Sustainable Banking as a Process of Institutional Adaptation: Regulatory Framework and Application in the European Union and Bulgaria

The article examines sustainable banking as a result of the transformation of the concept of sustainable development within the contemporary financial system and as a process of institutional adaptation emerging under the influence of regulatory pressure, economic incentives, and changing societal expectations. Based on the concepts of the Triple Bottom Line, stakeholder theory, and institutional theory, the study develops an integrated analytical framework for interpreting sustainable banking. The paper advances the thesis that sustainable banking should primarily be understood as a process of institutional adaptation to the regulatory and economic environment rather than as a fully completed and universally applicable model for the transformation of the financial system. Special attention is devoted to the role of the European Investment Bank (EIB) as an institutional mechanism for implementing sustainable finance policies within the European Union. The analysis demonstrates that sustainable banking is gradually becoming a structural element of the contemporary banking model, while simultaneously revealing contradictions related to the balance between sustainability, financial efficiency, and competitiveness. In the Bulgarian context, the study identifies emerging trends toward the integration of sustainable practices, but also shows that the process remains partially formal and highly dependent on external institutional pressure, creating a risk of formal compliance with ESG policies. The main contribution of the article lies in linking theoretical models with the analysis of the EIB and the Bulgarian banking sector, arguing that sustainable banking should be regarded as a dynamic and multidimensional process whose effectiveness depends on the institutional environment and the degree of actual integration of ESG principles.