Environmental, social, governance (ESG) and the performance of banks in South Africa

Abstract

Banks will play a pivotal role in the transition to a green economy and the achievement of the Sustainable development Goals (SDGs). Banks have investors and shareholders and as such must produce returns in order for shareholders to retain or increase their investment. This study assesses the effect that corporate sustainability disclosures and performance have on bank performance. The study included the six largest banks for South Africa, for which data was collected from publicly available sources. The study finds that there in a statistically significant inverse relationship between ESG and bank operational performance. Secondly, a positive relationship is observed between ESG and bank financial performance. Similarly, a positive relationship is found between ESG and market performance.