Prof. Dr. Habib Ahmed

Professor, Durham University, UK

This is summary of a lecture delivered by Prof. Dr. Habib Ahmed in August 2025 at Center for Islamic Economics, International Islamic University, Malaysia

Climate change and environmental degradation threaten humanity’s existence, prompting global responses like the Paris Agreement and Sustainable Development Goals (SDGs). Achieving these goals requires redefining development to prioritize sustainability over mere economic growth, recognizing the intricate link between human welfare and the health of natural systems. A holistic approach, balancing human needs with environmental sustainability, is essential.

Capitalist Economic System

Capitalism, rooted in the Enlightenment and Industrial Revolution, prioritizes private property, individual liberty, free markets, and trade. It relies on capital, labour, resources, and energy, with capital driving production. The system is based on profit maximization, with value determined by market exchanges, often excluding ethics. This framework prioritizes economic efficiency and growth, often at the expense of social and environmental values.

Capitalism, Law and Ethics

Capitalism is a system of “legal ordering” governed by rational laws and regulations that construct capital and enable corporations. While it emphasizes procedural justice (rule of law), it often overlooks crucial ethical considerations like commutative justice (fair prices) and distributive justice (fair distribution of costs and benefits).

Capitalism and Environment

Capitalism without ethics prioritizes profit over sustainability, exploiting resources and ignoring social and environmental costs. Driven by shareholder value, corporations can cause harm to society and the environment, highlighting the need for a more balanced approach that incorporates ethics into economic decision-making.

Islamic Economics Worldview

The Islamic economic system, guided by Shariah and Fiqh, aims to promote human well-being (maslahah) and prevent harm (mafsadah). It integrates legal principles and ethical values from the Quran, Sunnah, Qawaid al-Fiqh, and Maqasid al-Shariah to promote justice, fairness, and social welfare, providing a moral and ethical foundation for economic decision-making.

In Islamic economics, the principle of permissibility (ibahah) allows all activities unless prohibited by Shariah. This promotes a halal economy by excluding haram sectors and emphasizing fairness through the avoidance of riba (interest) and gharar (excessive uncertainty), ensuring Shariah-compliant transactions that benefit society and uphold Islamic values.

Maqasid al-Shariah prioritizes human well-being by protecting faith, self, intellect, posterity, wealth, and dignity. In economic transactions, it promotes principles like transparency, justice, and fairness, fostering a humane and just economic system that balances individual interests with the greater good of society, leading to a more inclusive and equitable economy.

Implications of applying the Islamic worldview on sustainable development

Shariah compliance can be viewed narrowly as legal compliance or more broadly to include ethical dimensions. The comprehensive approach incorporates Maqasid al-Shariah and Qawaid al-Fiqh, considering the impact on people and the planet to promote sustainable and responsible economic activity.

Islamic Economic System and Sustainable Development

A narrow legal interpretation of Shariah compliance may mirror capitalist profit-driven approaches. To achieve a sustainable economy aligned with Islamic values, integrating ethical dimensions of Shariah is crucial. Transforming economic agents into “homo islamic-ethicus” who prioritize stakeholder interests, sustainability, and environmental responsibility can foster a more equitable and sustainable economic system.

Islamic Finance: Practice

Embedding ethics in the economy requires education for sustainable development (ESD) to cultivate “homo Islamic-ethicus.”

Complementary measures include integrating ESGC screening with Shariah screening and implementing ESG Policy frameworks. A public policy framework informed by Maqasid al-Shariah and Qawaid al-Fiqh can also promote a sustainable economy aligned with Islamic principles.

Conclusion

Sustainable development in an Islamic economy is unattainable without the integration of ethics. To stay relevant, it is essential to broaden the interpretation of Shariah compliance beyond mere legal requirements, incorporating maqasid and qawaid to foster positive social and environmental outcomes.

Islamic economics and finance are designed to benefit all humanity, not just Muslims, and achieving “Rahmatil alamin” (mercy to all) requires ethics to be deeply embedded in the economy. However, this can only be realized by transforming the mind-set of economic agents from “homo Islamic-legalus” to “homo Islamic-ethicus,” who prioritize ethical decision-making.

Ultimately, the focus must shift from investing solely in financial and physical capital to investing in human capital, cultivating individuals who can drive sustainable and equitable economic growth.