Does environmental, social, and governance disclosure affect financial performance? An empirical study of Southeast and East Asia commercial banks

Abstract

This research aims to investigate the impact of environmental, social and governance (ESG) disclosure on the financial performance of commercial banks operating in Southeast and East Asia. Specifically, this study examines a sample of 40 Southeast and East Asian banks from 2009 to 2021 to verify the influence of ESG initiatives and each environmental, social, and governance dimension on their performance. The results indicate that ESG disclosure has an adverse impact on financial performance within the banking industry. However, upon closer examination, the associations between ESG dimensions present a mixture of favorable and unfavorable consequences. The positive effect of the governance pillar on bank performance is demonstrated by the findings. Conversely, the social and environmental aspects of ESG are inversely proportional to the banks’ performance.