Environment Sustainability and Banks: A Study of Selected Indian Banks

Abstract

Environmental sustainability has become a critical focus in corporate strategy, especially among financial institutions. Banks are progressively adopting ESG principles within their operational frameworks. The concept of environmental sustainability emphasizes responsible environmental practices aimed at preserving natural resources and ensuring their availability for future generations without compromising quality. Purpose: COVID-19 pandemic has drastically altered human behavior and perceptions, particularly concerning the environment. This study investigates the impact of environmental disclosures on the performance of selected Indian banks. Methodology: The study utilizes a dataset comprising financial and environmental metrics for selected Indian banks during the period 2013-2021. Using spearman’s Rank Correlation and robust regression analysis, the study examines the impact of environmental disclosure index on key financial indicators. Findings: The study reveals that banks with higher environmental disclosure index (EDI) tend to have high interest income per employee and better financial health in terms of lower non-performing advances. However, the relationship between environmental disclosure index and capital adequacy was nuanced, indicating potential costs associated with higher environmental disclosures. The significant relationships between environmental disclosures and bank performance, providing insights for stakeholders on the importance of sustainable practices in the Indian banking sector.

Keywords: Environmental Disclosures, Indian Banks, Financial Performance, ESG, Sustainability

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