Saqib Munee ; Singh, Ajay; Choudha y, Mazha Hussain; Alshamma i, Awwad Saad;
Bu , Nasi Ali
A icle
Does en i onmen al disclosu e and co po a e go e nance
ensu e he inancial sus ainabili y o Islamic banks?
Adminis a i e Sciences
P o ided in Coope a ion wi h:
MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel
Sugges ed Ci a ion: Saqib Munee ; Singh, Ajay; Choudha y, Mazha Hussain; Alshamma i, Awwad
Saad; Bu , Nasi Ali (2025) : Does en i onmen al disclosu e and co po a e go e nance ensu e he
inancial sus ainabili y o Islamic banks?, Adminis a i e Sciences, ISSN 2076-3387, MDPI, Basel, Vol.
15, Iss. 2, pp. 1-25,
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Ci a ion: Munee , S., Singh, A.,
Choudha y, M. H., Alshamma i,
A. S., & Bu , N. A. (2025). Does
En i onmen al Disclosu e and
Co po a e Go e nance Ensu e he
Financial Sus ainabili y o Islamic
Banks? Adminis a i e Sciences,15(2),
54. h ps://doi.o g/10.3390/
admsci15020054
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A icle
Does En i onmen al Disclosu e and Co po a e Go e nance
Ensu e he Financial Sus ainabili y o Islamic Banks?
Saqib Munee
1,
* , Ajay Singh
2
, Mazha Hussain Choudha y
1
, Awwad Saad Alshamma i
2
and Nasi Ali Bu
3
1Depa men o Economics and Finance, College o Business Adminis a ion, Uni e si y o Ha’il,
Ha’il 55476, Saudi A abia; [email p o ec ed]
2Depa men o Managemen and In o ma ion Sys ems, College o Business Adminis a ion,
Uni e si y o Ha’il, Ha’il 55476, Saudi A abia; [email p o ec ed] (A.S.);
[email p o ec ed] (A.S.A.)
3Depa men o English, Applied College, Uni e si y o Ha’il, Ha’il 55476, Saudi A abia; [email p o ec ed]
*Co espondence: [email p o ec ed]
Abs ac : The pu pose o his s udy is o in es iga e he in luence o en i onmen al dis-
closu e and co po a e go e nance on he inancial pe o mance o Islamic banks in Saudi
A abia. This s udy highligh s ha sus ainable p ac ices a e anspa en wi h inancial
objec i es using he eligious amewo k o Islamic inance. This esea ch is based on
Wo ldwide Vision 2030, which co e s sus ainable de elopmen and p omo es en i on-
men al, social, and go e nance (ESG) p inciples, as well as co po a e go e nance ac o s,
such as boa d composi ion and Sha iah Supe iso y Boa ds (SSBs). We use a hyb id ap-
p oach o ou indings, wi h a da ase spanning 2011–2023 o he quan i a i e analysis
and 20 semi-s uc u ed analyses conduc ed o a quali a i e app oach ha aligns wi h
objec i es. We ound ha en i onmen al disclosu e boos s p o i s and s akeholde us .
Co po a e go e nance s uc u es, such as en i onmen al boa ds and sus ainabili y com-
mi ees, imp o e he en i onmen al disclosu e o inancial pe o mance in Islamic banks.
In his posi i e in e ac ion, specialized go e nance d i es Sha ia-complian sus ainabili y
ini ia i es. SSBs help Islamic banks in eg a e sus ainabili y and mee eligious and ESG
en i onmen al s anda ds. Boa d di e si y and dedica ion in he sus ainabili y commi ee
bo h play impo an oles in enhancing en i onmen al disclosu e p ac ices; in e u n, hese
imp o ed inancial pe o mances. The in e ac ion o en i onmen al disclosu e and boa d
en i onmen al expe ise has a posi i e impac on he o e all pe o mance, which indi-
ca es ha go e nance s uc u e suppo s sus ainabili y- ela ed decision-making, aligning
wi h anspa ency. This s udy sugges s ha Islamic banks s anda dize ESG amewo ks,
imp o e boa d en i onmen al expe ise, and in es in eal- ime sus ainabili y epo ing
digi al solu ions. Saudi Islamic banks can lead egional and global sus ainable banking
by adop ing hese s a egies o align wi h global sus ainabili y ends, imp o e inancial
pe o mance, and mee e hical inance expec a ions.
Keywo ds: en i onmen al disclosu e; co po a e go e nance; Islamic banking; inancial
pe o mance; Saudi A abia
1. In oduc ion
Financial ins i u ions now include en i onmen al, social, and go e nance (ESG)
hemes, making sus ainable inance and co po a e go e nance global p io i ies. Since
Sha ia law is mo al, Islamic banking equi es sus ainable inance. Leade s in Islamic i-
nance like Saudi A abia app ecia e he impo ance o inancial sus ainabili y o economic
Adm. Sci. 2025,15, 54 h ps://doi.o g/10.3390/admsci15020054
Adm. Sci. 2025,15, 54 2 o 25
s abili y and en i onmen al esponsibili y. Saudi A abia’s Vision 2030 s esses sus ainable
economic g ow h; he e o e, co po a e go e nance mus p o ide en i onmen al ans-
pa ency. En i onmen al disclosu e le s banks epo hei sus ainabili y and en i onmen al
impac , a ec ing s akeholde s and inancial pe o mance. Saudi Islamic banking p io i izes
en i onmen al sus ainabili y since Sha ia law s esses land s ewa dship and social jus ice.
En i onmen al disclosu e’s impac on Islamic bank inancial sus ainabili y is unde s udied
despi e e hical du ies (Bashi & Babike ,2023;Muhammad e al.,2021).
Islamic banking go e nance mixes Sha ia and inancial ules. Sha ia Supe iso y
Boa ds (SSBs) moni o Islamic inance. These boa ds o e see e hical and eligious banking,
bu hei impac on en i onmen al sus ainabili y and co po a e anspa ency is unknown.
Go e nance and boa d e ec i eness a ec inancial sus ainabili y in adi ional inance, bu
hei ole in Islamic banking, pa icula ly en i onmen al disclosu e, needs g ea e in es-
iga ion. Islamic banks mus unde s and how go e nance s uc u es a ec sus ainabili y
epo ing and inancial pe o mance owing o e hical and eligious cons ain s. To compe e
in he global inancial sys em, which p io i izes ESG compliance, Islamic banks mus mee
in e na ional sus ainabili y disclosu e guidelines. The lack o Islamic banking-speci ic
en i onmen al disclosu e laws is se ious (Alwi e al.,2024;Sa i & Hussien,2024).
Co po a e go e nance and ESG in eg a ion in mains eam banking ha e been ex-
ensi ely s udied, bu no in Islamic inance. En i onmen al disclosu e amewo ks ha
mee ESG and Islamic banking ules a e sca ce, limi ing esea ch. Islamic inance’s e hical,
eligious, and ope a ional challenges a e some imes o e looked by adi ional inancial dis-
closu e egula ions o Wes e n banks. Islamic banks s uggle o epo and e alua e hei
wo ldwide ESG sus ainabili y pe o mance. Wi hou s anda dized disclosu e me hods,
in es o s and egula o s canno assess Islamic inancial ins i u ions’ sus ainabili y p ac ices,
which may es ic o e seas und aising and in es men . Islamic banking en i onmen al
disclosu e s udy and implemen a ion a e needed due o his ambigui y (Al-sa awi,2020;
Hab oo ,2022).
Ano he sus ainabili y go e nance li e a u e acuum is Sha ia Supe iso y Boa ds.
Islamic inancial compliance depends on SSBs, bu li le is known abou how hey in-
luence sus ainabili y policies, moni o en i onmen al equi emen s, and in eg a e ESG
in o banking ope a ions. Mos SSB esea ch ocuses on inancial compliance, igno ing i s
en i onmen al and social go e nance po en ial. This is c i ical as egula o y and social
p essu e on banks o emb ace sus ainable p ac ices g ows. Unde s anding how SSBs a -
ec sus ainabili y go e nance may assis Islamic banks in imp o ing hei en i onmen al
esponsibili y while ollowing Sha ia law (Rou ,2024).
Di e si y and en i onmen al awa eness in Islamic banking go e nance s uc u es
a e unde s udied. Di e se boa ds wi h en i onmen al p o essionals imp o e adi ional
inance sus ainabili y and p o i abili y, acco ding o esea ch. These indings a e unce ain
o Islamic banking, which has di e en e hical and ope a ional s anda ds. Few s udies
ha e examined how boa d di e si y, en i onmen al expe ise, and specialized sus ainabili y
commi ees a ec Islamic banks’ inancial sus ainabili y. Sha ia law encou ages e hical
s ewa dship; he e o e, ESG-based go e nance could imp o e Islamic banks’ en i onmen al
and social e ec s. Thus, mo e empi ical esea ch is needed o de e mine i Islamic bank
go e nance models should include mo e skills o sus ainabili y (Abdallah e al.,2022;
Rehman e al.,2020;Sa wa e al.,2022).
Beyond go e nance di icul ies, Islamic bank en i onmen al disclosu e’s inancial
implica ions a e uns udied. Many anecdo al s udies ha e illumina ed Islamic inance
sus ainabili y ends, bu ew quan i a i e s udies ha e linked en i onmen al disclosu e
o inancial pe o mance. I is unknown i en i onmen al openness encou ages in es -
men and imp o es Islamic banks’ long- e m inancial iabili y o aises ope a ing and
Adm. Sci. 2025,15, 54 3 o 25
compliance cos s wi hou su icien empi ical da a. Global inance is inc easingly ocused
on ESG compliance; he e o e, egula o s and indus y s akeholde s mus unde s and
sus ainabili y disclosu e’s inancial impac s. Add essing his gap would help policymake s
design mo e e hical and inancially sound Islamic banking policies (A. Buallay e al.,2020;
Shehadeh e al.,2024;Salhi e al.,2020).
Resea ch is complica ed by Saudi A abia’s egula ions and ma ke . Saudi A abian
Islamic banks’ sus ainabili y ini ia i es a e based on go e nmen policy and eligion, un-
like many Wes e n inancial ma ke s whe e in es o demand and egula ions d i e ESG
inclusion. Due o his dual e ec , Islamic banks mee global ESG ends wi h unique chal-
lenges. Compa ing Saudi Islamic banks o in e na ional ones can imp o e go e nance and
en i onmen al disclosu e. Financial s abili y and en i onmen al esponsibili y measu es
can be de eloped by unde s anding how local egula o y amewo ks a ec Saudi Islamic
bank sus ainabili y.
Gi en hese limi a ions, his wo k add esses many c i ical scien i ic ques ions. Fi s , i
will de e mine i en i onmen al anspa ency boos s Saudi A abian Islamic bank inances.
Second, i will analyze how Sha ia Supe iso y Boa ds d i e sus ainabili y in co po a e
go e nance. Islamic inance ules and sus ainabili y will be illumina ed by s udying
how go e nance sys ems a ec en i onmen al policy. Finally, he s udy will explo e how
boa d di e si y, go e nance, and en i onmen al unde s anding a ec sus ainabili y and
inancial pe o mance. The dynamics can help Islamic banks es ablish ESG-complian
go e nance s uc u es wi hou b eaching Sha ia (Abdul ahman,2024;Aslam e al.,2023).
Se e al heo e ical amewo ks o ganize his s udy’s Islamic banking sus ainabili y analysis.
S akeholde heo y equi es inancial decision-making o balance egula o s, in es o s,
cus ome s, and socie y. Ins i u ional heo y examines legisla i e and cul u al in luences on
Islamic bank go e nance and en i onmen al disclosu e. Sha ia Supe iso y Boa ds’ e hical
compliance and sus ainabili y a e encou aged by Sha ia go e nance heo y. Using many
heo e ical pe spec i es, i es ablishes a amewo k o unde s anding how go e nance
p ocesses a ec Islamic banking en i onmen al disclosu e and inancial sus ainabili y.
The esea ch a ec s egula o s, inancial ins i u ions, in es o s, and policymake s.
The s udy ad ises au ho i ies on imp o ing Islamic banking en i onmen al disclosu e
egula ions o sa is y global ESG benchma ks and Sha ia law. The s udy eaches Islamic
banks how boa d di e si y and SSBs may imp o e sus ainabili y and p o i abili y. ESG
in eg a ion’s impac on Islamic bank inancial s abili y can help in es o s and analys s
choose in es men s. Compa ing Islamic banking sys ems in di e en coun ies lays he
amewo k o u u e sus ainabili y esea ch in Islamic inance (Kashi e al.,2024).
This s udy in es iga es Saudi A abian Islamic banks’ inancial sus ainabili y, en i on-
men al anspa ency, and co po a e go e nance. The s udy ills li e a u e gaps o in o m
policy, go e nance, and sus ainable Islamic inancial discou se. ESG p inciples and Sha ia-
complian inancial models help Saudi A abia lead e hical and sus ainable banking as
i pu sues Vision 2030. This a icle imp o es Islamic banks’ anspa ency, go e nance,
and inancial esilience using empi ical analysis and heo e ical ideas o inc ease hei
wo ldwide esponsible inance and sus ainabili y posi ion.
2. Li e a u e Re iew
The Islamic banking li e a u e on en i onmen al disclosu e, co po a e go e nance,
and inancial sus ainabili y iden i ies key conce ns and gaps. En i onmen al disclosu e
is becoming mo e impo an in company openness, in es o us , and inancial pe o -
mance, bu Sha ia ules make i s in eg a ion in o Islamic inance challenging. The Global
Repo ing Ini ia i e (GRI) and Task Fo ce on Clima e- ela ed Financial Disclosu es (TCFD)
d i e en i onmen al disclosu e in con en ional banking, bu Islamic banks mus balance
Adm. Sci. 2025,15, 54 4 o 25
sus ainabili y wi h eligious obliga ions, esul ing in disclosu e s anda ds and epo ing
inconsis encies. Some expe s belie e ha en i onmen al disclosu e imp o es company
go e nance and inancial pe o mance by enhancing anspa ency and in es o us ,
bu o he s belie e ha sus ainabili y epo ing does no a ec ROA, ROE, o RAROE.
Co po a e go e nance sys ems, no ably Sha ia Supe iso y Boa ds (SSBs), may be mo e
signi ican in in eg a ing sus ainabili y in o Islamic banks han en i onmen al disclosu e
(Abdul ahman,2024).
Sha ia go e nance ins i u ions, especially SSBs, egula e inancial ansac ions o en-
su e Islamic compliance, making Islamic banking co po a e go e nance di e en om
con en ional inance. Islamic go e nance models complica e sus ainabili y decisions by
in eg a ing e hical, eligious, and socie al ac o s. T adi ional go e nance amewo ks
p io i ize sha eholde s and egula ions. Sha ia compliance depends on SSBs, al hough hei
impac on sus ainabili y and en i onmen al disclosu e is unknown. SSBs in e ace be ween
egula o s and inancial ins i u ions; he e o e, hei e ec s on co po a e go e nance, sus-
ainabili y, and inancial pe o mance wa an esea ch. S udies sugges ha SSBs could
p omo e e hical inance and esponsible in es men by including sus ainabili y c i e ia in
hei go e nance s anda ds, inc easing en i onmen al anspa ency. SSBs’ en i onmen al
go e nance and sus ainabili y- ela ed decision-making in luence a e inadequa ely explo ed,
c ea ing a c i ical li e a u e gap (Boshnak,2021;Ousama,2022).
Con en ional inance has ex ensi ely s udied boa d composi ion and go e nance
amewo ks, inding ha di e se boa ds wi h sus ainabili y compe ence be e in eg a e
ESG in o business s a egy. Few s udies ha e examined how boa d di e si y and en i-
onmen al expe ise a ec Islamic banking go e nance (Aslam e al.,2023). Sus ainabili y
expe s on boa ds imp o e isk managemen , s akeholde engagemen , and en i onmen al
policy, bu hese indings ha e p ima ily been applied o con en ional inancial ins i u-
ions, neglec ing Islamic bank go e nance cha ac e is ics. Gende di e si y on co po a e
boa ds p omo es accoun abili y and e hical decision-making, bu Islamic banks ace cul u al
and ins i u ional ba ie s (Boshnak,2021;Ousama,2022). Some s udies (
La i e al.,2020;
Na ayanan & P adhan,2024;Rismawa i & Bawono,2022) sugges gende -inclusi e boa ds
imp o e co po a e go e nance and encou age sus ainable p ojec s, bu o he s belie e he
e ec is limi ed, especially wi hou di e si y manda es. Unde s anding how boa d pa -
icipa ion in luences sus ainabili y pe o mance in Islamic banking amewo ks is i al,
especially in Saudi A abia, whe e co po a e go e nance s uc u es ope a e in a unique
legisla i e and cul u al en i onmen .
Islamic banking’s co po a e go e nance and en i onmen al disclosu e heo ies p o-
ide i al insigh s in o sus ainabili y in eg a ion, bu esea ch has ailed o link hem o
Islamic inance’s go e nance p ocesses. Financial i ms mus conside in es o s, egula-
o s, cus ome s, and he communi y while add essing sus ainabili y challenges, acco ding
o s akeholde heo y. Islamic banks’ e hical commi men o Sha ia and s akeholde en-
i onmen al equi emen s is highligh ed by his s a egy. S akeholde heo y suppo s
sus ainabili y disclosu e bu does no emo e Islamic banks’ s uc u al ba ie s o ESG
go e nance (Mukhlisin & Akba ,2021) and said ha esou ce dependence heo y shows
how egula o y moni o ing, Sha ia compliance, and ex e nal unding sou ces a ec Islamic
banking go e nance s uc u es and en i onmen al disclosu e. This heo y desc ibes how
ex e nal ins i u ional o ces a ec go e nance mechanisms when Islamic banks con ac
egula o y bodies and SSBs on sus ainabili y ini ia i es (Kashi e al.,2024).
Agency heo y, which add esses manage -s akeholde disag eemen s, is impo an in
Sha ia go e nance because SSBs in e ace Islamic banks and egula o s. Islamic alues help
SSBs educe agency ensions and inc ease co po a e accoun abili y. Con en ional agency
heo y sugges s ha s onge go e nance educes p incipal-agen con lic s, while Islamic
Adm. Sci. 2025,15, 54 5 o 25
banking go e nance sys ems mus balance inancial pe o mance and e hical compliance
(Alhamami,2023). Ins i u ional heo y can be used o examine how egula o y equi e-
men s, public expec a ions, and eligious alues a ec Islamic banking en i onmen al
disclosu e. This app oach add esses ex e nal sus ainabili y in eg a ion cons ain s bu no
how Islamic banks ope a ionalize en i onmen al disclosu e and co po a e go e nance
wi hin. Cu en esea ch has no su icien ly ela ed hese heo e ical app oaches o Islamic
banks’ go e nance s uc u es and sus ainabili y conce ns, agmen ing ou unde s anding
o how en i onmen al disclosu e and co po a e go e nance in e ac in Sha ia-complian
inancial ins i u ions (Almashhadani,2023;Qoyum e al.,2022).
Islamic banking li e a u e has ocused on sus ainabili y’s e hical g ounds bu igno ed
sys emic hu dles o ESG implemen a ion. Many s udies compa e Islamic inance o sus ain-
abili y bu neglec he obs acles Islamic banks ace in achie ing ESG c i e ia. Sus ainabili y
pe o mance assessmen and epo ing a e p oblema ic wi hou Islamic banking-speci ic en-
i onmen al disclosu e ules (Khémi i & Alsulami,2023). Despi e global disclosu e no ms,
GRI and TCFD neglec Islamic inance’s eligious and e hical dimensions. Islamic banks
s uggle o comply wi h Sha ia and global ESG s anda ds, causing disclosu e and egula o y
conce ns (Ellili & Nobanee,2023;Haddad & Souissi,2022). I is e ealed ha a Sha ia-
complian en i onmen al disclosu e sys em ha mee s global sus ainabili y s anda ds and
Islamic banking e hics and eligion is de eloped in his s udy (Lin & Qam uzzaman,2023).
How SSBs imp o e en i onmen al sus ainabili y is seldom s udied. SSBs a e impo an
o Sha ia compliance, bu hey ha e no been s udied o en i onmen al policy, s akeholde
pa icipa ion, o sus ainabili y. As Islamic banking’s p incipal egula o s, SSBs’ impac
on sus ainable go e nance should be add essed. We examine how SSBs a ec en i on-
men al disclosu e and i hey p omo e co po a e anspa ency and inancial sus ainabili y
o ill his gap (Almaq a i e al.,2023;A. M. Buallay e al.,2020;Akkas & Asu ay,2022;
Ousama e al.,2020
). Islamic banking boa d makeup and sus ainabili y. Di e se and en i-
onmen ally conscious boa ds imp o e co po a e go e nance, bu Islamic inance esea ch
disag ees. To assess sus ainabili y, Islamic banking boa d s uc u es mus conside gende
di e si y, en i onmen al unde s anding, and go e nance amewo ks due o cul u al and
legal cons ain s. Saudi Islamic banks’ en i onmen al disclosu e and co po a e go e nance
depend on boa d membe ship (Akkas & Asu ay,2022;Al-Ma a i e al.,2022;Haddad &
Souissi,2022;Khani ah e al.,2020;Lin & Qam uzzaman,2023).
The e a e ew empi ical s udies linking en i onmen al disclosu e o Islamic bank
inancial success. Sus ainabili y ends ha e been e ealed by quali a i e esea ch, bu
quan i a i e e idence on whe he en i onmen al anspa ency enhances inancial s abili y
o compliance is spa se. Wi hou da a, Islamic banking sus ainabili y s anda ds a e ha d
o assess. This s udy will ill his gap by empi ically assessing Saudi A abian Islamic
bank en i onmen al disclosu e, co po a e go e nance, and inancial sus ainabili y o a ec
egula o y policies and business s a egy (Almaq a i e al.,2023;A. M. Buallay e al.,2020;
Haddad & Souissi,2022;Lin & Qam uzzaman,2023;Qoyum e al.,2022).
This s udy syn hesizes li e a u e, inds gaps, and in eg a es ele an heo ies o un-
de s and how en i onmen al disclosu e and co po a e go e nance a ec Islamic bank-
ing inancial sus ainabili y (Abdul ahman,2024;Aslam & Ha on,2020;Ousama,2022;
Salhi e al.,2020
). The indings will in o m schola ly deba e and policy ideas o s eng hen
Islamic bank go e nance while mee ing Sha ia and in e na ional sus ainabili y s anda ds.
The Saudi A abian Vision 2030 p omo es en i onmen al esponsibili y and economic di e -
si ica ion; he e o e, Islamic banks need go e nance amewo ks ha suppo long- e m
sus ainabili y and inancial s abili y (Akkas & Asu ay,2022).
Adm. Sci. 2025,15, 54 6 o 25
3. Hypo hesis De elopmen
Based on he li e a u e e iew and heo e ical backg ound, he ollowing hypo heses
a e o mula ed:
1.
En i onmen al disclosu e posi i ely impac s he inancial pe o mance o Islamic
banks in Saudi A abia, as measu ed by ROA, ROE, and RAROE.
2.
Sha ia Supe iso y Boa ds in luence he in eg a ion o sus ainabili y p ac ices in Saudi
A abian Islamic banks, posi i ely a ec ing en i onmen al disclosu e.
3.
The inclusion o ESG p inciples in en i onmen al disclosu e enhances he inancial
pe o mance o Saudi A abian Islamic banks.
4.
Boa d composi ion, including en i onmen al expe ise and gende di e si y, posi i ely
in luences en i onmen al disclosu e p ac ices in Saudi A abian Islamic banks.
5.
The co po a e go e nance amewo k in Saudi A abian Islamic banks suppo s sus-
ainabili y e o s, imp o ing o e all inancial pe o mance and s akeholde us .
These hypo heses show abou s udy con ex how en i onmen al disclosu e and go -
e nance a ec Saudi A abian Islamic banks’ sus ainable inance. To be e unde s and
sus ainable Islamic inance, ou s udy will igo ously in es iga e hese ac o s’ complex in-
e ac ions.
4. Resea ch Me hodology
A well-s uc u ed me hodology sec ion analyzes Saudi A abia’s sus ainable Islamic i-
nancing using quan i a i e and quali a i e me hods. Go e nance, sus ainabili y issues, and
decision-making a e con ex ualized by semi-s uc u ed in e iews wi h boa d membe s,
Sha ia Supe iso y Boa d (SSB) membe s, op managemen , egula o s, and sus ainabili y
specialis s. Da a sa u a ion p inciples make 20 in e iews a s ong me hodological consid-
e a ion because hey ensu e ha no ex a da a is needed when esponses become epe i i e
and p o ide no new insigh s. Scien i ic igo will imp o e by speci ying sa u a ion c i e ia
and analyzing opics and how hei epe i ion wa an ed da a collec ion elimina ion.
The well-designed quan i a i e analysis co e s Saudi A abian Islamic banks om
2011 o 2023, coinciding wi h global ESG adop ion and Saudi Vision 2030. ROA, ROE, and
RAROE a e eliable indica o s o ins i u ional inancial sus ainabili y. Ex ac ing inancial
da a om annual epo s, egula o y ilings, and inancial da abases ensu es indus y-
s anda d inancial compa isons. A mo e comple e explana ion o how hese inancial
indica o s we e selec ed o Islamic banking sus ainabili y will imp o e me hodologi-
cal anspa ency.
Focusing on boa d composi ion, di e si y, and en i onmen al commi ees helps his
me hodology e alua e co po a e go e nance. En i onmen al disclosu e assessmen aligns
wi h Sha ia-complian and global ESG amewo ks like he Global Repo ing Ini ia i e (GRI)
and he Task Fo ce on Clima e- ela ed Financial Disclosu es (TCFD), balancing Islamic
inancial p inciples and in e na ional sus ainabili y s anda ds. Discussing how Sha ia
Supe iso y Boa ds and e hical in es men me hods a e measu ed can help ope a ionalize
go e nance ac o s.
Pa icipan anonymi y, uni o m in e iew me hodology, and in e iewe s wi hou
p io associa ions wi h esponden s educe biases and p omo e me hodological igo .
Discussing in e iewe biases and c oss- e i ica ion may s eng hen conclusions om
sel - epo ed quali a i e esponses. The s udy uses mixed me hods; howe e , i does no
desc ibe how o in eg a e quali a i e and quan i a i e indings in analysis o e alua e
en i onmen al disclosu e, go e nance, and inancial pe o mance. T iangula ion using
compa a i e analysis, coding amewo ks, o heme con e gence imp o es me hodologi-
cal anspa ency.
Adm. Sci. 2025,15, 54 7 o 25
The me hodology pa uses da a sa u a ion p inciples, ope a ionalizes key inancial
and go e nance a iables, and links s udy goals o in e na ional and Sha ia-complian
amewo ks. In eg a ing quali a i e and quan i a i e da a, cla i ying Islamic inancial
go e nance measu emen , and explaining sa u a ion and in e iewe bias s anda ds would
imp o e me hodological igo , s udy alidi y, and dependabili y.
5. Econome ic Model
En i onmen al disclosu e, co po a e go e nance, and inancial pe o mance a e quan-
i ied using he ollowing wo econome ic models:
Model 1: Linea eg ession examines he di ec ela ionship be ween en i onmen al
disclosu e (ED) and inancial pe o mance, w i en as ollows:
FPi =β0+β1EDi +β2CGi +β3CVsi +εi
ED (en i onmen al disclosu e) is measu ed h ough speci ic indica o s, such as ca bon
emissions in ensi y. CG (co po a e go e nance) includes me ics such as boa d en i on-
men al expe ise and he p esence o sus ainabili y commi ees. CVs (con ol a iables) a e
ac o s like bank size, age, and ma ke sha e.
ε
is he e o e m. i shows c oss sec ions and
shows ime se ies now we a e using panel da ase .
Model 2: The model accoun s o bank-speci ic and ime-speci ic e ec s and is ex-
p essed as ollows:
FPi =αi+βEDi +γCGi +δCVi +λ +εi
In model 2, i and deno e he bank iden i ie and ime pe iod, espec i ely;
αi
and
λ
ep esen bank-speci ic and ime-speci ic ixed e ec s; and
εi
cap u es he e o e m.
These models quan i y how en i onmen al disclosu e and go e nance a ec inancial
pe o mance while con olling o o he ac o s.
6. Va iables Measu emen
To achie e he s udy’s goals, complex sus ainable inance dynamics in Saudi Islamic
banks a e measu ed using de ailed a iables. This s udy uses bank annual inancial epo s’
ROA, ROE, and RAROE o measu e inancial pe o mance. ROA and ROE indica e a
bank’s p o i abili y and ope a ional e iciency in gene a ing e u ns om asse s and equi y.
RAROE adjus s hese e u ns o isk, gi ing isk-adjus ed p o i abili y o inancial s abili y
and sus ainabili y unde unce ain y. Annual epo s on Saudi banks’ websi es o audi ed
inancial da abases like he Saudi S ock Exchange (Tadawul) and Saudi Cen al Bank may
con ain hese measu emen s. A bank’s en i onmen al disclosu e (ED) a iable e alua es
i s anspa ency in epo ing en i onmen al ope a ions, such as CO
2
emissions in ensi y
and g een echnology in es men s. The bank in es s in ca bon educ ion and sus ainabili y
solu ions and manages en i onmen al e ec s wi h his composi e s a is ic. En i onmen-
al disclosu e sco es a e based on yea ly co po a e esponsibili y epo s, sus ainabili y
disclosu es, and Bloombe g ESG, which co e Saudi A abian bank en i onmen al cha ac-
e is ics. Saudi banks’ g een inance, ca bon managemen , and en i onmen al ini ia i es
ma ch global ESG amewo ks in co po a e and egula o y epo s (Abdul ahman,2024;
Aslam e al.,2023;Ousama,2022;Salhi e al.,2020).
Co po a e go e nance (CG) e alua es banks’ sus ainabili y commi ees, boa d mem-
be s wi h en i onmen al expe ise, and CEO incen i es. The bank’s go e nance ea u es
demons a e i s commi men o sus ainable managemen and en i onmen al s ewa dship
in co po a e decision-making. Saudi Cen al Bank (SAMA) and indi idual bank annual
go e nance epo s desc ibe boa d composi ion, commi ee s uc u es, and CEO pay. Fi-
Adm. Sci. 2025,15, 54 8 o 25
nally, con ol a iables (CVs) make up o ex e nal ac o s like bank size (measu ed by
o al asse s), age, owne ship ype, GDP g ow h, in la ion, and in e es a es ha may a ec
inancial pe o mance (Abdul ahman,2024;Boshnak,2021). These con ol a iables sepa-
a e en i onmen al and go e nance in luences on inancial pe o mance by adjus ing o
economic and ins i u ional di e ences. Saudi bank con ol da a om SAMA and GaS a , in-
cluding mac oeconomic a iables like GDP g ow h, in la ion, and in e es a es, is c edible
o analyzing he Saudi banking indus y (Aslam e al.,2023;Shehadeh e al.,2024). This
s uc u ed da a collec ion s a egy o e s a ho ough analysis o Saudi A abia’s banking
sec o ’s inancial pe o mance, en i onmen al disclosu e, go e nance, and economy.
6.1. Quali a i e Me hodology
The quali a i e me hod in es iga es how Saudi Islamic banks in eg a e sus ainabili y
in o go e nance. The 20 semi-s uc u ed in e iews a ge Sha ia Supe iso y Boa d mem-
be s, senio execu i es, egula o s, and sus ainabili y expe s o acqui e di e se sus ainable
inancial pe spec i es. In e iews include sus ainabili y decision-making, assessing en i-
onmen ally sus ainable inancial p oduc s, and econciling Sha ia and en i onmen al aims.
In e nal discussions a e con ex ualized by hema ic s udies o egula o y documen s, sus-
ainabili y epo s, and Sha ia compliance no ms. T iangula ion helps alida e quan i a i e
esul s wi h quali a i e obse a ions and imp o e unde s anding o Saudi Islamic inancial
sus ainabili y (Abdul ahman,2024).
6.2. Da a Collec ion P ocess
Annual epo s, inancial s a emen s, and da abases wi h ele an inancial measu es
p o ide quan i a i e da a om 2011 o 2023. Saudi Islamic banks’ en i onmen al disclosu e
and go e nance p ac ices can be s udied longi udinally o e 12 yea s abou 11 Islamic banks.
Su eying boa d membe s, managemen , and Sha ia expe s e alua es go e nance and
sus ainabili y in eg a ion. T us wo hiness and con iden iali y a e gua an eed. Quali a i e
da a is collec ed om 20 semi-s uc u ed in e iews o e ou mon hs wi h pa icipan
pe mission. These indings a e suppo ed by anonymized in e iews and sus ainabili y
epo and policy pape analysis. To analyze b oad pa e ns and speci ic disco e ies, his
mul i-me hod s a egy p o ides a big da ase .
The s udy analyzes quan i a i e and quali a i e da a wi h sophis ica ed ools o
p ecision and igo . We analyzed quan i a i e da a wi h S a a. S a a o e s eg ession,
ime-se ies analysis, and econome ic modeling o longi udinal panel da a analysis. NVi o
o ganizes, ca ego izes, and hema ically analyzes in e iew ansc ip s and documen s o
quali a i e analysis. NVi o’s hie a chical coding, memos, and que ies acili a e quali a i e
da a analysis and heme iden i ica ion. MAXQDA in eg a es in e iew da a, documen
e iews, and o he ex ual sou ces and p o ides isualiza ion ools o da a in e p e a ion
and anspa ency. S a a, NVi o, and MAXQDA handle bo h da a o ma s well, enabling
he mixed-me hods s udy (Aslam e al.,2023).
This s udy ollows s ingen openness, p i acy, and egula o y compliance e hics.
In o med consen equi es disclosu e o he s udy’s pu pose, con iden iali y, and wi h-
d awal igh s. All sensi i e da a egula o y pe missions a e sa e, and pa icipan names a e
anonymized. The s udy eam discloses con lic s o in e es and handles da a hones ly.
7. Da a Analysis
En i onmen al disclosu e, co po a e go e nance, and con ol a iables a ec inancial
pe o mance (ROA) ac oss h ee model assump ions in he linea eg ession analysis
(Table 1). En i onmen al disclosu e (ED) is posi i ely associa ed wi h ROA and s a is ically
signi ican in Models 1, 2, and 3 (0.035, 0.029, and 0.031). This consis en posi i e e ec ,
Adm. Sci. 2025,15, 54 15 o 25
Table 5. Summa y o quali a i e insigh s on co po a e go e nance and en i onmen al disclosu e.
Theme Insigh Example Quo es Implica ions
Co po a e Go e nance
P ac ices
Boa d En i onmen al
Expe ise
The p esence o boa d membe s
wi h en i onmen al expe ise is
iewed as c i ical o guiding
sus ainabili y e o s.
“Ou boa d includes membe s
wi h en i onmen al expe ience,
which helps d i e ou g een
inancing ini ia i es.”
Enhances
decision-making and
commi men o
sus ainabili y.
Gende Di e si y
Al hough gende di e si y is
g adually imp o ing, many banks
s ill lack su icien ep esen a ion o
women on boa ds.
“Inc easing emale pa icipa ion is on
he agenda, bu he e’s s ill a long
way o go.”
May limi di e si y in
pe spec i es on
sus ainabili y.
Sus ainabili y
Commi ees
Es ablishing sus ainabili y
commi ees is becoming a end,
wi h inc easing in luence on policy
de elopmen .
“Ou sus ainabili y commi ee plays
an ins umen al ole in se ing and
e iewing en i onmen al goals.”
P omo es
accoun abili y
and os e s a
sus ainabili y ocus.
En i onmen al
Disclosu e S a egies
T anspa ency in
Repo ing
Banks ecognize he need o
anspa en en i onmen al
disclosu es o mee s akeholde
expec a ions.
“We aim o disclose ou
en i onmen al impac openly o build
us wi h in es o s and cus ome s.”
Imp o es s akeholde
us and c edibili y.
ESG Compliance
Many banks a e beginning o adop
en i onmen al, social, and
go e nance (ESG) amewo ks o
s anda dize epo ing.
“Aligning wi h ESG s anda ds is
challenging, bu we belie e i ’s
essen ial o u u e compe i i eness.”
Enhances
compa abili y and
ul ills global
expec a ions.
Ca bon Emission
Repo ing
Repo ing on ca bon emissions
emains a new p ac ice, wi h some
banks hesi an due o po en ial
epu a ional isks.
“Accu a e ca bon disclosu es a e
complex and may expose us o
c i icism, bu we a e wo king on i .”
Highligh s he need
o clea amewo ks
and suppo .
Sus ainable Finance
Challenges
Regula o y
Cons ain s
Regula ions a ound sus ainable
inance a e e ol ing, c ea ing
unce ain y and complexi y o banks.
“Regula o y changes make i ha d o
main ain a consis en s a egy in
sus ainable inance.”
Impedes consis en
s a egy
implemen a ion.
Cos o
Implemen a ion
High cos s associa ed wi h
sus ainable p ac ices can de e
smalle banks om adop ing
hem ully.
“Sus ainabili y is a p io i y, bu he
ini ial cos s a e a majo conside a ion
o us.”
May limi widesp ead
adop ion, pa icula ly
in smalle banks.
Resou ce Limi a ions
Limi ed expe ise and esou ces a e
obs acles o many banks aiming o
in eg a e sus ainable p ac ices.
“We lack he specialized s a and
esou ces equi ed o in-dep h
sus ainabili y ini ia i es.”
Indica es a need o
capaci y-building and
expe ise.
Ma ke Demand o
G een Finance
The e is g owing ma ke demand o
g een inance, bu p oduc o e ings
a e s ill limi ed.
“Cus ome s a e inc easingly
in e es ed in g een inance p oduc s,
bu we need o de elop
hem u he .”
Highligh s a g ow h
oppo uni y o
expanding
g een inance.
Compe i i e
Ad an age
Banks ha adop sus ainable
p ac ices a e pe cei ed o ha e a
compe i i e edge in he ma ke .
“Ou en i onmen al ini ia i es ha e
se us apa in he indus y, a ac ing
new clien s.”
Rein o ces he
business case o
sus ainable p ac ices.
Adm. Sci. 2025,15, 54 16 o 25
Adm. Sci. 2025, 15, x FOR PEER REVIEW 17 o 26
Figu e 1. Dis ibu ion o en i onmen al disclosu e sco es and sca e plo o en i onmen al disclo-
su e s. inancial pe o mance.
Diagnos ic cha s e alua e he panel da a eg ession model’s assump ions and i o
en i onmen al disclosu e and inancial pe o mance in Figu e 2. Residuals s. i ed al-
ues es s homoscedas ici y, which equi es cons an esidual a iance ac oss i ed alues.
The model mee s homoscedas ici y because he esiduals a e andomly dis ibu ed
a ound ze o. Small clus e ing may sugges mino abno mali ies, bu no enough o wo y
abou . A Q-Q (quan ile–quan ile) plo o esiduals e alua es esidual no mali y o eg es-
sion hypo hesis es ing. These plo s indica e ha esiduals ollow he ed line, indica ing
a no mal dis ibu ion. The ails de ia e, bu he alignmen suppo s he assump ion o
no malcy, making he model’s in e ence es s eliable. The inal igu e, esiduals s. en i-
onmen al disclosu e sco e, examines he ela ionship. The plo e eals no end, suppo -
ing he model’s p emise ha esiduals a e independen o en i onmen al disclosu e sco e.
These diagnos ics show ha he panel da a eg ession model is well i ed and i s key
assump ions, making he esul s in e p e able.
Figu e 2. Panel da a eg ession model diagnos ics.
Figu e 3 shows how en i onmen al disclosu e sco e and boa d en i onmen al expe -
ise affec p edic ed ROA. The blue line shows banks wi h low boa d en i onmen al com-
pe ency, whe eas he o ange line shows excellen boa d expe ise. Be e en i onmen al
disclosu e a ings an icipa e be e ROA. Boa d en i onmen al compe ence mode a es
high slopes. Banks wi h li le boa d en i onmen al unde s anding ha e a s onge ela-
ionship be ween en i onmen al disclosu e and inancial pe o mance. En i onmen al
disclosu e aises ROA mo e in banks wi hou en i onmen al p o essionals. En i onmen-
al disclosu e affec s inancial success less o banks wi h high boa d en i onmen al
Figu e 1. Dis ibu ion o en i onmen al disclosu e sco es and sca e plo o en i onmen al disclosu e
s. inancial pe o mance.
Diagnos ic cha s e alua e he panel da a eg ession model’s assump ions and i o
en i onmen al disclosu e and inancial pe o mance in Figu e 2. Residuals s. i ed alues
es s homoscedas ici y, which equi es cons an esidual a iance ac oss i ed alues. The
model mee s homoscedas ici y because he esiduals a e andomly dis ibu ed a ound
ze o. Small clus e ing may sugges mino abno mali ies, bu no enough o wo y abou .
A Q-Q (quan ile–quan ile) plo o esiduals e alua es esidual no mali y o eg ession
hypo hesis es ing. These plo s indica e ha esiduals ollow he ed line, indica ing
a no mal dis ibu ion. The ails de ia e, bu he alignmen suppo s he assump ion
o no malcy, making he model’s in e ence es s eliable. The inal igu e, esiduals s.
en i onmen al disclosu e sco e, examines he ela ionship. The plo e eals no end,
suppo ing he model’s p emise ha esiduals a e independen o en i onmen al disclosu e
sco e. These diagnos ics show ha he panel da a eg ession model is well i ed and i s
key assump ions, making he esul s in e p e able.
Adm. Sci. 2025, 15, x FOR PEER REVIEW 17 o 26
Figu e 1. Dis ibu ion o en i onmen al disclosu e sco es and sca e plo o en i onmen al disclo-
su e s. inancial pe o mance.
Diagnos ic cha s e alua e he panel da a eg ession model’s assump ions and i o
en i onmen al disclosu e and inancial pe o mance in Figu e 2. Residuals s. i ed al-
ues es s homoscedas ici y, which equi es cons an esidual a iance ac oss i ed alues.
The model mee s homoscedas ici y because he esiduals a e andomly dis ibu ed
a ound ze o. Small clus e ing may sugges mino abno mali ies, bu no enough o wo y
abou . A Q-Q (quan ile–quan ile) plo o esiduals e alua es esidual no mali y o eg es-
sion hypo hesis es ing. These plo s indica e ha esiduals ollow he ed line, indica ing
a no mal dis ibu ion. The ails de ia e, bu he alignmen suppo s he assump ion o
no malcy, making he model’s in e ence es s eliable. The inal igu e, esiduals s. en i-
onmen al disclosu e sco e, examines he ela ionship. The plo e eals no end, suppo -
ing he model’s p emise ha esiduals a e independen o en i onmen al disclosu e sco e.
These diagnos ics show ha he panel da a eg ession model is well i ed and i s key
assump ions, making he esul s in e p e able.
Figu e 2. Panel da a eg ession model diagnos ics.
Figu e 3 shows how en i onmen al disclosu e sco e and boa d en i onmen al expe -
ise affec p edic ed ROA. The blue line shows banks wi h low boa d en i onmen al com-
pe ency, whe eas he o ange line shows excellen boa d expe ise. Be e en i onmen al
disclosu e a ings an icipa e be e ROA. Boa d en i onmen al compe ence mode a es
high slopes. Banks wi h li le boa d en i onmen al unde s anding ha e a s onge ela-
ionship be ween en i onmen al disclosu e and inancial pe o mance. En i onmen al
disclosu e aises ROA mo e in banks wi hou en i onmen al p o essionals. En i onmen-
al disclosu e affec s inancial success less o banks wi h high boa d en i onmen al
Figu e 2. Panel da a eg ession model diagnos ics.
Figu e 3shows how en i onmen al disclosu e sco e and boa d en i onmen al ex-
pe ise a ec p edic ed ROA. The blue line shows banks wi h low boa d en i onmen al
compe ency, whe eas he o ange line shows excellen boa d expe ise. Be e en i onmen al
disclosu e a ings an icipa e be e ROA. Boa d en i onmen al compe ence mode a es high
slopes. Banks wi h li le boa d en i onmen al unde s anding ha e a s onge ela ionship
be ween en i onmen al disclosu e and inancial pe o mance. En i onmen al disclosu e
aises ROA mo e in banks wi hou en i onmen al p o essionals. En i onmen al disclosu e
Adm. Sci. 2025,15, 54 17 o 25
a ec s inancial success less o banks wi h high boa d en i onmen al unde s anding, as he
slope is la e . En i onmen al disclosu e usually boos s inancial success, bu he boa d’s
compe ency may ma e . En i onmen al anspa ency may inc ease s akeholde us and
educe in o ma ion asymme y in ins i u ions wi h li le en i onmen al expe ise. Fo banks
wi h mo e boa d knowledge, anspa ency sligh ly boos s ROA due o a baseline le el o
us o e iciency. Disclosu e policies and boa d composi ion a e c ucial o unde s anding
sus ainabili y- ela ed inancial esul s.
Adm. Sci. 2025, 15, x FOR PEER REVIEW 18 o 26
unde s anding, as he slope is la e . En i onmen al disclosu e usually boos s inancial
success, bu he boa d’s compe ency may ma e . En i onmen al anspa ency may in-
c ease s akeholde us and educe in o ma ion asymme y in ins i u ions wi h li le en-
i onmen al expe ise. Fo banks wi h mo e boa d knowledge, anspa ency sligh ly
boos s ROA due o a baseline le el o us o efficiency. Disclosu e policies and boa d
composi ion a e c ucial o unde s anding sus ainabili y- ela ed inancial esul s.
Figu e 3. In e ac ion effec s plo o mode a ing a iables.
Figu e 4 p esen s he p ima y hemes o quali a i e analysis and concep s on banking
sec o co po a e go e nance, en i onmen al disclosu e, and sus ainable inancing as a
wo d cloud. Sus ainabili y and inancial pe o mance a gumen s cen e on compliance,
epo ing, isk, impac , and go e nance. Compliance and epo ing sugges s banks p o-
mo e en i onmen al and inancial anspa ency and egula o y compliance owing o
sha eholde and egula o y accoun abili y. Risk, inancial, and managemen emphasize
en i onmen al and inancial isk managemen , e lec ing banks’ s uggle o econcile p o -
i abili y and sus ainabili y. E hics, s a egy, communi y, and s akeholde highligh he so-
cial and e hical dimensions o sus ainable inance in addi ion o compliance, showing ha
banks a e mee ing communi y expec a ions and s akeholde in e es s. Ma ke alue and
compe i i e ad an age highligh he inancial and ma ke bene i s o sus ainable p ac ices,
whe eas inno a ion, efficiency, and s anda ds emphasize efficien , inno a i e means o
achie e sus ainabili y goals. The wo d cloud demons a es ha banks a e inc easingly
p io i izing e hical go e nance, egula o y compliance, isk managemen , and s a egic
sus ainabili y in es men o inancial s abili y and compe i i eness.
Figu e 3. In e ac ion e ec s plo o mode a ing a iables.
Figu e 4p esen s he p ima y hemes o quali a i e analysis and concep s on banking
sec o co po a e go e nance, en i onmen al disclosu e, and sus ainable inancing as a
wo d cloud. Sus ainabili y and inancial pe o mance a gumen s cen e on compliance,
epo ing, isk, impac , and go e nance. Compliance and epo ing sugges s banks p omo e
en i onmen al and inancial anspa ency and egula o y compliance owing o sha eholde
and egula o y accoun abili y. Risk, inancial, and managemen emphasize en i onmen al
and inancial isk managemen , e lec ing banks’ s uggle o econcile p o i abili y and
sus ainabili y. E hics, s a egy, communi y, and s akeholde highligh he social and e hical
dimensions o sus ainable inance in addi ion o compliance, showing ha banks a e
mee ing communi y expec a ions and s akeholde in e es s. Ma ke alue and compe i i e
ad an age highligh he inancial and ma ke bene i s o sus ainable p ac ices, whe eas
inno a ion, e iciency, and s anda ds emphasize e icien , inno a i e means o achie e
sus ainabili y goals. The wo d cloud demons a es ha banks a e inc easingly p io i izing
e hical go e nance, egula o y compliance, isk managemen , and s a egic sus ainabili y
in es men o inancial s abili y and compe i i eness.
Adm. Sci. 2025,15, 54 18 o 25
Adm. Sci. 2025, 15, x FOR PEER REVIEW 19 o 26
Figu e 4. Wo d cloud o key hemes om quali a i e analysis.
8. Discussion and Findings
This s udy examined how en i onmen al disclosu e, co po a e go e nance, and sus-
ainabili y affec inancial pe o mance using quan i a i e and quali a i e Saudi A abian
Islamic bank da a. En i onmen al disclosu e sco es, co po a e go e nance indica o s, eco-
nomic con ol a iables, and long- e m inancial measu emen s like ROA, ROE, and
RAROE a e quan i a i e. You can s udy how go e nance egula ions and en i onmen al
anspa ency affec p o i abili y o e ime wi h his longi udinal da ase . Quan i a i e
analysis and quali a i e da a om in e iews and documen e iews expose banks’ ope -
a ional, egula o y, and ESG challenges. Saudi A abian Islamic banks’ inancial pe o -
mance can be assessed using hese da ase s o de e mine how sus ainabili y and go e n-
ance amewo ks affec inancial ou comes (Tumewang e al., 2024).
Reg ession analysis in Tables 1, 2, and 4 shows ha en i onmen al disclosu e in-
c eases Saudi A abian Islamic banks’ ROA, ROE, and RAROE. The inancial pe o mance
o banks wi h g ea e en i onmen al disclosu e sco es shows he impo ance o en i on-
men al epo ing in p o i abili y and efficiency. En i onmen al disclosu e sco es and i-
nancial pe o mance imp o e o banks wi h high en i onmen al anspa ency, as seen in
Figu e 1. This suppo s global esea ch ha shows en i onmen al disclosu e a ac s en-
i onmen ally conscien ious in es o s, de elops s akeholde us , and educes ope a-
ional isks h ough esou ce managemen . En i onmen al disclosu e mee s CSR and Sha-
ia e hical business s anda ds o eligious and cul u ally s ic Saudi A abian Islamic
banks. En i onmen al esponsibili y p omo es Islamic esou ce conse a ion, boos ing
he bank’s c edibili y (Re iew, 2024).
The quali a i e hemes in Table 3 and he wo d cloud in Figu e 4 emphasize en i on-
men al disclosu e compliance, e hics, go e nance, and he Sha ia Supe iso y Boa d
(SSB)’s sus ainabili y impac . The Sha ia Supe iso y Boa d can p omo e Islamic bank
sus ainabili y by aligning en i onmen al policies wi h Sha ia p inciples and company
goals. Quali a i e esea ch shows ha en i onmen al disclosu es equi e boa d membe s
Figu e 4. Wo d cloud o key hemes om quali a i e analysis.
8. Discussion and Findings
This s udy examined how en i onmen al disclosu e, co po a e go e nance, and sus-
ainabili y a ec inancial pe o mance using quan i a i e and quali a i e Saudi A abian
Islamic bank da a. En i onmen al disclosu e sco es, co po a e go e nance indica o s,
economic con ol a iables, and long- e m inancial measu emen s like ROA, ROE, and
RAROE a e quan i a i e. You can s udy how go e nance egula ions and en i onmen al
anspa ency a ec p o i abili y o e ime wi h his longi udinal da ase . Quan i a i e anal-
ysis and quali a i e da a om in e iews and documen e iews expose banks’ ope a ional,
egula o y, and ESG challenges. Saudi A abian Islamic banks’ inancial pe o mance can be
assessed using hese da ase s o de e mine how sus ainabili y and go e nance amewo ks
a ec inancial ou comes (Tumewang e al.,2024).
Reg ession analysis in Tables 1,2, and 4shows ha en i onmen al disclosu e inc eases
Saudi A abian Islamic banks’ ROA, ROE, and RAROE. The inancial pe o mance o banks
wi h g ea e en i onmen al disclosu e sco es shows he impo ance o en i onmen al
epo ing in p o i abili y and e iciency. En i onmen al disclosu e sco es and inancial
pe o mance imp o e o banks wi h high en i onmen al anspa ency, as seen in Figu e 1.
This suppo s global esea ch ha shows en i onmen al disclosu e a ac s en i onmen ally
conscien ious in es o s, de elops s akeholde us , and educes ope a ional isks h ough
esou ce managemen . En i onmen al disclosu e mee s CSR and Sha ia e hical business
s anda ds o eligious and cul u ally s ic Saudi A abian Islamic banks. En i onmen al
esponsibili y p omo es Islamic esou ce conse a ion, boos ing he bank’s c edibili y
(Shehadeh e al.,2024).
The quali a i e hemes in Table 3and he wo d cloud in Figu e 4emphasize en i-
onmen al disclosu e compliance, e hics, go e nance, and he Sha ia Supe iso y Boa d
(SSB)’s sus ainabili y impac . The Sha ia Supe iso y Boa d can p omo e Islamic bank
sus ainabili y by aligning en i onmen al policies wi h Sha ia p inciples and company goals.
Quali a i e esea ch shows ha en i onmen al disclosu es equi e boa d membe s wi h
en i onmen al compe ence, such as Sha ia schola s wi h sus ainable inancial knowledge.
Adm. Sci. 2025,15, 54 19 o 25
Sha ia Supe iso y Boa ds can p omo e sus ainabili y by demons a ing ESG awa eness
ha ul ills global esponsible in es ing s anda ds. Thus, Saudi Islamic banks migh each
SSB membe s abou ESG amewo ks o help hem inco po a e sus ainabili y in o Sha ia
law (Sa i & Hussien,2024).
ESG p inciples in en i onmen al disclosu e imp o e inancial pe o mance, acco ding
o eg ession ables and he wo d cloud’s compliance ocus (Figu e 4). S anda dizing
ESG disclosu es makes banks’ sus ainabili y epo ing mo e compa able and comple e
(Algha es e al.,2024)
. Local and in e na ional s akeholde s a e sc u inizing Saudi A abia’s
banking indus y o en i onmen al accoun abili y, making his plan c ucial. Fo Islamic
banks, ESG p inciples can sa is y s akeholde s and a ac sus ainable in e na ional in-
es o s. ESG p inciples help companies manage en i onmen al isks and oppo uni ies,
imp o ing e enues (Tables 1and 2). The e o e, Saudi A abian Islamic banks should s an-
da dize hei en i onmen al disclosu es using ESG amewo ks o a ac global in es o s
and demons a e sus ainabili y (Abdul ahman,2024).
En i onmen al compe ence and gende di e si y on boa ds p omo e en i onmen al
disclosu e (Table 5and Figu e 3). Table 4shows ha en i onmen al compe ence on he
boa d imp o es inancial pe o mance h ough en i onmen al disclosu e, demons a ing
he impo ance o in o med boa d membe s in sus ainabili y. Table 3quali a i e insigh s
emphasize gende di e si y on boa ds because a ious iewpoin s imp o e holis ic and
inclusi e go e nance, which sus ains in eg a ion. Gende di e si y on Saudi business
boa ds could imp o e co po a e go e nance and en i onmen al accoun abili y. Women
and en i onmen ally awa e boa d membe s may boos bank anspa ency and s akeholde
us . To mee egula o y equi emen s and imp o e sus ainabili y, Saudi A abian Islamic
banks should ac i ely hi e en i onmen alis s and inc ease emale boa d ep esen a ion
(Bashi & Babike ,2023).
Saudi A abian Islamic banks’ quan i a i e and quali a i e assessmen s show ha sus-
ainable co po a e go e nance boos s inancial pe o mance and s akeholde us . Banks
wi h e ec i e co po a e go e nance, including en i onmen al awa eness and sus ainabili y
commi ees, pe o m be e inancially (Table 1, Table 2, and Table 4). Figu e 2shows ha
he model is well speci ied and accu a ely e lec s go e nance, en i onmen al disclosu e,
and inancial pe o mance. Table 3’s quali a i e indings show sus ainabili y commi ees se
en i onmen al goals and moni o banks (Ed-Da ali e al.,2024). Saudi A abia’s egula o y
sys em in eg a es sus ainabili y; hus, banking sec o co po a e go e nance sys ems can
be modeled. To imp o e co po a e go e nance, Saudi Islamic banks should o malize
sus ainabili y commi ees and le hem in luence en i onmen al disclosu e policies and
ope a ions (Muhammad e al.,2021).
These da a sugges me hods Saudi A abian Islamic banks can use o imp o e inancial
pe o mance and mee global sus ainabili y c i e ia. Islamic banks should i s es ablish
ESG-complian amewo ks o anspa ency, compa abili y, and e hical local and o eign
in es men . Islamic-complian ESG compliance s anda dized epo ing and p omo es he
bank’s en i onmen al esponsibili ies. The Sha ia Supe iso y Boa d (SSB) mus suppo .
Islamic banks can imp o e s akeholde con idence and loyal y by aining SSB membe s on
ESG ideas o ensu e hei sus ainabili y p ojec s espec Sha ia and eligious and e hical
no ms. Thi d, Islamic banks should ocus on boa d di e si y and expe ise o inc ease
en i onmen al disclosu es. En i onmen al specialis s and gende di e si y can imp o e
bank go e nance and inclusi i y (Abdallah e al.,2022).
Islamic banks should wo k wi h egula o s o se sus ainabili y guidelines o sim-
pli y new laws (Table 3). The Saudi Cen al Bank (SAMA) should adop sec o -speci ic
en i onmen al disclosu e c i e ia o s anda dize. T aining and echnical suppo om
sus ainabili y NGOs may help smalle banks o e come cos and esou ce cons ain s. To
Adm. Sci. 2025,15, 54 20 o 25
sa is y eco-conscious clien ele, Islamic banks may p o ide mo e g een unding op ions. As
seen in Table 3, clien s wan g een inancial solu ions; hus, Islamic banks can p o ide mo e
o compe e, a ac new cus ome s, and sa is y global sus ainabili y ends.
This s udy ound ha en i onmen al anspa ency and go e nance can imp o e
Saudi A abian Islamic banks’ inancial pe o mance and s akeholde us . En i onmen al
anspa ency and good go e nance may boos Islamic bank p o i abili y and make hem
sus ainable inance leade s. Islamic banks can mee global no ms and exhibi e hical inanc-
ing by adop ing ESG amewo ks, s eng hening Sha ia Supe iso y Boa ds, di e si ying
boa ds, and ackling implemen a ion issues. This Islamic- and ma ke -d i en in eg a ed
sus ainabili y app oach boos s banks’ compe i i eness and Saudi A abia’s inancial sec o ’s
economic and en i onmen al sus ainabili y.
The s udy’s conclusions a e impo an o Saudi A abia’s social, poli ical, and economic
clima e. En i onmen al disclosu e and go e nance by Islamic banks ep esen he coun-
y’s s ong Islamic ideals o accoun abili y, e hics, and s ewa dship. This builds us ,
especially as Vision 2030 empowe s women and di e si ies leade ship. Islamic banks can
mee changing social expec a ions while ollowing Sha ia by p io i izing boa d di e si y
and en i onmen al compe ence. Vision 2030, he Kingdom’s g ow h plan, is sus ainable.
Islamic banks can achie e hese goals by in eg a ing ESG p inciples in o ope a ions and
ha monizing en i onmen al disclosu e wi h legisla ion. By adding ESG o Islamic inancial
egula ions, Sha ia Supe iso y Boa ds (SSBs) can assu e compliance wi h na ional sus ain-
abili y laws and s eng hen he egula o y amewo k. The global shi owa ds sus ainable
and e hical unding may help Islamic ins i u ions. As Saudi A abia di e si ies away om
oil, ESG-s anda d Islamic banks may a ac global in es men and o e compe i i e g een
inancial solu ions. Smalle banks can wo k wi h egula o s and NGOs, while la ge banks
can lead hese ini ia i es. This would p omo e banking and help Saudi A abia di e si y
and sus ain i s economy.
Because GDP g ow h and in e es a es a ec inancial pe o mance, no ably in Saudi
A abia’s economy and banking ope a ions, his s udy adjus s o bo h. GDP g ow h in-
dica es economic heal h and impac s banking se ice demand and p o i abili y. Saudi
GDP g ow h is a signi ican me ic o economic p og ess and inancial pe o mance as
Vision 2030 di e si ies he economy. E en hough Sha ia-complian Islamic banks a oid
adi ional in e es sys ems, in e es a es a ec hei p o i s. Benchma k a e changes
may a ec Islamic bank compe i ion and cos s. The s udy links en i onmen al disclosu e
and go e nance o Sha ia-complian inancial success, closing gaps in Islamic banking’s
sus ainabili y and pe o mance indica o in eg a ion. Mode n e idence like GCC banking
ESG makes he pape ele an . This s udy also shows how boa d di e si y and en i-
onmen al awa eness a ec inancial pe o mance and how Saudi A abia applies global
ESG ecommenda ions o i s egula o y and economic amewo k. These a icles examine
how go e nmen s and inancial ins i u ions migh econcile adminis a i e, economic, and
en i onmen al conce ns.
En i onmen al anspa ency, co po a e go e nance, and inancial pe o mance a e
linked; howe e , he s udy should examine how hey suppo o con adic sus ainabili y
and Islamic banking go e nance belie s. The s udy ound ha Islamic banks’ e hical and
Sha ia-d i en s akeholde s ma e mo e han s akeholde heo y’s en i onmen al openness,
which builds us wi h in es o s and egula o s. This suppo s he heo y’s applica ion
o Islamic inance and highligh s Sha ia Supe iso y Boa ds’ media ion o sus ainabili y
commi men s and Islamic inancial legisla ion. The s udy should demons a e Islamic
banking’s dual e hical and inancial mo i a ions o en i onmen al anspa ency o e ine
o ex end s akeholde heo y and sepa a e i om con en ional banking models ha ely
on egula o y p essu es and ma ke o ces.
Adm. Sci. 2025,15, 54 21 o 25
Islamic banks p omo e esou ce dependence heo y by in eg a ing ESG and moni o -
ing go e nance wi h ex e nal egula o s, sus ainabili y commi ees, and Sha ia expe s.
Sus ainabili y aining, egula o y alignmen , and go e nance unde s anding a ec en i-
onmen al disclosu e and i m sus ainabili y pe o mance. En i onmen ally compe en
boa ds o banks do be e inancially. The s udy suppo s esou ce dependence heo y bu
sugges s Sha ia-complian Islamic banks may ha e s uc u al and ope a ional ba ie s o
using ex e nal sus ainabili y in o ma ion. This ad ances esou ce dependence heo y and
sugges s ha Islamic inance go e nance should inco po a e ESG expe ise in o eligious
and inancial legisla ion a he han elying on ex e nal esou ces like con en ional banks.
Agency heo y s a es ha co po a e go e nance sys ems elimina e p incipal-agen
con lic s and align managemen , s akeholde s, and egula o s. Sha ia Supe iso y Boa ds
en o ce e hical inancial p ac ices as de ac o moni o s, imp o ing sus ainabili y, ans-
pa ency, and inancial pe o mance. The addi ion o e hical moni o ing o inancial, mo al,
and eligious compliance unde mines agency heo y in inance. The pape should ex-
plain ha Islamic inance agency heo y mus accoun o Sha ia moni o ing sys ems,
which mimic boa d go e nance bu a e di e en . ESG-aligned go e nance amewo ks
imp o e inancial pe o mance, bu he s udy should expand o Islamic inance. These
indings should be iewed in he con ex o egula o y policy de elopmen in o he Gul
Coope a ion Council (GCC) na ions and eme ging Islamic inancial ma ke s like Malaysia,
Indonesia, and Tu key, whe e ESG in eg a ion e o s a e ising bu ace legal and economic
limi s. The s udy no es ha Saudi Vision 2030 combines inancial and en i onmen al goals,
bu o he Islamic inance hubs may s uggle o ma ch Saudi banks’ pe o mance. Saudi
A abia’s Islamic banking sec o could be compa ed o Malaysia’s Islamic Sus ainable and
Responsible In es men (SRI) amewo k o Sha ia-complian ESG in eg a ion.
Saudi A abian Islamic banks should pu sue long- e m ESG adop ion me hods ha
con o m wi h Sha ia law. Resea ch sugges s imp o ing gende di e si y and hi ing en i-
onmen al expe s on boa ds, as well as Islamic banking-speci ic ESG go e nance. Sha ia
Supe iso y Boa d membe s should ecei e ESG aining, e hical sus ainabili y epo ing
should be equi ed, and Islamic inancial legisla ion should ensu e ESG disclosu e. The
quali a i e esea ch highligh s implemen a ion cos s and egula o y p oblems; he e o e,
he s udy may explo e go e nmen incen i es like ax bene i s o Islamic banking ESG
suppo o minimize hese issues. The s udy inco po a es GDP g ow h and in e es a es,
bu go e nance and sus ainabili y should a ec inancial ou comes. Highe in e es a es
hu Islamic banks, which a e in e es - ee unde Sha ia. Due o ma ke and mone a y
easons, al e na i e inancing a angemen s may indi ec ly a ec Islamic banking p o i abil-
i y. Resea ch is needed o de e mine how ex e nal economic shocks a ec Islamic inance
s abili y and whe he sus ainabili y-d i en go e nance educes mac oeconomic ola ili y.
9. Conclusions
In an e hical and en i onmen ally conscious ma ke , en i onmen al disclosu e and
co po a e go e nance a ec Saudi A abian Islamic banks’ inancial pe o mance, demon-
s a ing he link be ween sus ainabili y and inancial pe o mance. En i onmen al disclo-
su e imp o es p o i abili y, ope a ional e iciency, and s akeholde us , as shown by i s
posi i e link wi h ROA, ROE, and RAROE. Islamic banks, which emb ace e hics and social
esponsibili y, may bene i om connec ing hei inancial s a egy wi h en i onmen al
goals. Saudi Islamic banks can compe e in he shi ing inancial ma ke by complying wi h
ESG equi emen s and anspa en ly disclosing en i onmen al impac s. These indings
suppo highe disclosu e mo ally and inancially by showing ha en i onmen al openness
is a s a egic asse ha aligns wi h Islamic banking alues.
Adm. Sci. 2025,15, 54 22 o 25
The esea ch also s esses he impo ance o obus co po a e go e nance amewo ks,
no ably en i onmen ally sa y boa d membe s and sus ainabili y commi ees, o en-
i onmen al anspa ency and unding. En i onmen al disclosu e and boa d expe ise
a o ably in e ac , showing ha special y go e nance s uc u es boos sus ainabili y ope -
a ions’ inancial pe o mance. This con e gence o go e nance and en i onmen al goals
suppo s Saudi A abia’s s a egic goal o sus ainable banking, whe e Sha ia alues and
en i onmen al e hics combine. Sha ia Supe iso y Boa ds (SSBs) ensu e Sha ia con o mi y
in en i onmen al ac i i ies, including sus ainabili y. Di e se and knowledgeable boa ds
and sus ainabili y commi ees help Saudi Islamic banks achie e egula o y equi emen s,
imp o e s akeholde con idence, and suppo sus ainable inancial sec o de elopmen .
In conclusion, his s udy p o ides da a and p ac ical ad ice o Saudi A abian Islamic
banks o ollow global sus ainabili y ends while adhe ing o Islamic banking s anda ds.
The inancial bene i s o en i onmen al disclosu e and good co po a e go e nance allow
hese banks o include sus ainabili y in o hei s a egic amewo ks, mee ing ma ke
demands o esponsible banking and egula o y anspa ency. These indings p opose
Saudi A abian Islamic banks s anda dize ESG-complian disclosu e me hods, s eng hen
boa d en i onmen al compe ency, and empowe Sha ia Supe iso y Boa ds o manage
sus ainabili y. By aking hese s eps, Islamic banks can boos hei inances, sa is y socially
conscious s akeholde s, and become e hical and sus ainable inance leade s. This s a egy
aligns wi h Vision 2030 and he wo ldwide end owa ds esponsible inance by inc easing
bank p o i s and sus ainable economic de elopmen in Saudi A abia.
This s udy has se e al limi a ions, especially ega ding Saudi A abian Islamic banks’
pionee ing and uns anda dized sus ainabili y epo ing and en i onmen al disclosu e and
co po a e go e nance no ms. The s udy used us wo hy quan i a i e and quali a i e
sou ces; howe e , bank epo ing o en i onmen al and go e nance indica o s may ha e a -
ec ed ou comes. Resul s om Saudi A abian Islamic banks may no apply o banks in o he
coun ies wi h di e en egula o y, cul u al, and comme cial ac o s. The s udy inishes
wi h majo con ibu ions, de iciencies ec i ied, and a comple e esea ch pa h. This s udy
add esses a acuum in Islamic banking li e a u e by illus a ing how Sha ia-complian
go e nance and ESG p inciples a ec inancial pe o mance and s akeholde us . Mixing
quan i a i e eg ession analysis and quali a i e insigh s, he s udy de ines Islamic bank-
ing go e nance and en i onmen al a iables and how hey migh be ope a ionalized o
sus ainabili y esea ch. The s udy ocused on Saudi A abian Islamic banks and used un-
s anda dized sus ainabili y epo ing o ma s, bu u u e esea ch should use longi udinal
da a ac oss a ied geog aphies and egula o y en i onmen s o cap u e go e nance and
sus ainabili y p ac ices’ dynamic e olu ion. P ac ical con ibu ions include s anda diz-
ing ESG-complian Islamic inancing s uc u es, di e si ying boa ds wi h en i onmen al
expe ise, and wo king wi h au ho i ies o c ea e consis en en i onmen al disclosu e s an-
da ds ha mee global sus ainabili y a ge s. Fu he esea ch should e alua e how digi al
ans o ma ion imp o es ESG in eg a ion, consume and in es o beha io in esponse o
enhanced disclosu es, egula o y e o ms, and cul u al ac o s o boos Islamic banking
sus ainabili y amewo ks wo ldwide.
10. Resea ch Implica ions
Sus ainabili y and en i onmen al openness a e s ill eme ging in Saudi A abia’s Islamic
banking indus y; he e o e, his s udy’s indings ha e heo e ical and p ac ical implica-
ions. En i onmen al disclosu e and inancial pe o mance in Islamic banking suppo
s akeholde and legi imacy heo ies ha companies, including banks, mus be e hical
and anspa en o sus ain legi imacy and us . Islamic inance’s Sha ia-based e hical
amewo k makes en i onmen al disclosu e good o business, suppo ing he idea ha
Adm. Sci. 2025,15, 54 23 o 25
companies can gain compe i i e ad an ages by ollowing social and en i onmen al no ms.
The epo emphasizes Sha ia Supe iso y Boa ds and boa d en i onmen al knowledge,
p omo ing ESG and Sha ia-based go e nance amewo ks and Islamic bank go e nance
philosophy. The epo inds ha banks wi h s ong en i onmen al disclosu e policies and
go e nance s uc u es can mee egula o y and public sus ainabili y equi emen s while
achie ing p o i abili y as Saudi A abia aligns i s Vision 2030 p og am wi h sus ainable
de elopmen aspi a ions.
These s udies help Saudi A abian Islamic banks imp o e inancial pe o mance and
compe i i eness h ough sus ainable go e nance. Comp ehensi e, s anda dized ESG e-
po ing sys ems ha enable openness and compa abili y can boos ma ke a ac i eness
and s akeholde us o Islamic banks. En i onmen al disclosu e imp o es inancial
pe o mance. Sha ia-complian and global sus ainabili y decisions made by en i onmen al
specialis s on boa ds and sus ainabili y commi ees assis Islamic banks’ balance o p o -
i abili y and e hics. These esul s sugges ha Saudi egula o y o ganiza ions like he Saudi
Cen al Bank (SAMA) should c ea e Islamic bank-speci ic sus ainabili y ules o ensu e
sec o -wide en i onmen al epo ing. The s udy ad ises Islamic banks o in es in digi al
ans o ma ion, pa icula ly in ech solu ions o eal- ime sus ainabili y moni o ing and
epo ing, o o e come esou ce cons ain s and enhance anspa ency. These p oposals can
help Saudi A abia’s Islamic banks mee sus ainabili y goals and lead he wo ldwide shi
owa ds esponsible inance, os e ing long- e m esilience and g ow h in a compe i i e
and e hical inancial sec o .
Au ho Con ibu ions: Concep ualiza ion, S.M. and A.S.; me hodology, A.S.; so wa e, S.M.; ali-
da ion, M.H.C., A.S.A. and S.M.; o mal analysis, S.M.; in es iga ion, A.S.; esou ces, A.S.A.; da a
cu a ion, M.H.C.; w i ing—o iginal d a p epa a ion, S.M.; w i ing— e iew and edi ing, A.S.; isu-
aliza ion, M.H.C.; supe ision, A.S.A.; p ojec adminis a ion, N.A.B.; unding acquisi ion, N.A.B. All
au ho s ha e ead and ag eed o he published e sion o he manusc ip .
Funding: This esea ch ecei ed no ex e nal unding.
Ins i u ional Re iew Boa d S a emen : E hical e iew and app o al we e wai ed o his s udy due
o da a used o analysis. This s udy mainly is based on seconda y da a and couple o in e iews
we e conduc ed o suppo he esul s.
In o med Consen S a emen : The pa icipan s chose o pa icipa e olun a ily. Be o e pa icipa ing,
all pa icipan s we e in o med o he pu pose o he s udy and he con iden iali y o hei in o ma ion.
A e p o iding in o med consen , he ques ionnai e was adminis e ed. Responden ’s pa icipa ion
in he s udy was olun a y, and hey ecei ed no compensa ion o i .
Da a A ailabili y S a emen : Da a is openly a ailable a SAMA h ps://www.sama.go .sa/en-US/
EconomicRepo s/Pages/da abase.aspx, accessed on 1 Feb ua y 2025.
Con lic s o In e es : The au ho s ha e no con lic s o in e es o decla e. We ce i y ha he
submission is o iginal wo k and is no unde e iew a any o he publica ion.
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