Sustainability Reporting and Value Creation Unveiling Innovative Impacts of an Islamic Non-Profit Institution

Abstract

Sustainability reporting has emerged as a primary tool for enhancing accountability and fostering strategic objectives in organisational practices. While sustainability reporting is extensively implemented in for-profit organisations in the evolving business landscape, its adoption within non-profit organisations remains underexplored. This paper explores how sustainability reporting, consisting of environmental, social, and governance initiatives, contributes to value creation in zakat institution. Lembaga Zakat Selangor (LZS), registered as a non-profit organisation, was selected in this study due to its recognition as a recipient of the Sustainability and Corporate Social Responsibility Malaysia Awards 2024, highlighting its commitment to sustainability and corporate social responsibility. Adopting a single case study approach, this study critically analysed sustainable reporting practices in LZS. Data were gathered through content analysis of the LZS Sustainability Report 2023 to gain comprehensive insights into the reporting. The findings reveal that sustainability reporting improves operational efficiency, enhances stakeholder engagement, and strengthens the organisation’s strategic positioning, thus driving substantial value creation. In line with the global sustainability goals, this study offers valuable insights for enhancing organisational effectiveness and reinforcing their societal contributions to the well-being of zakat recipients. By shedding light on integrating sustainability reporting into value creation, this study provides a foundation for further exploring how zakat institutions operationalise ESG, revealing unique intersections between Islamic ethical principles and global sustainability frameworks.