Beyond CSR: An Empirical Analysis of How Pakistan’s Banks Drive Sustainability Through Operational Efficiency, Eco-Friendly Practices & Green Financial Products.

Abstract

Purpose —This study investigates the impact of green banking practices on environmental performance in Pakistan's banking sector. As concerns about banks' environmental footprint grow, green banking has emerged as a crucial sustainability strategy.

Study Design/methodology/approach — This study incorporates a cross-sectional sample of 150 employees from Islamic and conventional banks in Pakistan. Primary data was collected and analyzed using structural equation modeling (SEM) with Smart PLS software to examine the relationship between green banking practices and environmental performance.

Findings — Findings indicate significant benefits of green banking practices, including enhanced competitiveness, reduced long-term costs, improved customer goodwill, and reduced carbon footprint. By promoting sustainable economic development, green banking practices positively influence environmental performance.

Research Practical Implications — The study provides valuable theoretical and managerial implications for encouraging environmentally conscious banking practices. It also emphasizes the need for policy development and strategic adoption of environmentally responsible practices to promote sustainable finance and environmental stewardship in Pakistan's banking sector. However, based on a cross-sectional sample, the findings may not capture long-term effects or industry-wide trends.

Originality/value — Despite its importance, empirical research on green banking in Pakistan is scarce. This study addresses this gap by examining the relationship between green banking practices and environmental performance, offering fresh insights into an underexplored area in the context of developing countries.