Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks

Abstract

Purpose Earlier firms were evaluated mostly from their financial performance perspective, but with the increasing attention to sustainability goals, environmental, social and governance (ESG) performance of firms became key concerns to stakeholders. The purpose of this paper is to explore the effects of ESG performance of banks on their financial performance, in the context of emerging markets. Design/methodology/approach This study employs the generalised method of moments technique for estimation purpose due to the dynamic nature of the data and to correct for endogeneity. This study uses the ESG performance data of 93 emerging market banks from 2015 to 2018, available in Asset4 ESG database of Refinitiv, formerly known as Thompson Reuters. The accounting and financial data are collected from Refinitiv Datastream database. Findings The findings indicate a positive association of emerging market banks’ environmental and social performance with their financial performance, but governance performance does not influence financial performance. Originality/value While many studies exist on the association of ESG concerns of an organisation with their financial profitability, the literature on in the context of banking is still limited. To the best of the authors’ knowledge, this is the first study that examines the effect of ESG practices of banks on their financial performance in the context of emerging economies.

Pengaruh Pengungkapan Esg Terhadap Kinerja Keuangan Perusahaan (Studi Empiris Pada Perusahaan Sektor Keuangan Yang Terdaftar Di Bei Periode 2017-2019)

“…Sektor industri berisiko tinggi tersebut dapat beroperasi karena adanya pendanaan yang berasal dari lembaga jasa keuangan. (Cornett, Erhemjamts, & Tehranian, 2016), (Shakil, Mahmood, Tasnia, & Munim, 2019) (Buallay, 2019a), (Maama, 2020), dan (Nollet, Filis, & Mitrokostas, 2016). (Freeman & McVea, 1984).…”

Board gender diversity and environmental, social and governance performance of US banks: moderating role of environmental, social and corporate governance controversies

“…ESG is also regarded as the fundamental strategy of corporate sustainability, and generally popular in banking institutions (McDonald and Rundle-Thiele, 2008). Effective strategic decisions to inject resources and capital to improve and achieve the commitments pertaining to ESG help banks to achieve a sound financial position, and upsurge customer loyalty (Arli and Lasmono, 2010;Buallay, 2019;Buallay et al, 2020;Shakil et al, 2019). Any negligence on ESG may harm the goodwill of the bank and question long-term sustainability.…”

Kinerja Perusahaan: Pengaruh Corporate Social Responsibility dan Pertumbuhan Pendapatan

“…Setiap perusahaan tentunya berkeinginan untuk memiliki kinerja yang baik dengan menghasilkan profit (Pan et al, 2014). Kinerja keuangan dinilai penting sebab untuk melihat bahwa suatu perusahaan yang menerapkan konsep dan praktik keberlanjutan mengalami perkembangan dengan menghasilkan profit (Shakil et al, 2019). Membandingkan kinerja keuangan perusahaan dengan tahun sebelumnya inilah yang membuat para stakeholder dapat melihat pencapaian hasil yang diterima atas aktivitas yang dilakukan perusahaan dalam mengimplementasikan praktik keberlanjutan.…”

“…Tanggung jawab secara sosial merupakan komitmen usaha untuk bertindak secara etis, beroperasi secara legal, dan berkontribusi mengembangkan keberlanjutan ekonomi bersamaan peningkatan kualitas hidup dari anggota perusahaan dan masyarakat secara lebih luas (Shakil et al, 2019). Disesuaikan dengan pedoman dari GRI-Standards, total keseluruhan indeks pengungkapan CSR berjumlah 89 (GRI Standards, 2018) yang akan diasumsikan sebagai.…”