Reversing the business rationale for environmental commitment in banking

Abstract

Purpose The banking industry plays a key role in society because of its role as a financial intermediary. Today’s banks are being asked to endorse environmental objectives, and recent studies have shown that large banks with strong financial performance are more likely to engage in environmental actions. Thus, the purpose of this paper is to investigate the link between corporate financial performance (CFP) and corporate environmental performance (CEP). Design/methodology/approach The authors focused on the French banking sector, using the data from a sample consisting of 191 observations covering 68 banks from 2008 to 2011. The environmental scores from the Vigeo database were the proxy measures for the extent to which banks engage in environmental actions. A panel regression model was employed for this study. Findings The findings show that high CFP was associated with high CEP. The findings also reveal that CFP and CEP may strengthen each other, suggesting a complex bidirectional relationship. Originality/value While many studies have examined whether it pays to be green, thus focusing on the causal relationship from CEP to CFP, few have considered that the causal direction might be reversed, from CFP to CEP. Furthermore, to the best of the authors’ knowledge, this paper is the first to analyze the CFP-CEP relationship using French bank data.

Environmental Regulation, Environmental Commitment, Sustainability Exploration/Exploitation Innovation, and Firm Sustainable Development

“…These results do not support the empirical analysis of Carrillo-Higueras et al (2018) with a potential reason that as an internal motivation, environmental commitment can effectively enhance firms' willingness on the environmental protection [1]. As prior suggestions, environmental commitment can improve firm performance through effective paths composed of a series of key organizational factors, e.g., environmental management capabilities, environmental activities, and environmental management systems [36,69,87].…”

A Systematic Review of Sustainable Banking through a Co-Word Analysis

“…Together with clients, employees have been added as another relevant stakeholder, and one for whom sustainable banking also has effects [76][77][78][79]. In the line of CSR performance, which is more central in this second period, one finds a large quantity of studies that border the relationship between surrender of corporate social responsibility and financial performance [6,[80][81][82][83][84][85][86][87][88][89][90][91][92]. One explanation of such significant growth in the works in this area is that it is due to the availability of new sources of data that consider measurements of CSR performance.…”

European Financial Services SMEs: Language in Their Sustainability Reporting

“…They are also under special supervision and regulation in each country, with specific requirements on top of those applied for nonfinancial entities [34], and there can be an effect of the type of market economy on banks´disclosure (coordinated or liberal market economy) [35]. This vital activity and the effects of the recent crisis have increased research on the relationship between social responsibility and profitability in financial services companies and companies operating in other sectors [36][37][38][39][40][41][42][43]. Nowadays, there is also "ethical banking" in comparison to "conventional banking" because it is supposed to be more responsible and issue more information, both financial and nonfinancial, in response to stakeholders [44,45].…”