Abstract
In the financial sector, the green banking concept has become increasingly popular in recent years, playing a pivotal role in green finance and sustainable practices, as well as in disclosing green banking performance information to multiple stakeholders. However, the credibility and reliability of the associated reporting attracts substantial scepticism. Stakeholders increasingly question whether the quality of green banking reporting (QGBR) is an authentic reflection of sustainability efforts or whether it is merely symbolic.This study therefore has three key objectives: (1) to assess whether the quality of green banking reporting is authentic or symbolic and how it has evolved over time; (2) to examine the influence of bank-specific factors (both internal and external) on the QGBR, such as green banking regulatory directives, Global Reporting Initiative (GRI) guidelines, social and environmental performance, management commitment, corporate governance quality (e.g., board size, independent directors, gender diversity, sustainability committees, etc.) and CEO power (including CEO duality, shareholding, tenure and family affiliation); and (3) to investigate whether the positive relationship between green banking regulatory directives and the QGBR is moderated by political connections.
In seeking to address these objectives, 264 firm-year observations from Pakistan’s banking sector over an 11-year period (2012–2022) were analysed by the study. Data were drawn from annual and sustainability reports. An 18-item QGBR index was developed through content analysis, with regression analysis using Stata/MP 18.0 employed to test the hypotheses. To validate the results, robustness checks were conducted.
The findings reveal three major insights, examined through the lenses of stakeholder theory, legitmacy theory and institutional theory. Firstly, green banking reporting in Pakistan’s banking sector was initially symbolic but improved notably following the introduction of green banking regulatory directives in 2017. However, key quality dimensions, for instance, verifiability and balanced information, still require substantial improvement. Until these areas are adequately addressed, green banking reporting cannot be considered fully substantive. Despite notable progress, the findings suggest that the green banking reporting in Pakistan’s banking sector remains largely a procedural formality rather than a genuine reflection of commitment to sustainability practices. Secondly, external and internal factors (i.e., green banking regulatory directives, GRI guidelines, social and environmental performance, management commitment and corporate governance quality) show a positive association with the QGBR, whereas no significant relationship is found between CEO power and the quality of green banking reporting (QGBR). Thirdly, the positive impact of green banking regulatory directives on the QGBR is moderated and strengthened by political connections, enhancing the overall effectiveness of regulatory efforts.
This study makes several contributions. In theoretical terms, it extends the quality of non-financial reporting literature by focusing specifically on the QGBR, a distinct area within sustainability and green banking reporting. It addresses a critical gap by distinguishing the QGBR from general corporate social responsibility (CSR) and carbon reporting, while examining its unique drivers. In methodological terms, the study develops a comprehensive 18-item QGBR index, offering a structured tool to assess the QGBR, especially in the contexts of developing countries like Pakistan. In practical terms, the findings have implications for various stakeholders. Regulators can use the QGBR index to monitor and improve green banking reporting’s credibility, with the result being a more transparent and accountable banking sector. Investors can benefit from increased transparency when evaluating banks’ environmental commitments. Overall, the study provides evidence-based guidance to support green banking practices that are more responsible, transparent and effective.
| Date of Award | 2026 |
|---|---|
| Original language | English |
| Supervisor | Habib KHAN (Supervisor), Abu MOLLIK (Supervisor) & Simon HOY (Supervisor) |
Cite this
- Standard