Islamic Ethics in Business – How to Trade Ethically

Ethics in Islam

Muslims hold privilege over other people in business due to their religious principles and guidance in day-to-day business needs. The belief in the Oneness of God not only serves as a motivation factor. But it demands an obligation to adhere to Islamic laws in each aspect of life.

The devoted Muslims should practice moral conduct in their everyday life according to the teachings of Islam and the Quran. The revealed fundamental principles offer moral consistency on which the whole Islamic community can flourish.

Islam emphasizes ethics and principles of good conduct in all walks of life. Islamic ethics deal with the principles of morality and how one can learn to distinguish right from wrong.

Islam’s term « ethics » is deeply associated with « khulq » in the Quran. Our Holy Book provides a set of words to explain the concept of righteousness and morals. « Birr » (righteousness), « Khair » (goodness), « Adl » (justice), and « Haq » (truth) are some of the terms used in the Holy Quran in the context of morality.

The principles of Islam and Sunnah highly encourage Muslims to observe fundamental principles of morality and ethics. One such example from the Holy Quran is mentioned below:

« You are the best of people evolved for mankind, enjoining what is right, forbidding what is wrong, and believing in Allah. » (Al-Qur’an 3:110)

The Holy Prophet Muhammad (PBUH) said:

« You cannot treat people through your wealth; hence, you should treat them through your moral conduct. »

« O Allah, grant me high ethics, nobody, but you can grant high ethics. O Allah, keep me away from bad qualities. » (Muslim, Misafirun, 201)

Business

If we look up to the definition of business, it could be any buying or selling practice done for the sole purpose of earning profit. However, one should do it through legal means. Illegitimate activities would not fall under the business category.

In a literal aspect, business implies any trade or activity initiated by for-profit earnings. In the words of L.H.Haney, an American economist and professor, « It is a human activity directed towards providing or acquiring wealth through buying and selling. »

Islamic Perspective of Business Ethics

Business ethics are essential principles that demonstrate how a business behaves. These guidelines are similar to those applied to an individual’s way of conduct. Ethical behavior implies keeping a difference between right and wrong and making decisions accordingly. Islamic Business Ethics offers a comprehensive guide and framework for an Islamic ethical model that a business can implement.

Islam is a complete code of life, and there is essentially no discovery regarding Islamic business ethics. The foundation of an Islamic system of life lies in incredible moral values. A Muslim must follow this code of conduct to prove his strong faith and live a content life. Islam offers several guiding principles to its followers in almost all walks of life.

These values include honesty, tolerance, equity and justice, law and order, integrity, etc. Business ethics require the same principles as Muslims are supposed to abide by these values. No matter what worldly position you enjoy, officer, employer, businessman, trader, or ordinary person, you must recognize the importance of these values.

The Holy Qur’an has emphasized, in multiple places, the importance of business ethics and how to become a successful businessman.

« O you who believe, eat not up to your property among yourselves unjustly except it may be traded among you by mutual consent. » (part 5, surah 4 verse 29)

Principles for Business Ethics in Islam

Islam has given strict emphasis on the moral ethics of a Muslim. The Holy Quran and Sunnah teach us to adopt a life of morality. The same conditions on ethical values and code of conduct apply in our daily trade and business deals. As Muslims, we must have strong faith that Islamic teachings are a source of success both in this world and hereafter. Allah wants His creation to excel in every walk of life, be it business, employment, politics, or economics.

Our religion offers a complete code of life. It doesn’t let us wander unguided. We can seek guidance in all life matters, like, social, cultural, political, economic, and legal. Islam requires us to remain on a path of self-discovery and accomplishment. Hence, it requires a Muslim to adhere to the beautiful teaching and simplify his life after accepting this religion.

1. Buy and Sell by Lawful Means

One of the keys to a successful business is trading through lawful means. This practice is one of the principles of business ethics in Islam, and a Muslim must follow it religiously. Islam doesn’t permit selling or buying unethical products like pork, alcohol, nicotine, and impermissible services like porn. Debts that involve interest are highly disliked in our religion.

Islam, however, does not impose principles without logic. You will find a logical and scientific benefit behind each code that Muslims follow. Research suggests that high alcohol consumption causes vast expenses and health hazards. An alcoholic person loses track of his morality and struggles in distinguishing between good and evil.

Nicotine or smoking is also detrimental to health and severely damages the lungs. We can find numerous examples of the disadvantages of these products that Islam has already forbidden us to consume. Their emotional, physical, and psychological harm is highly dangerous for a human’s life.

2. Honesty is the Best Policy

We have read and listened to this phrase several times. Honesty holds immense importance in Islamic principles, and Muslim people in business are also supposed to apply integrity and an honest approach in their daily trading. Trust plays a vital role; without it, a business deal might not get fruitful. We can witness mistrust or fraudulent activity cases in the corporate and non-corporate world.

Dishonest intentions do not last long; they steal your mental and physical peace and negatively impact your business profile.

Our Holy Prophet Muhammad (PBUH) said,

« The honest and trustworthy merchant will be with the prophets, the truthful, and the martyrs. »

[Sunan al-Tirmidhi]

Abdullah ibn Masood narrated: The Messenger of Allah (PBUH) said,

« You must be truthful. Verily, truthfulness leads to righteousness, and righteousness leads to Paradise. A man continues to be truthful and encourages honesty until he is recorded with Allah as truthful. And beware of falsehood. Verily, falsehood leads to wickedness, and wickedness leads to Hellfire. A man continues to tell lies and encourages falsehood until he is recorded with Allah as a liar. »

[Sahih al-Bukhari 6094, Sahih Muslim 2607]

3. Good Conduct With Employees

One of the essential principles of business ethics in Islam is having good conduct with employees. Being a Muslim in business, you must pay your employees on time. A famous saying of the Holy Prophet (PBUH) was reported in Sunan Ibn Majah, where he taught Muslims to give their employees wages before their sweat dries.

« Woe to those that deal in fraud. When they have to receive by measure from men, those who exact full measure, but when they have to give by measure or weight to men, give less than due. Do they not think that they will be called to account? We have Mighty Day. A Day when (all) humanity will stand before the Lord of the Worlds. »

[Al-Mutaffifin 83:1-6]

At another event, the Messenger of Allah (PBUH) narrates that Allah said:

« I will be the opponent to three types of people on the Day of Judgment:… and one who hires staff takes full work from them and does not pay them their wages. »

[Sahih al-Bukhari]

Besides, paying total wages to your workers on time is also crucial. Business people who regularly apply this principle in their daily trading deals find great results. Moreover, it helps increase employees’ efficiency and overall performance at work. According to research, good conduct with workers have the following outcomes:

• More productivity and employee commitment lead to more sales, growth, and profits
• Long-lasting client relationships
• Less absence from work and hence, fewer opportunity costs
• More staff retention and a low employee turnover rate
• A sizeable human resource to hire for your workforce

4. No Unlawful or Fraudulent Act

Integrity and acknowledging other people’s opinions are fundamental business principles in Islam. Our peace-loving religion doesn’t permit any kind of fraudulent or unlawful activity. This Islamic principle teaches the importance of integrity in transactions and helps us learn how to respect our business partners.

Allah, The Most Merciful says: “O you who have believed, do not consume one another’s wealth unjustly but only [in lawful] business by mutual consent.” [Quran 4:29]

The Prophet (PBUH) narrates in Sahih Muslim:

“Whoever cheats us is not one of us.”

The Prophet once said: “Earning a halal livelihood is binding (wajib) on every Muslim.” (Majma’uz Zawaid, vol.10 pg.291)

5. Give Charity

The Holy Prophet (PBUH) states, “To say a good word is just a charity” (agreed). He (PBUH) also said, “Every good deed is charity.” (Bukhari)

The above sayings by our beloved Prophet Muhammad (PBUH) convey a great message. His teachings make us understand the importance of good morals and charity regardless of time and space.

Charity begins at home; this famous proverb clarifies how crucial charitable acts are for a business. It could be monetary, emotional, or physical. If a Muslim starts his business deals and takes out some amount for the needy first, this one-act is most likable in Allah’s eyes, and HE blesses such people with more wealth and happiness. Our Prophet (PBUH) has also encouraged his companions and followers to charity during the trade.

He (PBUH) narrates: “O Businessmen, transactions carry lies and false oaths, so add charitable giving to your businesses [to mitigate wrongdoing].” [al-Nasa’i]

Spiritual Calling

Our religion, Islam, wants us to become responsible members of an Islamic society. We can follow Islamic principles and guidelines by aligning our life preferences accordingly. No matter how big or small our business network is, we must not leave the golden principles of business ethics taught by Islam.

A Muslim is fair and honest in all walks of life, and this quality makes him achieve more significant results both in this world and the hereafter. The life of our beloved Prophet (PBUH) is an excellent example in this regard. He was a practical role model for all humanity and taught Muslims how to be great business people all his life. We must strive to become productive members of our society by possessing exemplary moral values and assessing our personal and business deals.

Let’s promise and decide today the legacy we would want to leave this world with: do we wish to be

• Money hoarders, who are morally unsuccessful?
• Or do we want to be a staunch business leader who is a practicing Muslim?

Islam ensures its followers lead a dignified life and has been given the freedom of expression in matters related to their well-being, socially and economically. And indeed, Allah knows the best.