ESG scores in MENA banks

Abstract

An extensive body of the literature on ESG examined its effect on banks performance. However, little attention has paid on the relationship between the growing role of Islamic banks Sharia and sustainability. Based on a sample of 41 conventional and Islamic banks from MENA countries in the region 2012–2021 by using a data of ESG score extracted from Thomson Reuters Refinitiv, this paper assesses whether and to what extent the development of Islamic banks Sharia to Sustainability strategies. Our results show that conventional banks have higher sustainability practices compared to Islamic banks. The mean ESG score in conventional banks is higher than Islamic banks. Hence, we reject our hypothesis assumption that suggest the Islamic banks uses Sharia principles increase the corporate social responsibility. Therefore, The findings show a negative relationship between Islamic finance and sustainability. Finally, the results indicate an upward trend in the ESG scores in both types of banks.