Introduction

The environmental, social, and governance (ESG) dimensions have attained a dominant role for financial institutions in recent years and in particular the practical initiatives to incorporate ESG into business and operating models have become one of the most significant issues for European banks. The three letters E, S, G—which form the acronym ESG—identify a comprehensive setting that have changed and will continue to have a huge influence on banking. Why ESG topics matter for financial institutions and banks? What impacts do ESG dimensions have on banks? The significance of ESG matters has never been more prominent since the society has to deal with environmental and social challenges such as climate change, social inequality, and governance failures. In this context, ESG is increasingly becoming a relevant issue for doing business in banks as it can support in managing risks, enhancing reputation, complying with regulatory requirements, driving innovation, and growing access to capital. Banks that prioritize ESG are likely to attain long-term success because they are better appropriate for creating a more sustainable and fair future for all stakeholders. ESG themes are progressively important for customers, investors, and other stakeholders who want to recognize banks as responsible entities. Banks that prove their commitment toward sustainability are more able to fascinate customers, as well as to raise funding from ESG-interested investors.