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Reversing the business rationale for environmental commitment in banking

Author

Listed:
  • Issam Laguir
  • Magalie Marais

    (Montpellier Business School)

  • Jamal El Baz
  • Rebecca Stekelorum

Abstract

Purpose The banking industry plays a key role in society because of its role as a financial intermediary. Today's banks are being asked to endorse environmental objectives, and recent studies have shown that large banks with strong financial performance are more likely to engage in environmental actions. Thus, the purpose of this paper is to investigate the link between corporate financial performance (CFP) and corporate environmental performance (CEP). Design/methodology/approach The authors focused on the French banking sector, using the data from a sample consisting of 191 observations covering 68 banks from 2008 to 2011. The environmental scores from the Vigeo database were the proxy measures for the extent to which banks engage in environmental actions. A panel regression model was employed for this study. Findings The findings show that high CFP was associated with high CEP. The findings also reveal that CFP and CEP may strengthen each other, suggesting a complex bidirectional relationship. Originality/value While many studies have examined whether it pays to be green, thus focusing on the causal relationship from CEP to CFP, few have considered that the causal direction might be reversed, from CFP to CEP. Furthermore, to the best of the authors' knowledge, this paper is the first to analyze the CFP-CEP relationship using French bank data.

Suggested Citation

  • Issam Laguir & Magalie Marais & Jamal El Baz & Rebecca Stekelorum, 2018. "Reversing the business rationale for environmental commitment in banking," Post-Print hal-03542444, HAL.
    • Handle: RePEc:hal:journl:hal-03542444
    DOI: 10.1108/MD-12-2016-0890
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    Citations

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    Cited by:

    1. Xinpeng Xing & Tiansen Liu & Jianhua Wang & Lin Shen & Yue Zhu, 2019. "Environmental Regulation, Environmental Commitment, Sustainability Exploration/Exploitation Innovation, and Firm Sustainable Development," Sustainability, MDPI, vol. 11(21), pages 1-20, October.
    2. Cristina Gutiérrez-López & Julio Abad-González, 2020. "Sustainability in the Banking Sector: A Predictive Model for the European Banking Union in the Aftermath of the Financial Crisis," Sustainability, MDPI, vol. 12(6), pages 1-25, March.
    3. María Mar Miralles-Quirós & José Luis Miralles-Quirós & Jesús Redondo Hernández, 2019. "ESG Performance and Shareholder Value Creation in the Banking Industry: International Differences," Sustainability, MDPI, vol. 11(5), pages 1-15, March.
    4. Mario La Torre & Helen Chiappini (ed.), 2020. "Contemporary Issues in Sustainable Finance," Palgrave Studies in Impact Finance, Palgrave Macmillan, number 978-3-030-40248-8, December.
    5. Feng-Li Lin, 2021. "R&D Investment, Financial and Environmental Performance Nexuses via Bootstrap Fourier Quantiles Granger Causality Test," Economies, MDPI, vol. 9(2), pages 1-11, May.
    6. María Mar Miralles‐Quirós & José Luis Miralles‐Quirós & Jesús Redondo‐Hernández, 2019. "The impact of environmental, social, and governance performance on stock prices: Evidence from the banking industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1446-1456, November.
    7. Magdalena Kludacz-Alessandri & Małgorzata Cygańska, 2021. "Corporate Social Responsibility and Financial Performance among Energy Sector Companies," Energies, MDPI, vol. 14(19), pages 1-16, September.
    8. Antonio Fabio Forgione & Issam Laguir & Raffaele Staglianò, 2020. "Effect of corporate social responsibility scores on bank efficiency: The moderating role of institutional context," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2094-2106, September.
    9. Michelangelo Bruno & Valentina Lagasio, 2021. "An Overview of the European Policies on ESG in the Banking Sector," Sustainability, MDPI, vol. 13(22), pages 1-10, November.
    10. Issam Laguir & Rebecca Stekelorum & Lamia Laguir & Raffaele Staglianò, 2021. "Managing corporate social responsibility in the bank sector: A fuzzy and disaggregated approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1324-1334, July.
    11. Juan Camilo Mejia-Escobar & Juan David González-Ruiz & Eduardo Duque-Grisales, 2020. "Sustainable Financial Products in the Latin America Banking Industry: Current Status and Insights," Sustainability, MDPI, vol. 12(14), pages 1-25, July.
    12. Juan J. Nájera-Sánchez, 2019. "A Systematic Review of Sustainable Banking through a Co-Word Analysis," Sustainability, MDPI, vol. 12(1), pages 1-23, December.
    13. Esther Ortiz-Martínez & Salvador Marín-Hernández, 2020. "European Financial Services SMEs: Language in Their Sustainability Reporting," Sustainability, MDPI, vol. 12(20), pages 1-20, October.

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