Date of Conferral

2023

Degree

Doctor of Business Administration (D.B.A.)

School

Business Administration

Advisor

Erica D. Gamble

Abstract

Bank managers are facing increasing pressure to adopt sustainable finance models that address stakeholders' diverse interests. It is important to understand how ESG strategies relate to corporate financial performance (CFP) to facilitate the adoption by bank leaders. Grounded in the triple bottom line and stakeholder theories, the purpose of this ex-post facto study was to examine the relationship between sustainability practices and the CFP of banks within the contingency of firm size. Secondary data on 226 global banks were collected from the Sustainalytics and FitchConnect databases. The results of the moderated multiple regression analysis indicated the two full models comprising four predictor variables (ESG risk ratings and firm size) were significant in explaining the variations in CFP, R2 = .142, F(7, 218) = 5.155, p < .05 and R2 = .140, F(7, 218) = 5.086, p < .05. In the first model, the relationships between the banks' ESG risk management and CFP were nonsignificant. The interaction effect of bank size and governance risk management was significant (p = .015, β = -3.664). In the second model, the linkage between social risk management and CFP was significant (p = .034, β = -.028). The (a) connections between environmental and governance risk management and CFP and (b) interaction impacts of bank size and ESG risk management were nonsignificant. The key recommendations are for bank leaders to clarify the financial and nonfinancial motivations for adopting sustainable strategies and apply appropriate benchmarks to evaluate the outcomes. The implications for positive social change include the potential for banks to foster financial inclusion, reduce social inequalities, positively influence other players' sustainability behaviors, and catalyze the transition to low-carbon economies.

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