GREEN BANKING INITIATIVES FOR SUSTAINABLE DEVELOPMENT: PRACTICES AND PERFORMANCE OF COMMERCIAL BANKS
Article Sidebar
Main Article Content
Abstract
Concerns about environmental sustainability and climate change have prompted commercial banks to adopt green initiatives, such as dedicated "Green Funds" and eco-friendly products, to support sustainable development. Regulatory frameworks and stakeholder pressures are driving banks to integrate environmental responsibility and corporate social responsibility into their operations. Green banking is defined as integrating environmentally friendly practices, such as sustainable lending, carbon footprint reduction, and financing for renewable energy, into banking operations. Standard practices include funding eco-friendly projects and minimizing the bank's carbon footprint. These initiatives aim to align financial activities with ecological conservation and long-term economic stability. This study examines green banking practices across 10 commercial banks (5 public, 5 private) in Jaipur, India, focusing on their impact on banks' environmental Performance. A survey using structured questionnaires collected data from 161 bank employees (including branch managers, branch heads, relationship managers, and assistant managers) across all ten banks. Subsequently, correlation and regression analysis were conducted to assess the relationship between green practices and environmental performance indicators. The results reveal a statistically significant and positive impact of green banking on the environmental Performance of both public and private sector banks. Quantitatively, the regression model explains about 71.3% of the Variance in the ecological performance measure (R² =0.713), indicating that sustainability-oriented practices substantially improve outcomes. The major finding is that green banking initiatives alone account for roughly 71.3% of the variation in banks' environmental outcomes in this sample. Overall, these results highlight the strong empirical association between banks' green initiatives and their environmental Performance.
JEL Classification Codes: G21, G41, E44.
Downloads
Article Details
Section
This work is licensed under a Creative Commons Attribution 4.0 International License.
How to Cite
References
Ahuja, N. (2015). Green banking in India: A review of literature. International Journal for Research in Management, 4(1), 11–16.
Bihari, S. C., & Pandey, B. (2015). Green banking in India. Journal of Economics and International Finance, 7(1), 1–17. https://doi.org/10.5897/jeif2014.0599
Bimha, A., & Nhamo, G. (2017). Measuring environmental Performance of banks: Evidence from Carbon Disclosure Project (CDP) reporting banks. Journal of Economic and Financial Sciences, 10(1), 26–46.
Brar, T. (2016). Green banking adoption: A comparative study of Indian public and private sector banks. ENVISION – International Journal of Commerce and Management, 10, 60–67.
Chen, J., Siddik, A., Zheng, G. W., Masukujjaman, M., & Bekhzod, S. (2022). The effect of green banking practices on banks' environmental Performance and green financing: An empirical study. Energies, 15(4), 1292. https://doi.org/10.3390/en15041292
Chowdhury, R. K. (2018). Corporate Sustainability and Financial Performance of Bangladeshi Banks, Master’s thesis, Waterloo, Ontario, Canada.
Cholasseri, S. (2016). Green banking - An overview. International Journal of Advance Research and Innovative Ideas in Education, 1(4), 108–111.
Dewi, K., & Indudewi, Y. R. (2024). Green banking impact: Mediation of green image and bank trust on bank loyalty. PERFORMA, 9(1), 1–19. https://doi.org/10.37715/jp.v9i1.4513
Goswami, R. (2024). Does green banking pay off? A meta-analysis of the link between sustainable finance and profitability. Sustainability, 16(3), 1456. https://doi.org/10.3390/su16031456
Grover, S., & Kaur, H. (2019). Green banking: A strategic response to environmental turbulence. Journal of Management Research and Analysis, 6(2), 120–123. https://doi.org/10.18231/j.jmra.2019.023
Habibullah, M., & Natalwala, A. (2023). A quantitative study on customers’ attitude towards green banking practices through ABC theory in Surat City. International Journal of Education, Modern Management, Applied Science & Social Science (IJEMMASSS), 5(1), 1–10.
Han, S., Zhang, Z., & Yang, S. (2022). Green finance and corporate green innovation: Based on China’s green finance reform and innovation pilot policy. Journal of Environmental and Public Health, 2022, 1–12. https://doi.org/10.1155/2022/1833377
Jain, P., & Sharma, B. K. (2023). Impact of green banking practices on sustainable environmental Performance and profitability of private sector banks. International Journal of Social Ecology and Sustainable Development, 14(1), 1–19. https://doi.org/10.4018/ijsesd.330135
Jayabal, G., & Soundarya. (2016). Green banking: As banks initiative for sustainable development. International Journal of Management, 7(7), 276–280.
Jeucken, M. (2010). Sustainable finance and banking: The financial sector and the future of the planet. Earthscan.
Kala, N., & Vidyalaya, K. (2020). A study on the impact of green banking practices on banks' environmental Performance with special reference to Coimbatore City. African Journal of Business and Economic Research, 15(3), 1–6.
Kalra, R. (2016). Green banking: A modern approach for sustainable development. International Journal of Business Quantitative Economics and Applied Management Research (IJBEMR), 3(3), 96–107.
Karim, R., Hossain, S., Rahman, M., & Hossain, A. (2020). The effects of green banking practices on financial Performance of listed banking companies in Bangladesh. Canadian Journal of Business and Information Studies, 2(6), 120–128. https://doi.org/10.34104/cjbis.020.01200128
Krstić, N. (2013). United Nations Environment Programme Finance Initiative: UNEP FI. Bankarstvo, 42(5), 140-149.
Khanna, A., Arora, S., & Rajput, N. (2013). An empirical study of impact of environmental Performance on financial Performance in Indian banking sector. International Journal of Business and Management Invention, 2(9), 19–24.
Kumar, R., Verma, A., Shome, A., Sinha, R., Sinha, S., Jha, P. K., ... & Vara Prasad, P. V. (2021). Impacts of plastic pollution on ecosystem services, sustainable development goals, and need to focus on circular economy and policy interventions. Sustainability, 13(17), 9963.
Mahmud, S., & Lee, D. (2025). Green banking in emerging economies: The role of ATM infrastructure and board risk governance in financial Performance. Journal of Financial Services Research, 69(2), 215–238. https://doi.org/10.1007/s10693-025-00452-3
Mathur, S., & Chaturvedi, A. (2022). Future of green financing – Banking customer’s perspective. Madhya Bharti, 82, 330–342.
Meena, R. (2013). Green banking: As initiative for sustainable development. Global Journal of Management and Business Studies, 3(10), 1181–1185.
Mir, A. A., & Bhat, A. A. (2022). Green banking and sustainability – A review. Arab Gulf Journal of Scientific Research, 40(3), 247–263. https://doi.org/10.1108/agjsr-04-2022-0017
Muchiri, M. K., Erdei-Gally, S. K., & Fekete-Farkas, M. (2025). Green banking practices, opportunities, and challenges for banks: A systematic review. Climate, 13(5), 102. https://doi.org/10.3390/cli13050102
Prabhu, G. N., & Aithal, P. S. (2021). A review-based research agenda on green banking service practices through green CSR activities. International Journal of Management, Technology and Social Sciences (IJMTS), 6(2), 204–230.
Risal, N., & Joshi, S. (2018). Measuring green banking practices on banks' environmental Performance: Empirical evidence from Kathmandu Valley. Journal of Business and Social Sciences, 2(1), 44–56. https://doi.org/10.3126/jbss.v2i1.22827
Rahal, M. H., Rahman, J., Tanchangya, T., & Esquivias, M. A. (2023). Green banking initiatives and sustainability: A comparative analysis between Bangladesh and India. Research in Globalization, 7, 100184. https://doi.org/10.1016/j.resglo.2023.100184
Sahoo, B. P., Singh, A., & Jain, N. (2016). Green banking in India: Problems and prospects. International Journal of Research - Granthaalayah, 4(8), 92–99. https://doi.org/10.29121/granthaalayah.v4.i8.2016.2566
Scholtens, B. (2017). Why finance should care about ecology. Trends in Ecology & Evolution, 32(7), 500–505. https://doi.org/10.1016/j.tree.2017.03.013
Shaumya, K., & Arulrajah, A. (2017). The impact of green banking practices on banks' environmental Performance: Evidence from Sri Lanka. Journal of Finance and Bank Management, 5(1), 77–90. https://doi.org/10.15640/jfbm.v5n1a7
Sharma, M., & Choubey, A. (2022). Green banking initiatives: A qualitative study on Indian banking sector. Environment, Development and Sustainability, 24, 293–319. https://doi.org/10.1007/s10668-021-01426-9
Sutrisno, S., Widarjono, A., & Hakim, A. (2024). The role of green credit in bank profitability and stability: A case study on green banking in Indonesia. Risks, 12(12), 198. https://doi.org/10.3390/risks12120198
Thomas, S., & Linson, S. (2018). Customers’ awareness and adoption of green banking in Thrissur District. VISTA, 7(1), 37–46.
Trehan, R. (2015). Green banking in India. Journal of Poverty, Investment and Development, 14, 27–33. https://core.ac.uk/download/pdf/234695277.pdf
Tu, T. T. T., & Dung, N. T. P. (2017). Factors affecting green banking practices: Exploratory factor analysis on Vietnamese banks. Economics Development Review, 24(2), 4–30. https://doi.org/10.24311/jed/2017.24.2.05
Ullah, M. A. (2020). Green banking in the way of sustainable development: An overview of practice and progress in Bangladesh. Canadian Journal of Business and Information Studies, 2(5), 105–119. https://doi.org/10.34104/cjbis.020.01050119
Varghese, R. (2018). Green banking – A runway for Indian business to land in the path of success through powerful customer network. International Journal for Research in Engineering Application & Management, 4(12), 13–16. https://doi.org/10.18231/2454-9150.2018.0003
Wang, Y., Sun, W., & Yu, J. (2023). Green banking disclosures, corporate governance, and firm value: Evidence from emerging markets. Journal of Cleaner Production, 415, 137658. https://doi.org/10.1016/j.jclepro.2023.137658
Weber, O. (2016). Equator Principles reporting. Journal of Sustainable Finance & Investment, 6(3), 172–191. https://doi.org/10.1080/20430795.2016.1184868
Wijethunga, A. W. G. C. N., & Dayaratne, D. A. I. (2018). Role of banking sector in promoting green investments: Exploring new developments. International Journal of Accounting and Business Finance, 4(1), 66–81. https://doi.org/10.4038/ijabf.v4i1.28
Wisetsri, W., Chansongpol, T., & Thaisaentha, K. (2022). Green marketing: A study on environmental concern and consumer perception. Journal of Positive School Psychology, 6(8), 7366–7375. https://doi.org/10.31849/jpsp.v6i8.12345
Zhang, D. (2021). How environmental Performance affects firms' access to credit: Evidence from EU countries. Journal of Cleaner Production, 315, 12829. https://doi.org/10.1016/j.jclepro.2021.12829
Zhang, X., Whang, Z., Zhong, X., Yang, S., & Siddik, A. (2022). Do green banking activities improve the banks' environmental Performance? The mediating effect of green financing. Sustainability, 14(2), 989. https://doi.org/10.3390/su14020989
Zheng, T., Zhang, H., & Ye, S. (2024). Monetary policies on green financial markets: Evidence from a multi-moment connectedness network. Energy Economics, 136, 107739.