarly, its partnerships in healthcare, from supporting heart surgeries for children to enabling mobile medical clinics, reflect not episodic charity but sustained interventions in systemic gaps. Its support for clean drinking water solutions in underserved villages, investment in Islamic finance education, financial literacy drives, and healthcare infrastructure such as breast cancer units further demonstrate how Islamic banking institutions can operationalise the principles of khidmat and long-term societal wellbeing. Their continued investment in professional development for Islamic banking, and financial literacy are changing the game for semi urban and rural populations respectively. Such initiatives show how Islamic values, when translated into modern CSR practice, create measurable and lasting impact.
This alignment between Islamic values and modern CSR practice is not unique to Pakistan; similar global models further demonstrate the transformative potential of ethical Islamic finance across the world. A strong international example comes from Malaysia’s Bank Islam, which pioneered the Sadaqa House; a Shariah-compliant crowdfunding platform that channels voluntary contributions into healthcare, education, and renewable energy projects for underserved communities. By combining transparent governance with measurable social outcomes, Bank Islam demonstrates how modern Islamic finance can institutionalise compassion and deliver meaningful, scalable impact while remaining commercially sustainable.
The future of corporate responsibility lies in integrating social value into the core of banking operations. This means ensuring that financing decisions account for environmental consequences, community needs, and ethical implications. It also requires shifting from charity-based models to sustainable, long-term development partnerships. Banks must move beyond traditional CSR budgets and embed impact into the products they design, the sectors they support, and the financial behaviours they encourage.
For Islamic banks, the question is not whether they should act, but how comprehensively they can translate Islamic principles into modern financial practice. This includes championing financial inclusion through Shariah-compliant microfinance, supporting women-led enterprises, developing green financing structures, promoting ethical investment frameworks, and strengthening communities through knowledge, healthcare, and digital access. The shift toward sustainability also calls for transparent reporting, impact measurement, and alignment with global benchmarks such as SDGs.
Looking ahead, corporate responsibility in banking will increasingly be judged by authenticity and strategic coherence. Stakeholders, including customers, regulators, and international partners, expect banks to demonstrate how their actions contribute to societal resilience. The most respected banks will be those that create shared value and institutions that meet business objectives while improving lives, supporting climate resilience, and strengthening communities. In Pakistan’s dynamic landscape, this is not merely desirable rather it is essential for long-term stability and growth.
