Banks operate in a complex institutional environment, which relies on strong state regulation, sector self-regulation, nongovernmental monitoring, and academic oversight (Carnevale and Mazzuca, 2014). In this respect, the CSR strategies of banks are a means of guaranteeing trust in relations with stakeholders and have become a key aspect of public opinion regarding banking institutions, in the past fifteen years (de la Cuesta-Gonz_alez et al., 2006; Perez and del Bosque, 2015; Shen et al., 2016). One example in this respect is the launch of the Equator Principles in 2003. Out of the necessity to determine, assess, and manage environmental and social risks in major infrastructure projects, the Equator Principles have proposed a risk management framework endorsed by 80 financial institutions until 2020. The principles seek to prevent negative impacts on ecosystems, communities, and climate and provide a process for lenders to focus on environmental and social responsibility related to major industrial projects (Aras et al., 2018). 

 

 As indicated by the Equator Principles, responsible banking means optimizing the credit portfolio in favor of socially responsible borrowers. Goss and Roberts (2011) report that banks offer less attractive loan contracts to clients that are perceived to be risky from a CSR perspective. Moreover, in line with agency theory, the CSR expenditures of low-quality borrowers are considered overinvestments and penalized in terms of loan maturity and cost of debt. Socially responsible investing/lending takes into account the non-financial and ethical characteristics of customer performance and policies (Scholtens, 2009). For this purpose, banks are expected to invest in screening credit applicants, checking the “earlywarning signals” (EWS), monitoring credit performance, and reporting lending activities. Therefore, financial institutions play a key role as safe-keepers of business ethics principles in their value chain (Scholtens, 2006). 

 

CSR disclosure serves to highlight the company’s stakeholder engagement, cross-sector partnerships, and community development. Sustainability reporting is a crucial aspect of corporate transparency and seeks to satisfy the stakeholders’ expectations. This way, society grants a “license to operate” beyond strict legal compliance (Perrini et al., 2011). Disclosure stems from the awareness that ethical conduct is extremely important, and transparency is part of ethical behavior (Birindelli et al., 2015). The bestknown approach is the “triple bottom line” framework (Elkington, 2008) which is at the heart of the Global Reporting Initiative (2016) guidelines. The disclosure standard of the GRI allows companies to track their sustainability performance on a set of comparable indicators on three dimensions: economic, social, and environmental (Avrampou et al., 2019; Siueia et al., 2019). The Refinitiv scores capture the CSR performance and transparency aspects in relation to industry peers. 

 

Sumber: 

Bătae, O. M., Dragomir, V. D., & Feleagă, L. (2021). The relationship between environmental, social, and financial performance in the banking sector: A European study. Journal of Cleaner Production, 290, 125791. 

 Aras, G., Tezcan, N., Kutlu Furtuna, O., 2018. The value relevance of banking sector multidimensional corporate sustainability performance. Corp. Soc. Responsib. Environ. Manag. 25, 1062e1073. https://doi.org/10.1002/csr.1520. 

 Carnevale, C., Mazzuca, M., 2014. Sustainability report and bank valuation: evidence from European stock markets. Bus. Ethics 23, 69e90. https://doi.org/10.1111/beer.12038. 

 Perez, A., del Bosque, I.R., 2015. How customer support for corporate social responsibility influences the image of companies: evidence from the banking industry. Corp. Soc. Responsib. Environ. Manag. 22, 155e168. https://doi.org/10.1002/csr.1331. 

 Shen, C.H., Wu, M.W., Chen, T.H., Fang, H., 2016. To engage or not to engage in corporate social responsibility: empirical evidence from global banking sector. Econ. Modell. 55, 207e225. https://doi.org/10.1016/j.econmod.2016.02.007. 

 Global Reporting Initiative, 2016. GRI Sustainability Reporting Standards. Amsterdam, The Netherlands. 

 Birindelli, G., Ferretti, P., Intonti, M., Iannuzzi, A.P., 2015. On the drivers of corporate social responsibility in banks: evidence from an ethical rating model. J. Manag. Govern. 19, 303e340. https://doi.org/10.1007/s10997-013-9262-9. 

 Avrampou, A., Skouloudis, A., Iliopoulos, G., Khan, N., 2019. Advancing the sustainable development goals: evidence from leading European banks. Sustain. Dev. 27, 743e757. https://doi.org/10.1002/sd.1938. 

 Esteban-Sanchez, P., de la Cuesta-Gonz_alez, M., Paredes-Gazquez, J.D., 2017. Corporate social performance and its relation with corporate financial performance: international evidence in the banking industry. J. Clean. Prod. 162, 1102e1110. https://doi.org/10.1016/j.jclepro.2017.06.127. 

 Gangi, F., Meles, A., D’Angelo, E., Daniele, L.M., 2019. Sustainable development and corporate governance in the financial system: are environmentally friendly banks less risky? Corp. Soc. Responsib. Environ. Manag. 26, 529e547. https:// doi.org/10.1002/csr.1699.