Theoretical Framework for the Influence of Crucial Factors on Green Banking Strategy Implementation

Over the past decade, most research in sustainable development has emphasised the implementation of green banking as an essential component of the transition to Sustainable Financial 2.0. By maximising the integrated value, which integrates financial, social, and environmental value, it provides stakeholder value. Generally, one of the most important objectives of sustainable growth is to ensure environmental value. A stable environment could let the next generation gain more profit without worrying about hardship and risks from natural disasters. As a result, the stakeholder approach to corporate governance and the practice of corporate social responsibility leads to the adoption of green banks. The purpose of the study is to analyze the factors that affect how green banking strategies are implemented and to make hypotheses about how effective these factors are for green banks. To fulfil such purpose, the theory of change is used to classify these factors into ESG (environment, society and governance) model under the theoretical framework. While external factors influencing green banking strategy include the environment (including physical risks, transition risks, and liability risks) and society (including policy, regulation, customer demand, and competition), bank management is a crucial internal component to guiding the banking system toward going green.