Integrating ESG Principles Into Islamic Banking Digitalization To Strengthen Sustainable Financial Literacy

Abstract

This study aims to analyze how the integration of Environmental, Social, and Governance (ESG) principles in Islamic banking serves as a mechanism for strengthening sustainable financial literacy through the use of Sharia-based digital financial services in the Kerang Krajan community. This study uses a descriptive qualitative approach with a literature review method supported by an analysis of the implementation of Sharia-compliant digital financial services. Data were obtained from scientific articles, official reports, regulations related to ESG and Islamic banking, and documentation of digital service implementation. Data were then analyzed thematically through data reduction, data presentation, and conclusion drawing. The results show that ESG integration supports the improvement of sustainable financial literacy through environmental, social, and governance dimensions. In the environmental dimension, the digitalization of financial services contributes to resource efficiency through reduced paper use. In the social dimension, the implementation of digital services increases public understanding of responsible financial management, business ethics, and the values ​​of the maqashid of Sharia. Meanwhile, in the governance dimension, the integration of digital systems with Islamic banking strengthens transparency, accountability, and compliance with Sharia principles. These findings indicate that ESG integration plays a role in supporting the strengthening of sustainable financial literacy through innovation in Islamic banking digital services and provides input for the development of more transparent, accountable, and sustainability-oriented financial service strategies.