Implementation of ESG Principles in Islamic Fintech: A Case of P2P Alami Sharia

Abstract

Due to its emphasis on social and environmental effects as well as its connection to increased financial performance, the topic of environmental, social, and governance (ESG) is quite popular globally. Similarly, another idea that is gaining popularity around the world is Islamic financial technology (fintech), which complies with Shariah. As they both address issues with social development, these two ideas have numerous shared ideals and characteristics. However, as ESG is a novel idea, there are many obstacles and difficulties in integrating it into financial institutions. The development of the Islamic fintech industry has advanced to the point where it now takes into account the potential for coexistence with these SDGs and ESG as well as further carving out a chance for improved innovation and financial power. This study uses a descriptive-analytical methodology to examine how ESG principles are applied in Islamic fintech. The information is gathered from a survey of the literature and interviews with prominent Islamic Peer to Peer Financing Alami Sharia and Islamic fintech figures. This paper finds that Fintech Peer-to-Peer Financing Alami Sharia in its operations, especially in distributing financing to beneficiaries, pays attention to and applies ESG principles. This research also finds a unique approach to how Alami Sharia can realize maqashid shariah that is in line with ESG. This study is one of a few research papers in the field of Islamic fintech and its correlation with ESG. This study provides a new and unique paradigm for implementing ESG principles in Islamic finance, especially in Islamic fintech that could be a reference for stakeholders.