A Shariah-Based Critique of Social Business’s Foundational Principles

Nobel Peace Laureate Professor Muhammad Yunus has pioneered a socially devoted and self-sustaining business model called Social Business (SB). He has implemented this model in Bangladesh since 1983 by founding Grameen Bank (a village bank). For advancing financial inclusion, economic wellbeing, and women’s empowerment in rural communities, he and his organisation won the Nobel Peace Prize in 2006. Notably, Professor Yunus has introduced more than 50 societal ventures across Bangladesh to address numerous critical problems. SB has been well-received by the global community and has earned tremendous acclaim for its profound success in addressing socioeconomic issues. Yunusian Social Business (YSB) is operationalised through the Seven Principles articulated by Professor Yunus. This article aims to examine those principles through the lens of Islamic principles so that YSB can be more confidently and effectively implemented in Muslim communities.

YSB Principle 1: The Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization.

The first principle of YSB clearly defines its social objectives: alleviating poverty, resolving health inequities, minimizing technological gaps, and preserving the environment. These objectives align with Maqasid al-Shariah, specifically the protection of life (Hifz al-Nafs), intellect (Hifz al-Aql), and dignity and wealth (Hifz al-Mal). Poverty eradication is considered a religious, moral, and institutional obligation. Islam recognises poverty as a threat to human dignity; a potential risk to faith and social stability. Poverty alleviation is a collective responsibility of society and the state.

Allah SWT states in the Quran:
“and who give the rightful share of their wealth to the beggar and the poor” ( Surah Al-Ma’arij -70:24–25)

Similarly, education is obligatory (fard) and foundational for individual growth and development. Denying access to education is against Islamic justice (adl) and social responsibility. In this regard, an authentic hadith says, “Seeking knowledge is obligatory upon every Muslim.” (Sunan Ibn Majah- Hadith 224). That implies that the last messenger of Allah SWT strongly emphasised the importance of education. In the same vein, the apostle of Allah SWT further stated, “Whoever follows a path to seek knowledge, Allah will make the path to Paradise easy for him.” (Sahih Muslim, Hadith 2699).

In the eyes of Islam, health is a trust (amanah) from Allah, and preserving life is a sacred duty. As Allah SWT commands in the Quran: “and do not let your own hands throw you into destruction (by withholding). And do good, for Allah certainly loves the good-doers. (Surah Al-Baqarah-2:195)

Preservation of health is strongly promoted in Islam. Prophet said, “There are two blessings which many people lose: (They are) Health and free time for doing good.” Sahih al-Bukhari 6412
“Cleanliness is half of faith.” (Sahih Muslim).

Therefore, addressing health issues is crucial for individuals and society. Because our social development relies on collective efforts. Only a healthy society can ensure its steady economic growth.

On the other hand, technology is value-neutral. Its permissibility depends on the purpose and impact. It must serve human wellbeing, not exploitation. Digital inclusion is essential for education, livelihood, and civic perception. The ethical use and promotion of maslaha (public welfare) are mandatory in the use of technology. Digital inequality (digital poverty) is an Islamic justice issue.

Humans are stewards (Khulafa) on earth. Hence, it is an obligation for human beings to protect the environment. Prohibition of waste (israf) also prohibits humans from harming the environment. Therefore, climate action and environmental justice are aligned with Islamic ethics. Regarding environmental sustainability, the divine commandment can be referred to:
“Do not cause corruption on the earth after it has been set in order.” ( Surah Al-A’raf – 7:56)

The first principle also indicates profit generation for the business’s self-sustainability but prohibits profit maximization. This principle holds that economic activity serves to fulfill moral and social obligations rather than merely to seek profit. The profit-generating motive is permissible in Islam if social wellbeing (falah) takes precedence over maximization. In this regard, wealth is considered a trust (amanah) from Allah (SWT), and it should be used for public good (maslahah).

YSB Principle 2: Financial and economic sustainability.

The second principle of YSB, attaining financial sustainability, holds that a self-sustaining business can deliver more social benefits than a charity-reliant enterprise. Sustainability ensures continuous, dignified, and resilient social impact. This notion is closely aligned with the Islamic principle of Kasb, which means self-reliance and sustainability.

Islam discourages dependency and encourages self-reliance. The Prophet (PBUH) emphasized earning through lawful means rather than relying on charity. Besides, sustainability ensures the continuity of benefits, which falls within the ambit of Sadaqah Jariyah. Besides, Allah’s apostle praises charity but heightens the value of self-sustenance. He said:
“The upper hand is better than the lower hand. (Sahih al-Bukhari & Sahih Muslim)”

That means the donors stand higher than the recipients of charity. This hadith also emphasises the importance of self-reliance rather than depending on others.

YSB Principle 3: Investors get back their investment amount only. No dividend is given beyond investment money.

This principle makes Yunusian social Business a socially devoted business, distinguishing it from conventional social enterprises. Business is focused on addressing social problems, and the investor is akin to business objectives concerning the critical social issues to be resolved. Investment authority and the Yunusian social business model complement each other. Hence, YSB substantially impacts society, growing with a greater competitive advantage. Most importantly, this principle resonates with the application of an Islamic social finance instrument, Qardul Hassan (benevolent loan/ goodly loan), which does not require any surplus return; instead, the principal amount is returned after a stipulated time. This instrument helps reduce asset concentration while benefiting vulnerable debtors. Adherent wealthy Muslims are commanded to extend loans to attain divine blessings. Allah SWT in the Holy Quran asserts prosperity, divine rewards, and forgiveness for those who provide “goodly loans,” with no expectation of any surplus beyond the principal.

“Who is it that will lend to Allah a good loan which Allah will multiply (many times over) for them, and they will have an honourable reward?”(Surah Al-Hadid-57:11)

In other verses, Allah SWT says:
“If you lend to Allah a good loan, He will multiply it for you and forgive you. For Allah is Most Appreciative, Most Forbearing.” (Surah Al-Taghabun-64:17)
“Indeed, those men and women who give in charity and lend to Allah a good loan will have it multiplied for them, and they will have an honourable reward.” (Surah Al-Hadid-57:18)

YSB Principle 4: When investment amount is paid back, company profit stays with the company for expansion and improvement.

This principle emphasises organisational growth to enable a wider impact on society and to address more problems. It resonates with the concept of asset perpetuity, similar to waqf (endowment), in which assets are preserved, and benefits are recycled for social good. In the holy Quran, wealth circulation (tadawul al-tharwah) is encouraged rather than wealth concentration.

In Surah Al-Hashr, Verse 7, Allah SWT Says:
“As for gains granted by Allah to His Messenger from the people of (other) lands, they are for Allah and the Messenger, his close relatives, orphans, the poor, and (needy) travellers so that wealth may not merely circulate among your rich.”

YSB Principle 5: Gender sensitive and environmentally conscious.

Humankind is the Khalifa (vicegerent) of Allah SWT. Men and women are commanded by Allah SWT to achieve the divine objectives together by playing specific roles assigned to them. Thus, there is no place for discrimination in Islam. Furthermore, Islam emphasises human dignity (Karamah), which is why rational coexistence of men and women must be ensured in the workplace. On the other hand, environmental corruption is considered a form of Fasad, and environmental care is a religious obligation. In this regard, Al-Quran narrates:

“Corruption has spread on land and sea as a result of what people’s hands have done, so that Allah may cause them to taste the consequences of some of their deeds, and perhaps they might return (to the Right Path). (Surah Ar-Rum-30:41)

YSB Principle 6: Workforce gets market wage with better working conditions.

The sixth principle emphasises the market wage, and a better environment could be tied to Adl (justice) and Ehsan (excellence). Here, the market wage refers to the wage that aligns with the employee’s value position. Islam prioritises justice in every sphere of our lives. Therefore, salary or wage must be paid equitably and justly. The Prophet (PBUH) suggested paying the wage immediately upon completion of the task. In this regard, a prominent hadith is mentioned below:

“Give the worker his wages before his sweat dries.”- (Ibn Majah, n.d., p. 2443)

Furthermore, Islam promotes the principle of Ehsan (excellence), which emphasizes the pursuit of embellishment, beauty, and comfort while prioritising conscious excellence, inner discipline, and moral self-regulation.

The holy Qur’an states:
“Indeed, Allah commands you to return trusts to their rightful owners; and when you judge between people, judge with fairness…” (Surah Nisa -4:58)

Furthermore, the noble Quran says, “…And speak kindly to people…” (Surah al Baqarah-2:83).
This verse suggests maintaining a positive, friendly work environment with kindness.

YSB Principle 7: …do it with joy.

In Islam, joy is a balanced, meaningful, and morally guided state of happiness rooted in faith, gratitude, purpose, and ethical living. That means joy should reflect spiritual alignment between purpose, action, and faith. Joy could be classified as spiritual joy and moral & ethical joy. When adherent Muslims submit to Allah SWT, their hearts are filled with a celestial feeling, known as spiritual joy. In the Quran, Allah SWT says,
“Surely in the remembrance of Allah do hearts find comfort.” (Surah Ar-Ra’d -13:28)

On the other hand, according to the lens of Ihsan, people experience moral and ethical joy by selflessly doing good for others, such as pursuing justice or helping others. In this regard, Allah SWT says in the Quran.
“…We will surely bless them with a good life, and We will certainly reward them according to the best of their deeds.”(Surah An-Nahl – 16:97)

Therefore, good deeds for the good of humanity, selfless efforts for social wellbeing, are encouraged and rewarded by Islam. Hence, the hearts of doers must be blessed and filled with unalloyed happiness and celestial joy.

Conclusion

Based on the above discussion, it could be concluded that Yunusian Social Business’s seven operating principles are Shariah-compliant. Social Business can be legitimized under Shariah laws if it is free from interest (riba)-based financial transactions, gharar (ambiguity), and mysir (gambling). Besides, social business must deal with the type of business that are permissible (halal) by Shariah and avoid those that are impermissible (haram), such as alcohol, pork raising, gambling, and so on. Hence, Yunusian social business can be widely practised in Muslim communities worldwide.

Globally, about 808 million people live in extreme poverty, meaning 1 in 10 people are unable to fulfil their basic needs. However, this condition is more severe in Muslim-majority regions: the Middle East, North Africa, and South Asia. High unemployment, especially among youth, low labour productivity, and rural-urban disparities prevail across OIC countries. One in eight people in this region is hardcore poor. Notably, the poverty scenario is very critical in Somalia, Yemen, Syria, Sudan, Comoros, Mauritania, Djibouti, Morocco, Tunisia, and Palestine. People in these countries are deprived of basic amenities, such as food, water, healthcare, education, and conducive living conditions.

Yunusian social business, as it is entirely focused on resolving social issues sustainably, could be a promising approach to addressing many socioeconomic challenges in Muslim communities. Wider practice of YSB would bring greater benefits to the underserved Muslims. In this regard, Islamic social funds, such as Zakat, Waqf, Sadaqah, Infaq, and Qardul Hasan, could be integrated as sources of capital, as they are cost-free and dedicated to social welfare. Proper policy formulation and government initiatives are deemed necessary to make that happen.