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Sustainable banking initiatives, environmental disclosure and financial performance: The moderating impact of corporate governance mechanisms

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  • Douglas A. Adu

Abstract

This paper contributes to the sustainable development in business literature by examining the impact of a broad corporate governance disclosure index on sustainable banking initiatives and, subsequently, determines the extent to which the sustainability‐for‐performance sensitivity metric is moderated by corporate governance mechanisms. Based on data collected from 220 banks in 16 Sub‐Saharan Africa countries over the 2007–2018 period (i.e., making over 2027 bank‐year observations), the findings of the study are as follows: Firstly, the study finds that corporate governance mechanisms have positive impact on sustainable decisions, as captured by environmental disclosures and sustainable banking initiatives. Secondly, the study finds that sustainable banking initiatives improve the financial performance of banks in the Sub‐Saharan African countries. Finally, the study detects that the relationship between sustainable banking initiatives and financial performance is significantly moderated by corporate governance mechanisms, revealing that the sustainability‐for‐performance sensitivity metric is mainly positive, and improves in banks with quality corporate governance mechanisms. This indicates that the sustainability‐for‐performance sensitivity is contingent on the quality of the bank's corporate governance structures. The findings have key implications for banking practitioners, environmental activists, regulators and policymakers.

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  • Douglas A. Adu, 2022. "Sustainable banking initiatives, environmental disclosure and financial performance: The moderating impact of corporate governance mechanisms," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2365-2399, July.
    • Handle: RePEc:bla:bstrat:v:31:y:2022:i:5:p:2365-2399
    DOI: 10.1002/bse.3033
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    2. Al-Najjar, Basil & Salama, Aly, 2022. "Mind the gap: Are female directors and executives more sensitive to the environment in high-tech us firms?," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    3. Douglas A. Adu, 2022. "Competition and bank risk-taking in Sub-Saharan Africa countries," SN Business & Economics, Springer, vol. 2(7), pages 1-26, July.
    4. Agnieszka Karman & Viktor Prokop & Carlo Giglio & Fazal Ur Rehman, 2024. "Has the Covid‐19 pandemic jeopardized firms' environmental behavior? Bridging green initiatives and firm value through the triple bottom line approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 375-395, January.
    5. Md. Nur-E-Alam Siddique & Shifa Mohd Nor & Zizah Che Senik & Nor Asiah Omar, 2023. "Corporate Social Responsibility as the Pathway to Sustainable Banking: A Systematic Literature Review," Sustainability, MDPI, vol. 15(3), pages 1-19, January.
    6. Nosheena Yasir & Muhammad Babar & Hafiz Shakir Mehmood & Ruyu Xie & Guanke Guo, 2023. "The Environmental Values Play a Role in the Development of Green Entrepreneurship to Achieve Sustainable Entrepreneurial Intention," Sustainability, MDPI, vol. 15(8), pages 1-27, April.
    7. Monday Nweke Igwe & Saleh F. A. Khatib & Ayman Hassan Bazhair, 2023. "Sustainability reporting in Africa: A systematic review and agenda for future research," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2081-2100, September.
    8. Grey, Colette & Flynn, Antoinette & Adu, Douglas A., 2024. "An examination of how executive remuneration and firm performance are influenced by Chair-CEO diversity attributes," International Review of Financial Analysis, Elsevier, vol. 94(C).
    9. Adu, Douglas A. & Abedin, Mohammad Zoynul & Hasan, Mudassar, 2023. "Bank ownership structures and sustainable banking initiatives: The moderating effect of governance mechanism," International Review of Financial Analysis, Elsevier, vol. 89(C).

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