Green Banking, CSR, and Financial Outcomes in Pakistan

Abstract

Green banking and corporate social responsibility (CSR) have become the important mechanisms that are contributing towards sustainable financial practices besides the realization of organizational performance objectives. With a background of Pakistan, mounting pressure on the banking industry is the need to incorporate elements of environmental sustainability and social responsibility into the general operations of the industry owing to regulatory provisions, stakeholder privileges, and international sustainability requirements. This paper examines how green banking initiatives, CSR practices and financial performance are related in Pakistani banks. Quantitative methodology was used to find data on employees and managers working in six large banks using a structured questionnaire which is founded on valid scales. The relationships between green banking adoption and CSR engagement and financial performance indicators were analyzed through statistical analysis, in which correlation, regression, and structural equation modeling were applied to identify the relationships. The results indicate that the implementation of green banking initiatives results positively in CSR implementation that consequently leads to improvement in profitability, operational efficiency and trust of stakeholders. This paper makes a contribution to the body of literature because it presents empirical evidence of the state in Pakistan, and the study introduces strategic importance of incorporating environmental and societal practices in the banking activities in an attempt to attain sustainable financial results.