The Effect of Sustainability Management Practices, Green Intellectual Capital, and Enterprise Risk Management on Indonesian Banking Sustainable Growth

Abstract

In Indonesia, bank sustainability received special attention after the issuance of the Sustainable Finance Roadmap Phase 1 in 2014 by the Financial Services Authority (Otoritas Jasa Keuangan). This roadmap is based on the criticism of development which solely targets economic growth but is not followed by attention to the issue of environmental degradation and social inequality. The negative impact of unsustainable economic development has prompted the initiation of sustainable development that prioritizes the harmony of economic, environmental, and social aspects, or in other words the triple bottom line. This study aims to examine and analyze the effect of sustainability management practices, green intellectual capital, and enterprise risk management toward Indonesian banking sustainable growth. Multiple regression analysis with panel data was used for hypothesis testing in this study. The sample in this study consists of 50 observations from 10 banks listed on the Indonesia Stock Exchange between 2016 and 2020. The results showed that sustainability management practices have a negative effect on Indonesian banking sustainable growth whereas green intellectual capital and enterprise risk management positively affected the sustainable growth of Indonesian banking.