Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

To green or not to green? How CSR mechanisms at the governance level affect the likelihood of banks pursuing green product strategies

To green or not to green? How CSR mechanisms at the governance level affect the likelihood of... This study aims to investigate the relationship between banks’ corporate social responsibility (CSR) mechanisms at the governance level and their likelihood of pursuing green product strategies. It also examines how CSR characteristics and green product strategies have evolved across regions and time.Design/methodology/approachUsing a sample of listed banks from different economic areas over the period 2010–2019, the authors examine how CSR mechanisms at the governance level and green product strategies, which they categorize through principal component analysis, have changed over time and across regions. The authors then conducted panel regression to identify which CSR characteristics affect the likelihood that banks implement green product strategies.FindingsResults show that CSR mechanisms related to bank transparency and commitment to the community, such as sustainability reporting and United Nations Global Compact adherence, are substantive in affecting the likelihood of banks pursuing green product strategies. In contrast, mechanisms related to internal organization, such as the presence of a CSR Committee and an environmental management team, tend to play more a symbolic role. Findings also support a reconsideration of environmental, social and governance-related compensation schemes, which appear to decrease the likelihood that banks engage in some forms of green financing. The likelihood of banks pursuing green product strategies varies across regions and has increased after the Paris Agreement.Research limitations/implicationsThe findings are useful in guiding regulators, supervisory authorities and policymakers in defining policies that can create conditions for banks to develop green products and, hence, encourage the sustainability behaviors of their clients. Empirical evidence reveals that some corporate governance mechanisms and green product strategies correlate positively, institutional factors matter and public policies can play a role in strengthening such a correlation. However, results are limited to specific geographical areas and listed banks.Originality/valueThis study contributes to the institutional literature by showing that some corporate governance mechanisms are substantive in increasing the likelihood of banks pursuing green product strategies, while others are more symbolic. It also extends the literature by analyzing how banks belonging to different geographical areas have responded, over time, to sustainability objectives. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

To green or not to green? How CSR mechanisms at the governance level affect the likelihood of banks pursuing green product strategies

Birindelli, Giuliana; Palea, Vera
Corporate Governance , Volume 23 (1): 24 – Jan 26, 2023
Download PDF
24 pages

Loading next page...
 
/lp/emerald-publishing/to-green-or-not-to-green-how-csr-mechanisms-at-the-governance-level-HpJrmumFMd

References (91)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1472-0701
eISSN
1472-0701
DOI
10.1108/cg-09-2021-0349
Publisher site
See Article on Publisher Site

Abstract

This study aims to investigate the relationship between banks’ corporate social responsibility (CSR) mechanisms at the governance level and their likelihood of pursuing green product strategies. It also examines how CSR characteristics and green product strategies have evolved across regions and time.Design/methodology/approachUsing a sample of listed banks from different economic areas over the period 2010–2019, the authors examine how CSR mechanisms at the governance level and green product strategies, which they categorize through principal component analysis, have changed over time and across regions. The authors then conducted panel regression to identify which CSR characteristics affect the likelihood that banks implement green product strategies.FindingsResults show that CSR mechanisms related to bank transparency and commitment to the community, such as sustainability reporting and United Nations Global Compact adherence, are substantive in affecting the likelihood of banks pursuing green product strategies. In contrast, mechanisms related to internal organization, such as the presence of a CSR Committee and an environmental management team, tend to play more a symbolic role. Findings also support a reconsideration of environmental, social and governance-related compensation schemes, which appear to decrease the likelihood that banks engage in some forms of green financing. The likelihood of banks pursuing green product strategies varies across regions and has increased after the Paris Agreement.Research limitations/implicationsThe findings are useful in guiding regulators, supervisory authorities and policymakers in defining policies that can create conditions for banks to develop green products and, hence, encourage the sustainability behaviors of their clients. Empirical evidence reveals that some corporate governance mechanisms and green product strategies correlate positively, institutional factors matter and public policies can play a role in strengthening such a correlation. However, results are limited to specific geographical areas and listed banks.Originality/valueThis study contributes to the institutional literature by showing that some corporate governance mechanisms are substantive in increasing the likelihood of banks pursuing green product strategies, while others are more symbolic. It also extends the literature by analyzing how banks belonging to different geographical areas have responded, over time, to sustainability objectives.

Journal

Corporate Governance – Emerald Publishing

Published: Jan 26, 2023

Keywords: Sustainable finance; Corporate governance; Corporate social responsibility; Green loans; Green assets under management; G21; L21

There are no references for this article.