Integration of ESG Principles in Halal Logistics: Advancing Sustainable Practices in the Islamic Supply Chain

Integration of ESG Principles in Halal Logistics: Advancing Sustainable Practices in the Islamic Supply Chain

Amirul Syahidah Asmadi¹ and Intan Sazrina Saimy^2*

¹Faculty of Social Science and Humanities, Universiti Teknologi Malaysia, 54100, Kuala Lumpur

²Faculty of Artificial Intelligence, Universiti Teknologi Malaysia, 54100, Kuala Lumpur

DOI: https://dx.doi.org/10.47772/IJRISS.2024.8120152

Received: 23 November 2024; Accepted: 07 December 2024; Published: 08 January 2025

ABSTRACT

The integration of ESG principles into halal logistics represents a strategic alignment of sustainable practices with Islamic ethical standards, advancing sustainability within the Islamic supply chain. Halal logistics, rooted in Shariah law, emphasises ethical conduct, transparency, and environmental stewardship, echoing the objectives of ESG frameworks. This review explores the synergy between ESG principles and halal logistics, highlighting shared values such as environmental responsibility, social justice, and robust governance. It identifies key areas where ESG integration can enhance halal supply chains, including ethical sourcing, waste reduction, fair labour practices, and technological innovation. Furthermore, the review discusses challenges such as regulatory inconsistencies, financial constraints, and stakeholder engagement, offering recommendations to address these barriers. By aligning ESG with the maqāṣid al-Sharī‘ah and Sustainable Development Goals, this paper underscores the transformative potential of halal logistics as a model for ethical and sustainable global supply chain practices.

Keywords– Halal logistics, ESG integration, Islamic supply chain, sustainability, maqāṣid al-Sharī‘ah, ethical sourcing, sustainable development

INTRODUCTION

The integration of Environmental, Social, and Governance (ESG) principles into halal logistics represents a transformative shift toward sustainable development within the Islamic economy. ESG principles, widely acknowledged for addressing global sustainability challenges, provide a framework for balancing economic performance with ethical, social, and environmental considerations. Within this context, halal logistics plays a pivotal role in Islamic supply chains, promoting ethical practices, transparency, and sustainability. The alignment of halal logistics with ESG principles not only ensures adherence to Islamic ethical standards but also strengthens the Islamic economy’s contribution to the global sustainability agenda.

The values underlying ESG — environmental stewardship, social equity, and governance accountability — closely align with maqāşid al-Sharī’ah (the higher objectives of Islamic law), which emphasises human welfare, justice, and environmental balance. According to Khan (2019), the current financial and economic systems, which operate on a linear model, often neglect ecological concerns. This shortcoming highlights the need for a shift toward circular economic models that are more consistent with both the maqāşid al-Sharī’ah and the Sustainable Development Goals (SDGs). Such a transition reveals the potential for Islamic finance, including its logistics sector, to advance sustainability and support human development through ethical and environmentally responsible practices.

Halal supply chain management (HSCM) has been widely explored as a key avenue for advancing sustainability goals. Khan et al. (2021) proposed a conceptual framework linking halal logistics with sustainable performance, identifying essential factors like ethical sourcing, animal welfare, and fair-trade practices. This framework demonstrates how Islamic ethical standards intersect with ESG-related considerations, highlighting HSCM’s role in achieving both sustainability and halal compliance. By embedding these principles into logistics operations, businesses can enhance transparency and accountability, thereby strengthening consumer trust and stakeholder confidence.

Further research underscores the broader role of halal logistics in advancing SDGs. Ghalih et al. (2024) illustrate how ESG-driven halal logistics contributes to key SDG targets, including poverty reduction, sustainable agriculture, gender equality, and responsible consumption. Their findings show that halal supply chains grounded in ESG principles support not only environmental and economic sustainability but also address the social and ethical dimensions of Islamic economic practices. This alignment reflects the shared objectives of ESG and Islamic ethical standards, both of which promote social justice and environmental stewardship.

From an operational perspective, embedding ESG-related practices into halal logistics requires overcoming challenges tied to governance, resource management, and stakeholder engagement. Fuseini and Lever (2021) examined sustainable agricultural practices from an Islamic perspective, stressing the importance of environmental stewardship and animal welfare. These principles align with the environmental dimension of ESG, which prioritises efficient resource use and ecological preservation. Through the adoption of sustainable operational practices, halal logistics businesses can support the conservation of natural resources while ensuring compliance with Islamic ethical standards.

Social equity and governance are also critical aspects of ESG in halal logistics. Mansor et al. (2019) found that ethical funds outperformed conventional funds during financial crises, demonstrating the value of integrating ethical considerations into financial and operational decision-making. This approach aligns with the governance component of ESG, which emphasises transparency, accountability, and ethical leadership. In the context of halal logistics, effective governance mechanisms ensure compliance with halal standards and alignment with sustainability objectives, fostering more resilient and sustainable supply chain operations.

Advancements in digital technologies, such as blockchain and the Internet of Things (IoT), have also facilitated the application of ESG principles in halal logistics. These technologies enhance traceability, transparency, and accountability within supply chains, enabling businesses to track and verify compliance with both halal standards and ESG requirements. By leveraging such innovations, halal logistics operators can enhance operational efficiency, boost consumer confidence, and increase the visibility of ethical practices across the supply chain.

Despite the opportunities presented by ESG-driven halal logistics, several challenges persist. Embedding ESG into halal logistics requires addressing issues related to regulatory frameworks, stakeholder engagement, and policy alignment. Ghalih et al. (2024) highlight the need for capacity building, stakeholder engagement, and policy harmonisation to overcome these obstacles. Addressing these challenges calls for collaborative efforts among industry stakeholders, policymakers, and academic researchers to develop comprehensive strategies and frameworks that support sustainable halal logistics and bolster the Islamic economy.

CONCEPTUAL FRAMEWORK

Environmental, Social, and Governance (ESG) Overview

ESG principles serve as a cornerstone for advancing sustainability in supply chain management. These principles encompass environmental responsibility, social equity, and governance transparency, establishing a comprehensive framework for ethical and sustainable business practices. The incorporation of ESG principles in global supply chains addresses critical issues such as resource conservation, labour rights, and corporate accountability. In halal logistics, these principles align seamlessly with Islamic ethical values, emphasising trust, fairness, and ecological stewardship.

The concept of ESG is rooted in the broader movement towards sustainability. El-Bassiouny et al. (2017) highlight the holistic nature of sustainability from an Islamic perspective, integrating divine attributes with macro-marketing principles. This conceptualisation provides a robust framework for embedding sustainability throughout business operations rather than treating it as a mere strategic objective. Similarly, Haleem et al. (2021) demonstrate how sustainability can be operationalised in halal supply chain management by linking it with ethical practices, including fair trade and animal welfare. Their findings underscore the compatibility of ESG principles with Islamic values, fostering a shared vision for sustainable development.

The role of governance within ESG is critical in ensuring transparency and compliance. Governance mechanisms not only uphold ethical standards but also enhance consumer trust, a key component in halal logistics. As emphasised by Raimi et al. (2024), robust governance structures within Islamic finance can mitigate risks and promote sustainable growth through mechanisms like Islamic Green Sukuk and socially responsible investment funds. These insights are mirrored in the findings of Fuseini and Lever (2021), who discuss the importance of environmental stewardship and governance in sustainable agricultural practices from an Islamic perspective. Both studies highlight the interconnectedness of governance and sustainability, reinforcing the relevance of ESG principles in Islamic economic systems.

Social responsibility, a core pillar of ESG, addresses issues of equity and inclusivity, resonating with the maqāşid al-Sharī’ah, which prioritise human welfare and justice. Khan et al. (2022) identifies social equity as a critical factor in halal supply chain management, linking it to sustainable performance. Their research demonstrates that inclusive practices, such as fair labour policies and community engagement, significantly enhance the sustainability of supply chains.

The environmental component of ESG is particularly pertinent in the context of halal logistics, where ecological sustainability is a fundamental concern. The findings of Sari et al. (2024) reveal the positive impact of green management and digital transformation on the sustainable performance of halal culinary micro, small, and medium enterprises (MSMEs). This is complemented by the insights of Amalia et al, (2024), who emphasise the role of innovation and environmental concern in enhancing tourist experiences within halal tourism. Both studies illustrate how environmental responsibility can drive sustainability, reinforcing the potential of ESG principles to transform halal supply chains into models of ecological stewardship.

The integration of ESG principles in global supply chains is not without challenges. Regulatory inconsistencies, cultural diversity, and technological barriers often hinder implementation. Additionally, the study by Ghalih et al. (2024) underscores the importance of capacity building and stakeholder collaboration in overcoming obstacles to embedding ESG practices. These findings suggest that a concerted effort involving industry stakeholders, policymakers, and researchers is essential for realising the potential of ESG in halal logistics.

The adoption of ESG principles in halal logistics also provides opportunities for leveraging advanced technologies. Ahmad et al. (2023) discusses the transformative potential of Industry 4.0 technologies, such as blockchain and IoT, in enhancing traceability and accountability within halal supply chains. These technologies enable real-time monitoring and verification of compliance with both halal standards and ESG criteria, fostering greater transparency and consumer confidence.

Halal Logistics

Halal logistics, rooted in the principles of Islamic jurisprudence, emphasises compliance with Shariah laws in the handling, transportation, and storage of goods. The core tenets of halal logistics revolve around maintaining the integrity of halal products by ensuring they are free from contamination with haram (prohibited) items and aligning processes with Islamic ethical guidelines. The framework for halal logistics includes segregation of halal and non-halal goods throughout the supply chain, traceability mechanisms to ensure compliance, and adherence to hygiene standards. Omar et al. (2019) underscores the importance of Islamic values in the poultry industry’s supply chain, highlighting the role of transparency and segregation in sustaining the halal status of products. Similarly, Khan et al. (2021) establishes a conceptual framework linking halal supply chain management to sustainable practices, emphasising ethical considerations such as fair trade and animal welfare as pivotal components.

Halal logistics diverges significantly from conventional supply chain systems, primarily due to its stringent adherence to religious guidelines. Unlike conventional supply chains that focus primarily on efficiency and cost reduction, halal logistics incorporates ethical, religious, and sustainability considerations into its operations. This distinction is evident in the handling of cross-border halal meat, as discussed by Omar et al. (2022), who identify challenges such as maintaining the integrity of halal certification and mitigating risks of contamination in international logistics. Similarly, Khan et al. (2023) identifies nine (9) critical factors impacting halal supply chain management, including effective traceability systems and risk mitigation strategies, which are often absent in conventional systems.

The principles of halal logistics extend to addressing the spiritual and social dimensions of supply chain operations. This holistic approach ensures that economic activities align with the maqāşid al-Sharī’ah, which emphasise the preservation of faith, life, intellect, lineage, and wealth. Idris et al. (2022) argue that integrating halal and Tayyiban principles with SDGs offers strategic advantages by addressing health, social justice, and environmental sustainability. Their findings align with the observations of Nasyiah et al. (2024), who highlight the role of traceability systems and knowledge management in enhancing sustainable performance within halal supply chains.

The operationalisation of halal logistics faces unique challenges, including regulatory inconsistencies, cultural diversity, and logistical complexities. Ustadi and Osman (2022) identify the need for standardised halal guidelines in port logistics to address these challenges. Their study suggests that robust halal logistics frameworks can enhance the transparency and accountability of supply chains, particularly in seaport operations.

The integration of ESG principles into halal logistics not only reinforces its ethical and religious foundations but also enhances its competitiveness in the global market. This perspective is supported by Kamase et al. (2021), who advocate for the adoption of sustainable principles in halal logistics to achieve environmental, social, and economic benefits.

The key differences between halal and conventional supply chains also extend to stakeholder engagement and community impact. Halal logistics prioritises ethical considerations and social welfare, fostering trust among consumers and stakeholders. Raimi et al. (2024) emphasise the interdependence of halal entrepreneurship and Islamic finance in creating a cohesive halal ecosystem, which enhances economic growth and social welfare.

Intersection of ESG and Halal Logistics

Integrating ESG principles into halal logistics fosters a unique alignment of shared values, including ethical conduct, environmental responsibility, and social justice. This synergy aims to create a supply chain that supports global sustainability goals while adhering to Islamic ethical standards.

At the intersection of ESG and halal logistics lies a commitment to ethical conduct and responsible governance. Ghalih et al. (2024) analyse the integration of ESG values in halal supply chains, highlighting their role in advancing SDGs. They point out that halal logistics already incorporates elements like fair trade, which aligns with ESG’s social dimension. Similarly, Haleem et al. (2021) emphasise the importance of ethical practices in halal supply chain management, including animal welfare and adherence to Shariah-compliant standards, which resonate with the governance aspect of ESG frameworks.

Environmental stewardship is a cornerstone of both ESG and halal logistics. Fuseini and Lever (2021) discuss sustainable livestock agriculture from an Islamic perspective, emphasising the environmental responsibilities embedded in halal practices. This aligns with ESG’s environmental criteria, which advocate for reduced environmental footprints in supply chain operations.

Social justice, another shared value between ESG and halal logistics, underscores the importance of community welfare and equitable treatment of stakeholders. Mansor et al. (2019) observe that ethical funds outperformed conventional ones during crises, illustrating how socially responsible investments can enhance resilience. This insight is relevant to halal logistics, which prioritises social equity through fair trade and ethical labour practices.

Despite these synergies, the integration of ESG principles in halal logistics requires addressing regulatory and cultural challenges. Ustadi and Osman (2022), notes the need for standardised guidelines in halal logistics to address inconsistencies in global supply chains. Establishing such standards is essential for embedding ESG principles effectively in halal logistics.

LITERATURE REVIEW

ESG in Supply Chain Management

The inclusion of ESG in logistics, particularly in halal supply chains, provides a pathway to align operational practices with ethical, social, and environmental objectives and is increasingly relevant as organisations seek to enhance sustainability. Several case studies and theoretical insights highlight the challenges and benefits of this integration, showcasing how ESG adoption can reshape logistics and supply chain frameworks.

Case studies on ESG integration often emphasise the role of digital innovation and regulatory frameworks in fostering sustainable practices. Ahmad et al. (2023) discusses the application of Industry 4.0 technologies, such as blockchain, artificial intelligence, and IoT, in halal food manufacturing. These technologies ensure traceability, enhance product integrity, and reduce inefficiencies, which align with ESG’s environmental and governance goals. Similarly, Cuesta-Valiño et al. (2020) examine the role of Muslim-friendly online services in promoting sustainable tourism destinations. They find that such services not only cater to the specific needs of Muslim consumers but also support environmental and social goals by tailoring digital offerings to enhance inclusivity.

Despite these advancements, challenges remain in implementing ESG principles in supply chains. Alim et al. (2023) identify regulatory gaps in halal tourism management, particularly in rural areas. They note that a lack of consistent enforcement of halal standards can hinder the adoption of ESG frameworks, as stakeholders struggle to align local practices with global sustainability benchmarks. This challenge is echoed by Azalie (2023), who argues for an integrated sustainable halal policy that harmonises public, industrial, and economic strategies with ESG goals. Such policies are crucial to overcoming fragmented regulations and ensuring cohesive ESG adoption across supply chain networks.

The benefits of adopting ESG in supply chains extend beyond compliance and efficiency. Danarta et al. (2024) emphasise the economic and social benefits of combining religious and sustainable principles in halal tourism. Their findings suggest that ESG integration fosters economic development and social inclusivity while maintaining ethical integrity.

Digital innovation continues to play a transformative role in ESG implementation. Alam et al. (2024) analyse digital campaigns promoting halal ecotourism and observe significant engagement with sustainability themes. These campaigns leverage social media to enhance awareness and community involvement, showcasing how technology can bridge gaps between ESG principles and consumer practices. This aligns with the observations of Amalia et al. (2024), who identify innovation and environmental concern as critical drivers of tourist satisfaction in halal destinations. Together, these studies underline the potential of digital tools to operationalise ESG values effectively.

The social dimension of ESG in supply chains often intersects with efforts to enhance workforce sustainability and consumer engagement. Abdul Rahim et al. (2022) identifies poor career paths, inadequate training, and low salaries as barriers to sustaining halal talent in Malaysia. Addressing these issues is critical to realising the social benefits of ESG adoption, as equitable workforce practices are central to ethical supply chain management. Abdullahi (2019) further explores the role of zakah in promoting social causes and corporate responsibility, demonstrating how Islamic financial principles can complement ESG goals by encouraging equitable wealth distribution and responsible consumption.

Sustainability in Halal Supply Chains

Ethical responsibility, social equity, and environmental stewardship, which are foundational to Islamic perspectives on sustainability. The growing emphasis on sustainable practices within halal logistics offers an opportunity to align these values with contemporary global standards.

A key connection between maqāṣid al-Sharī‘ah and SDGs lies in their shared focus on holistic human development and environmental preservation. Khan (2019) highlights the shift needed within Islamic finance to move from a linear to a circular economic model, emphasising that this paradigm supports the achievement of SDGs and reinforces maqāṣid al-Sharī‘ah’s objectives of human welfare. Similarly, Idris et al. (2022) argue that the integration of Halal-Tayyiban principles with SDGs offers businesses a strategic advantage by promoting health, social justice, and environmental benefits, which are critical for sustainable development.

The application of these Islamic sustainability principles is evident in various sectors of halal logistics. Fuseini and Lever (2021) emphasise the role of Islam in sustainable livestock management, particularly through the promotion of ethical treatment of animals and environmental stewardship. This aligns with practices in halal supply chains that prioritize animal welfare and responsible resource use. Meanwhile, Ghalih et al. (2024) explore how the adoption of ESG principles in halal supply chains contributes to SDGs such as poverty reduction, sustainable agriculture, and responsible consumption. Their findings underscore the potential of aligning Islamic ethical values with global sustainability standards to create resilient supply chain models.

The operationalisation of sustainability in halal supply chains has also been studied through specific frameworks and case examples. Haleem et al. (2021) develop a conceptual framework linking HSCM with sustainable performance, identifying critical factors such as ethical practices and fair trade. Their work demonstrates that integrating sustainability into halal logistics enhances the ethical credibility and operational efficiency of supply chains. Similarly, Omar et al. (2019) assess Islamic values in halal poultry supply chains, highlighting the importance of transparency and resilience in fostering sustainability.

Digital technologies have emerged as key enablers of sustainability in halal supply chains. Harsanto et al. (2024) explore the impact of digital tools, legislation, and financing on the performance of halal value chains for micro, small, and medium enterprises (MSMEs). They find that digital technologies significantly enhance supply chain efficiency and traceability, which are essential for aligning with both Islamic principles and global sustainability goals. Complementing this, Nasyiah et al. (2024) analyse the role of traceability systems in halal supply chain management, demonstrating their positive impact on sustainable performance. These studies highlight the potential of technology to bridge the gap between traditional Islamic values and modern supply chain practices.

Challenges in achieving sustainability within halal supply chains often stem from regulatory and operational constraints. Mahbubi and Uchiyama (2020) identify high costs and environmental impacts, such as carbon emissions and water usage, in the Indonesian halal beef supply chain. These challenges underscore the need for targeted interventions to reduce inefficiencies and improve environmental outcomes.

Efforts to align halal supply chains with sustainability goals are further supported by entrepreneurial and financial strategies. Erwansyah et al. (2024) demonstrate the role of entrepreneurial networking in enhancing marketing performance and supporting SDG alignment among halal SMEs in Indonesia. Their findings suggest that collaborative networks and resource optimisation are crucial for achieving sustainability in halal logistics. Examples of successful sustainable practices in halal logistics reflect the adaptability of Islamic principles to modern challenges. Kamase et al. (2021) explore sustainable design principles in the development of Lombok’s beachside areas, emphasising environmental, social, and economic benefits. Such practices demonstrate how Islamic values can guide sustainable development initiatives in diverse contexts.

Role of ESG in Halal Logistics

The role of ESG in this domain is pivotal for aligning Islamic supply chains with sustainable and responsible business models. Ethical and eco-friendly practices form the cornerstone of ESG-aligned halal supply chains. Raimi et al. (2024) emphasise the interdependence of halal entrepreneurship and Islamic finance, which collectively create a robust halal ecosystem prioritising ethical practices and social welfare. This approach ensures that economic activities are consistent with Islamic ethical values while supporting sustainability goals. Similarly, Sari et al. (2024) highlight the role of sustainable strategic planning in improving the ecological and economic performance of halal culinary MSMEs. Their findings reveal that the integration of green management and halal business management practices contributes to reducing environmental impact and enhancing operational sustainability.

Transparency and consumer trust are critical outcomes of ESG integration in halal logistics. Ustadi and Osman (2022) underline the importance of developing robust governance structures for halal ports, focusing on logistics practices that prioritise transparency and accountability. Such frameworks ensure compliance with halal certification standards while addressing consumer concerns about product authenticity. Supporting this, Wiryani et al. (2018) identify gaps in legal enforcement related to halal and thoyyib food protection, advocating for reforms that enhance professionalism and public participation in halal certification processes. These measures not only strengthen consumer trust but also reinforce the credibility of halal supply chains.

The application of Islamic ethical principles within halal logistics aligns seamlessly with ESG goals. Sharifah et al. (2019) explore principles such as La Dharar wa La Dhirar (no harm) and social responsibility, demonstrating their relevance to sustainable development. These principles serve as a foundation for integrating ethical and environmental considerations into supply chain operations. Meanwhile, Rubawati et al. (2018) analyse consumer behaviour towards halal products, finding that the halal label significantly influences purchasing decisions due to its association with ethical production and quality assurance.

The adoption of ESG principles also facilitates enhanced stakeholder collaboration and operational efficiency. Mohamed Haniba et al. (2019) examine the impact of social customer relationship management (s-CRM) on SMEs in Malaysia, revealing that ICT adoption fosters transparency and customer-centric practices. The perceived value of s-CRM plays a mediating role in enhancing performance and building consumer trust, which are critical for sustaining competitive advantage in halal logistics. Similarly, Rhama (2022) identifies a need for halal tourism practices to transition from mass tourism models to more sustainable paradigms, recommending improvements that align with ESG and halal principles.

Financial and operational frameworks are essential for implementing ESG principles in halal logistics. Saba et al. (2021) discuss the role of Islamic financial products, such as Green Sukuk, in advancing sustainable development goals. These instruments provide a mechanism for financing eco-friendly and socially responsible initiatives within halal supply chains. Additionally, Zulvianti et al. (2022) analyse the influence of environmental factors on tourist satisfaction in halal destinations, finding that sustainability practices mediate positive perceptions and enhance consumer trust.

Comparative Analysis of ESG Principles Between Islamic And Conventional Supply Chains

The integration of ESG principles within the Islamic supply chain holds a distinct advantage over conventional supply chains, particularly in advancing sustainable practices. This advantage stems from the intrinsic ethical and sustainability framework rooted in Islamic values, which provides a holistic approach to supply chain management. Islamic principles, such as fairness, transparency, and social responsibility, align closely with ESG principles, emphasising the social and environmental dimensions of sustainability. These values, derived from core Islamic teachings, provide a unique foundation for promoting sustainable practices within the halal logistics and supply chain sector.

In the conventional supply chain, the primary focus often revolves around maximising efficiency and profitability, sometimes at the expense of environmental and social concerns. While some businesses in the conventional sector have begun adopting ESG principles to address sustainability challenges, the integration tends to be reactive, driven by regulatory pressures or consumer demand. In contrast, the Islamic supply chain, guided by principles such as tawhid (unity of God) and khilafah (stewardship), inherently promotes a more sustainable and ethical approach to business operations. Islamic finance, for instance, encourages investment in projects that foster social welfare and environmental stewardship (Khan, 2019; Sulong et al., 2024). This alignment with sustainability from the outset provides a framework for continuous improvement in the social, environmental, and economic dimensions of the halal supply chain.

Moreover, the application of ESG principles in the Islamic supply chain extends beyond mere compliance to encompass a broader ethical mandate. This includes promoting fair labour practices, ensuring animal welfare, reducing waste, and fostering community development. Islamic values such as adl (justice) and ihsan (excellence) resonate deeply with the governance component of ESG, ensuring that supply chains not only comply with regulations but also uphold the dignity and rights of workers and communities (Haleem, Khan, & Khan, 2021; El-Bassiouny et al., 2017). These principles naturally integrate environmental and social considerations into decision-making processes, ensuring that the Islamic supply chain is not only economically efficient but also socially responsible and environmentally conscious.

In comparison, the conventional supply chain is often less inclined to prioritise ethical practices unless incentivised by external pressures such as consumer demand for corporate social responsibility (CSR) or legislative mandates. While some organisations have made strides in adopting ESG practices, the shift is often gradual and focused on addressing short-term objectives rather than creating systemic, long-term change. Furthermore, conventional supply chains may face challenges related to balancing profit maximisation with ethical concerns. In contrast, the Islamic supply chain is driven by the ethical underpinnings of Islamic teachings, where profit is not the sole goal. Instead, businesses are encouraged to seek barakah (blessings) by engaging in socially responsible practices that benefit both the individual and the broader community (Haleem et al., 2021; Khan, Haleem, & Khan, 2022).

The integration of ESG principles in the Islamic supply chain can also be seen as more sustainable due to the emphasis on long-term ecological and social well-being. Islamic finance and business ethics promote circular economic models that minimise waste and encourage resource conservation, aligning with modern sustainability concepts such as the circular economy (Khan, 2019; Raimi et al., 2024). In the halal logistics sector, for example, businesses are encouraged to reduce waste and carbon footprints, reflecting Islamic principles of wafa (integrity) and istislah (public interest), which advocate for the protection of resources for future generations. This commitment to environmental stewardship can lead to more sustainable supply chain practices, such as the use of eco-friendly packaging and sustainable transportation methods, which are often overlooked in conventional models.

Another key factor that enhances the sustainability of the Islamic supply chain is the emphasis on community and ethical trading practices. The integration of social considerations within the ESG framework aligns with the Islamic concept of zakat (almsgiving), which promotes wealth distribution and poverty alleviation. This principle is often reflected in halal supply chains, where companies are encouraged to engage in fair trade practices and contribute to the welfare of underserved communities (Ghalih et al., 2024; Sulong et al., 2024). In contrast, conventional supply chains may prioritise cost-cutting measures that result in exploitative labour practices, environmental degradation, and social inequality. The adoption of ESG principles in the Islamic supply chain not only ensures compliance with ethical standards but also contributes to social justice, a critical component of sustainability.

Furthermore, the Islamic supply chain places a significant emphasis on transparency and accountability in governance, which are core elements of the ESG framework. The Islamic finance model, for example, promotes financial transactions that are free from exploitation and uncertainty, principles that align closely with the governance aspects of ESG (Solehudin et al., 2024; Raimi et al., 2024). By integrating these principles into the supply chain, businesses are more likely to foster trust with stakeholders, including consumers, investors, and regulators, leading to more resilient and sustainable business operations. In conventional supply chains, the lack of transparency and ethical oversight can often lead to reputational risks, legal challenges, and long-term sustainability issues.

The importance of integrating ESG principles in the Islamic supply chain cannot be overstated, as it offers a pathway to achieving SDGs. Halal supply chains that adhere to ESG standards are better positioned to contribute to global sustainability efforts, such as poverty alleviation, responsible consumption, and environmental conservation (Ghalih et al., 2024; Idris et al., 2022). The convergence of Islamic ethical values with modern sustainability practices offers a unique opportunity to drive positive social and environmental change. Additionally, businesses within the halal logistics sector can leverage ESG principles to differentiate themselves in the market, appealing to both Muslim and non-Muslim consumers who prioritise ethical and sustainable practices. Summary of comparison of ESG integration between Islamic supply chain and conventional supply chain were tabulated in Table 1 below.

Table 1 Comparison of ESG Integration in Supply Chains

METHODOLOGICAL TRENDS IN RESEARCH

The methodologies employed in studies on ESG principles and halal logistics exhibit significant diversity, reflecting the complexity and multidimensional nature of these areas. Conceptual analysis is one of the most commonly used approaches, as demonstrated by El-Bassiouny et al., who integrate Islamic theological concepts with macromarketing perspectives to present a holistic sustainability framework. Their study emphasises the alignment of sustainability principles with maqāṣid al-Sharīʿah, thereby laying a theoretical foundation for embedding ethical and environmental considerations into Islamic supply chains. Similarly, Khan (2019) employs conceptual analysis to propose reforms in Islamic finance for sustainable development, linking the circular economy paradigm with Islamic economic principles to advance human development and ecological balance.

Case study methodologies also play a pivotal role in examining ESG integration within halal logistics. Mahbubi and Uchiyama (2020) analyse the Indonesian halal beef supply chain, assessing its economic, environmental, and social impacts. Their findings highlight significant challenges such as high carbon emissions and unsustainable resource usage, underscoring the need for targeted interventions to enhance sustainability. Another case study by Solehudin et al. (2024) focuses on Sharia compliance in halal tourism, demonstrating how Islamic business ethics can guide sustainable practices in tourism logistics, particularly in Bandung Regency.

Bibliometric analysis serves as an effective tool for identifying research trends and gaps in halal logistics. Supardin et al. (2023) provide a comprehensive bibliometric review of halal tourism, mapping its evolution and identifying future research directions. Their study reveals the limited focus on halal tourism in non-Muslim-majority countries, indicating a broader gap in the application of ESG principles across diverse cultural and geographical contexts. Such analyses are instrumental in highlighting underexplored areas, enabling researchers to address critical issues in ESG and halal logistics integration.

Despite progress made through various methodologies, notable research gaps persist in this domain. Alam et al. (2024) highlight the limited understanding of social media’s impact on promoting eco-friendly practices in halal ecotourism, suggesting the need for more empirical studies to evaluate the effectiveness of digital campaigns. Meanwhile, Abdul Rahim et al. (2022) identifies a lack of structured career paths and training opportunities for halal industry professionals, posing a barrier to achieving sustainability goals. Addressing these gaps requires a multidisciplinary approach that combines Islamic principles with contemporary sustainability frameworks.

The integration of advanced technologies into halal logistics represents another area with limited empirical exploration. As mentioned earlier, Ahmad et al. (2023) discusses the potential of Industry 4.0 technologies, such as blockchain and IoT, in ensuring product integrity and enhancing supply chain transparency. However, there is a paucity of real-world case studies evaluating the practical implementation of these technologies within halal supply chains. This gap highlights the need for pilot projects and longitudinal studies to assess the long-term impact of technological interventions on ESG outcomes.

The intersection of ESG principles and halal logistics also suffers from fragmented regulatory frameworks and inconsistent standards. Khan et al. (2022) identify critical factors influencing halal supply chain management, emphasising the need for standardised practices to achieve sustainable performance. However, their findings indicate that existing regulations are often inadequate to address the complexities of integrating ESG principles into halal logistics. Future research should focus on developing cohesive regulatory models that align Islamic ethical standards with global sustainability goals.

Moreover, the role of consumer behaviour in driving ESG integration within halal logistics remains underexplored. Rubawati et al. (2018) analyse consumer preferences for halal products, finding that ethical labelling significantly influences purchasing decisions. However, there is limited research on how consumer demand for eco-friendly and socially responsible products can shape supply chain practices. Expanding this area of inquiry could provide valuable insights into leveraging consumer preferences to promote ESG-aligned logistics.

CASE STUDIES AND PRACTICAL INSIGHT

The integration of ESG principles in Islamic finance and halal industries has been effectively demonstrated through various case studies highlighting regional practices and offering valuable lessons for global application. Studies such as those by Syamsurrijal et al. (2023) illustrate how halal tourism policies in Lombok, Indonesia, driven by religious values and economic imperatives, have successfully incorporated ESG principles. The decision-making process in Lombok reflects a balanced approach that includes ecological preservation and societal welfare, creating a model for sustainable development adaptable to other contexts. These differences in purpose and application are summarised in Table 2:

Table 2 Case studied related to purposed and application of Halal to support sustainability

Another significant contribution is from Khan et al. (2021), who identify and analyse risk dimensions in halal supply chains using integrated methodologies like fuzzy Delphi and DEMATEL. Their research underscores the importance of addressing production, planning, logistics, and outsourcing risks. This structured approach aids in mitigating disruptions while aligning halal logistics with ESG goals. The emphasis on proactive risk management demonstrates the potential of structured frameworks to support both economic and environmental sustainability.

In the realm of policy development, Azalie (2023) offers a comprehensive framework for an Integrated Sustainable Halal Policy (ISHP) in Brunei Darussalam. This policy aligns industrial, public, and economic sectors with the SDGs, addressing poverty alleviation and responsible consumption. This case study serves as a blueprint for other regions seeking to integrate ESG principles within halal logistics frameworks, highlighting the benefits of policy harmonisation for achieving sustainability.

Sari et al. (2024) examine the impact of sustainable strategic planning on halal culinary MSMEs in Southeast Asia. Their findings reveal that green management and digital transformation significantly enhance ecological, social, and economic performance. These practices illustrate how ESG-aligned strategies can transform operational efficiencies in halal industries, particularly in sectors with high consumer interaction, such as food services.

Lessons from other halal-related industries, such as halal tourism, are also instrumental. Lestari et al. (2023) explore destination competitiveness in Indonesia, emphasising the role of perceived trust and value in encouraging sustainable tourism practices. The integration of these attributes into destination management strategies aligns with ESG principles by promoting environmental consciousness alongside economic development.

Further advancing ESG integration in halal supply chains, Raimi et al. (2024) discuss Islamic sustainable finance as a tool for mitigating financial risks while promoting green entrepreneurship. Their findings highlight mechanisms like Islamic Green Sukuk and socially responsible investment funds, which serve as models for integrating ethical and sustainable financing within the halal ecosystem. These financial instruments not only enhance economic stability but also reinforce consumer trust, a critical element in ESG-aligned supply chains.

The role of consumer awareness in driving ESG integration is evident in studies such as Nusran et al. (2018), which highlight the impact of halal certification campaigns. Increased awareness fosters demand for halal products that meet ESG standards, encouraging businesses to adopt sustainable practices. Similarly, the work of Erwansyah et al. (2024) underscores the importance of entrepreneurial networks in improving marketing performance for halal-certified SMEs, showcasing how community-driven initiatives can support ESG objectives. Practical insights from these case studies reveal both commonalities and regional differences in implementing ESG principles across halal industries.

CONCLUSION

In conclusion, integrating ESG principles into halal logistics represents a promising synergy between Islamic ethical practices and sustainable development goals. Both frameworks align in their focus on responsible stewardship, ethical practices, and a commitment to welfare, highlighting shared values that enhance operational and societal benefits within halal logistics. The convergence of ESG and Islamic principles in logistics offers a more holistic and ethical approach, strengthening the halal industry’s credibility while appealing to sustainability-focused markets. The Islamic concepts of halalan tayyiban and maqasid al-Shariah resonate with the objectives of ESG, particularly in ensuring environmental protection, ethical labour practices, and community welfare—essential elements for sustainable halal logistics.

This review has identified key areas where Islamic principles and ESG criteria can be operationalised in halal logistics. Ethical sourcing, environmental stewardship, and fair labour standards are integral to both ESG and Islamic mandates. Additionally, aligning halal supply chains with circular economy principles can further reduce waste and enhance resource efficiency. However, implementing these principles across halal logistics faces challenges, particularly regarding regulatory coherence, financial constraints, and the need for greater stakeholder awareness and engagement.

To advance this integration, industry stakeholders should prioritise the development of regulatory frameworks that accommodate both Islamic and sustainable principles, invest in capacity-building initiatives, and promote transparency in halal logistics operations. A unified approach to addressing these challenges can contribute to a more resilient, ethical, and sustainable halal logistics system. As global demand for ethical products continues to grow, integrating ESG within halal logistics not only fulfils religious and ethical obligations but also enhances the industry’s global competitiveness, providing a blueprint for sustainable and socially responsible logistics practices.

RECOMMENDATIONS FOR FUTURE RESEARCH AND PRACTICE

There is growing recognition of the need to incorporate both sustainable practices and Islamic ethical frameworks within the logistics sector particularly in countries that are not Muslim majority. As halal logistics gains prominence in global trade, addressing research gaps in non-Muslim-majority countries becomes critical. A more inclusive approach to halal logistics, especially when considering the diverse regulatory environments in these countries, can foster sustainability while promoting fair trade and ethical practices. Additionally, expanding ESG frameworks within halal logistics can better align the sector with broader SDGs, ensuring a more robust and holistic approach. Research should prioritise policy developments and digital solutions that facilitate these integrations.

One significant challenge in halal logistics is the underexplored area of digitalisation, which could significantly enhance the application of ESG principles. The integration of digital tools such as blockchain and big data analytics in halal supply chains can improve transparency, traceability, and accountability. These technologies allow for better monitoring of ethical sourcing, environmental impacts, and regulatory compliance—essential for both ESG and halal certification. Policy and regulatory frameworks must also adapt to accommodate these technological advancements. Research should focus on how digital solutions can address current logistical barriers, streamline operations, and ensure that halal products meet ESG standards in both Muslim-majority and non-Muslim-majority countries. Such frameworks should incorporate both local and international regulations to create a cohesive and adaptable system.

Moreover, the integration of Islamic ethical principles with contemporary ESG standards offers a promising direction for future research. Islamic finance and business ethics have long emphasised sustainability, with key principles such as justice, equity, and environmental stewardship forming the foundation of Islamic business practices. These principles can complement broader ESG goals by ensuring that business practices align with ethical values and contribute to sustainable development. Understanding how these ethical frameworks can be integrated into the ESG structure is crucial for halal logistics, particularly in ensuring operations are both environmentally responsible and socially just. Studies should explore how the concept of maqāṣid al-Sharī‘ah (the objectives of Islamic law) can align with contemporary ESG practices, particularly in logistics and supply chains. This alignment can address both local and global sustainability challenges.

The expanding scope of ESG practices in halal logistics is also closely linked to broader trends in sustainable supply chain management. For instance, halal logistics can play a critical role in advancing sustainable agricultural practices, particularly in halal food supply chains. Research should focus on how halal supply chains, which often emphasise ethical sourcing, animal welfare, and fair trade, can further integrate ESG principles to improve sustainability outcomes. Halal logistics has the potential to enhance the effectiveness of ESG principles in the food supply chain by addressing environmental impacts, ethical treatment of animals, and fair-trade practices. This intersection between halal supply chain management and ESG principles is critical for achieving SDGs related to responsible consumption and production.

Future research must also address how halal logistics can support the achievement of SDGs in regions where halal markets are emerging or underdeveloped. The halal logistics sector, particularly in non-Muslim-majority countries, presents an opportunity to tackle key social challenges, including poverty alleviation and economic inclusion. Research should explore how halal logistics can contribute to social responsibility by creating sustainable jobs and promoting inclusive growth. For example, in non-Muslim-majority countries, halal logistics could support community-based enterprises, which contribute to local economies and provide ethical alternatives to traditional supply chains. This could include promoting SMEs involved in halal production and logistics, as they are essential for economic inclusion. Research should investigate how policy development can encourage the growth of halal logistics networks in these regions, focusing on social and economic outcomes.

In terms of policy and regulation, greater collaboration between governments, businesses, and consumers is necessary to advance ESG goals within halal logistics. Significant gaps in existing regulatory frameworks, particularly in non-Muslim-majority countries, may hinder the effectiveness of ESG practices in halal supply chains. Governments play a crucial role in creating policies that incentivise the integration of ESG principles into halal logistics. These policies could include tax incentives for businesses adopting sustainable practices, regulations ensuring transparency in halal certification processes, and guidelines for halal certification bodies to uphold ESG standards. Furthermore, research on how halal logistics companies can comply with both local regulations and international ESG standards will be essential to creating an inclusive global framework for halal logistics.

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