Employee Engagement and Green Finance: An Analysis of Indonesian Banking Sustainability Reports

Green finance has emerged as a critical driver of sustainable development for the banking industry. Engaging employees is essential for the successful implementation of green finance initiatives. This study aims to examine the employee engagement strategies of leading Indonesian banks and compare them with non-banking financial institutions. By analyzing sustainability reports and ESG risk ratings, this study identifies key employee engagement practices in the green finance context, compares them with those of non-banking institutions, and explores the link between green finance, employee engagement, and ESG risk ratings. Drawing on stakeholder theory and an ethical sustainability governance framework, this content analysis study reveals that Indonesian banks primarily focus on training, labor rights, and diversity as key employee engagement practices. While these practices are consistent across materiality, strategy, and performance, they may not fully capture the nuances of employee engagement in the context of green finance. When compared to non-banking institutions, Indonesian banks exhibit a stronger focus on all employee engagement parameters. However, a potential link between green finance, employee engagement, and ESG risk ratings is not evident. The current ESG rating methodologies may prioritize the quantity and quality of sustainability reporting over the actual implementation of impactful sustainable practices, particularly in employee engagement practices and green finance.