Sustainable or Just Ethical? Revisiting Islamic and ESG Indices Through the Lens of Resilience

Aljandali, Abdulkader ORCID: https://orcid.org/0000-0003-0880-6634, Amine, Mohammed and ElEdel, Dalia (2026) Sustainable or Just Ethical? Revisiting Islamic and ESG Indices Through the Lens of Resilience. Business Ethics, the Environment & Responsibility. doi:10.1111/beer.70104 (In Press)

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Abstract

As financial systems face mounting exposure to economic, environmental, and geopolitical shocks, the definition of Corporate Sustainability (CS) is undergoing a fundamental transformation. This paper advances the field by reconceptualizing CS to include resilience—defined as the ability to withstand, adapt to, and recover from systemic disruptions—as a core dimension. This theoretical shift raises questions about the sustainability classification of ethically oriented investment frameworks—particularly Islamic and ESG indices—which have traditionally been considered sustainable due to their normative commitments to ethical governance, social responsibility, and environmental stewardship. By placing resilience at the heart of sustainability evaluation, this study provides a novel conceptual lens to distinguish between ideological alignment, structural similarity, and functional convergence in ethical finance. To empirically test this expanded framework, our paper analyzes the behavior of Islamic and ESG markets across eight major crises from 2004 to 2024, encompassing financial, macroeconomic, geopolitical, and public health crises. Using risk‐adjusted return metrics, Value at Risk (VaR), Dynamic Conditional Correlation–GARCH models, and Time‐Varying Parameter Vector Autoregression (TVP‐VAR), we assess risk, connectedness, and hedging effectiveness. Findings reveal complementary resilience profiles: the Islamic market outperforms the ESG market during financial and macroeconomic crises, while ESG exhibits greater robustness during energy‐related and geopolitical shocks. Both indices show strong spillover dynamics and mutual hedging benefits, primarily through exposure to clean energy, commodities, and general equities. In doing so, the paper offers a multidimensional, resilience‐based redefinition of sustainable finance, challenging conventional ESG classifications and advancing a more adaptive understanding of what it means to be truly sustainable in an era of global volatility.

Item Type:	Article
Article Type:	Article
Additional Information:	This is the peer reviewed version of the following article: Aljandali, A., M.Amine, and D.ElEdel. 2026. “Sustainable or Just Ethical? Revisiting Islamic and ESG Indices Through the Lens of Resilience.” Business Ethics, the Environment & Responsibility 1–20, which has been published in final form at https://doi.org/10.1111/beer.70104. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
Uncontrolled Keywords:	Corporate sustainability; ESG investing; Islamic investing; Resilience; Sustainable investing
Subjects:	H Social Sciences > HG Finance > HG1501 Banking H Social Sciences > HG Finance > HG4001 Finance management. Business finance H Social Sciences > HG Finance > HG4501 Investment, capital formation, speculation
Divisions:	Schools and Research Institutes > School of Business, Computing and Social Sciences
Depositing User:	Rhiannon Goodland
Date Deposited:	15 Apr 2026 09:03
Last Modified:	16 Apr 2026 08:00
URI:	https://eprints.glos.ac.uk/id/eprint/16164

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