The circular economy and its possible collaboration with Islamic economics and finance

• Main Authors: Haneef, Mohamed Aslam, Jamaludin, Husna
• Format: Book Chapter
• Language: English
• Published: Springer Nature 2021
• Subjects: BPH Islamic Economics; HC79.E5 Environmental policy and economic development. Sustainable development. Sustainability.
• Online Access: http://irep.iium.edu.my/98725/7/98725_The%20circular%20economy%20and%20its%20possible%20collaboration.pdf; http://irep.iium.edu.my/98725/; https://doi.org/10.1007/978-981-16-6061-0_6

This chapter examines the possible relationship between the Circular Economy and Islamic (economics and finance). The fundamental idea at the base of this article is that the circular economy, with all its limitations, does present a different model of decision-making, i.e., one that sees decisions being made not based on a narrow individual self-interest. The circular economy promotes the view that economics and finance must incorporate “others” into one’s decision-making. Islamic Banking/Finance has developed over the last three decades and while it has served the needs of providing a Shariah (read legal) compliant financing, reservations have been voiced as to its social impact and its contribution to the real economy that seems to have also contributed to the positive shift in the direction taken in IBF in the last decade. The chapter then presents the main highlights of the circular economy discourse and takes a critical look at some of its limitations. The authors argue that, despite its limitations, the circular economy provides an opportunity to further strengthen the preliminary re-alignment that has taken place in current Islamic Banking/Finance discourse, especially the development of social finance. The goals and overall approach of IBF must be reformulated to serve the needs of achieving socio-economic justice. Since Islamic finance is still dominated by Islamic banking, reforms made by Islamic banking authorities and IF educators will have a significant impact on developing the direction of the discipline. Instead of narrow focus on maximizing shareholder returns, these reforms will allow for promoting a genuine stakeholder model where decisions made by individual agentsmust include a concern for others, including the environment. The chapter generally uses secondary data and discourse/content analysis involving literature written over the last three decades.