ESG Disclosure Based on Regulatory Landscape: An Enquiry Into the Stock Exchange Enlisted Banks in a Fastest Growing Economy
DOI:
https://doi.org/10.33423/jabe.v26i6.7387Keywords:
business, economics, ESG disclosures, ESG scores, Bangladesh Bank, ESG disclosure practices, sustainabilityAbstract
This research aims to reveal the extent, modes, and trend of ESG disclosure by the banks in Bangladesh. Analyses involve annual reports of 28 banks from 2016 to 2022 through the content analysis method using a ‘checklist’ comprised of 143 ESG disclosure items compiled from several policy guidelines regarding environmental and social performance disclosure circulated by the central bank, Bangladesh Bank. The study finds a spontaneously increasing tendency for ESG disclosure during the study period. Banks disclose information in both financial and non-financial modes, along with necessary details. However, information non-disclosure results in 75.18%, 63.38%, and 67.40% of environmental, social, and governance information, including many important ESG aspects that should not be ignored. The study result represents an optimistic scenario of ESG disclosure; nonetheless, Bangladeshi banks are yet to develop ESG disclosure practices.
References
Adu, D.A., Al-Najjar, B., & Sitthipongpanich, T. (2022). Executive compensation, environmental performance, and sustainable banking: The moderating effect of governance mechanisms. Business Strategy and the Environment, 31(4), 1439–63. doi: 10.1002/bse.2963
Akhter, F., Hossain, M.R., Elrehail, H., Rehman, S.U., & Almansour, B. (2023). Environmental disclosures and corporate attributes, from the Lens of Legitimacy Theory: A longitudinal analysis on a developing country. European Journal of Management and Business Economics, 32(3), 342–69. doi: 10.1108/EJMBE-01-2021-0008
Arif, M., Sajjad, A., Farooq, S., Abrar, M., & Joyo, A.S. (2020). The impact of audit committee attributes on the quality and quantity of environmental, social and governance (ESG) disclosures. Corporate Governance (Bingley), 21(3), 497–514. doi: 10.1108/CG-06-2020-0243
Bangladesh Bank. (2020). CSR reports of Banks and FIs. Retrieved from https://www.bb.org.bd/en/index.php/publication/publictn/1/69
Bangladesh Bank. (2020). Sustainable Finance Department. Policy Guidelines on Corporate Social Responsibility for Banks and Financial Institutions (SFD Circular No. 1). Retrieved from https://www.bb.org.bd/mediaroom/circulars/gbcrd/jan092022sfdl01e.pdf
Bangladesh Bank. (2020). Sustainable Finance Department. Sustainable Finance Policy for Banks and Financial Institutions (SFD Circular No. 5). Retrieved from https://www.bb.org.bd/mediaroom/circulars/gbcrd/dec312020sfd05.pdf
Belal, A.R., & Cooper, S. (2011). The absence of corporate social responsibility reporting in Bangladesh. Critical Perspectives on Accounting, 22(7), 654–67. doi: 10.1016/j.cpa.2010.06.020
Birindelli, G., Dell’Atti, S., Iannuzzi, A.P., & Savioli, M. (2018). Composition and activity of the board of directors: Impact on ESG performance in the banking system. Sustainability (Switzerland), 10(12), 1–20. doi: 10.3390/su10124699
Bose, S., Khan, H.Z., Rashid, A., & Islam, S. (2018). What drives green banking disclosure? An institutional and corporate governance perspective. Asia Pacific Journal of Management, 35(2), 501–27. doi: 10.1007/s10490-017-9528-x
Bruno, M., & Lagasio, V. (2021). An Overview of the European Policies on ESG in the Banking Sector. Sustainability (Switzerland), 13(22). doi: 10.3390/su132212641
da Silva Inácio, L., & Delai, I. (2022). Sustainable Banking: A Systematic Review of Concepts and Measurements, 24. Springer Netherlands.
de Villiers, C., Naiker, V., & van Staden, C.J. (2011). The effect of board characteristics on firm environmental performance. Journal of Management, 37(6), 1636–63. doi:10.1177/0149206311411506
Diouf, D., & Boiral, O. (2017). Article information: The quality of sustainability reports and impression management: A stakeholder perspective abstract purpose – The purpose of this research is to analyze the perceptions of stakeholders – More. Accounting, Auditing & Accountability Journal, 30(3), 643–67.
El Khoury, R., Nasrallah, N., & Alareeni, B. (2023). The determinants of ESG in the banking sector of MENA Region: A trend or necessity? Competitiveness Review, 33(1), 7–29. doi: 10.1108/CR-09-2021-0118
Gai, L., Bellucci, M., Biggeri, M., Ferrone, L., & Ielasi, F. (2023, April). Banks’ ESG disclosure: A new scoring model.
Galletta, S., Mazzù, S., & Naciti, V. (2022, May). A bibliometric analysis of ESG performance in the banking industry: From the current status to future directions. Research in International Business and Finance, 62. doi: 10.1016/j.ribaf.2022.101684
Guthrie, J., & Farneti, F. (2008). GRI sustainability reporting by Australian Public Sector Organizations. Public Money and Management, 28(6), 361–66. doi: 10.1111/j.1467-9302.2008.00670.x
Habib-Uz-Zaman Khan, M., Halabi, A.K., & Samy, M. (2009). Corporate Social Responsibility (CSR) reporting: A study of selected banking companies in Bangladesh. Social Responsibility Journal, 5(3), 344–57. doi: 10.1108/17471110910977276
Ielasi, F., Bellucci, M., Biggeri, M., & Ferrone, L. (2023, January). Measuring banks’ sustainability performances: The BESGI score. Environmental Impact Assessment Review, 102. doi:10.1016/j.eiar.2023.107216
Islam, M.T., & Kokubu, K. (2018). Corporate social reporting and legitimacy in banking: A longitudinal study in the developing country. Social Responsibility Journal, 14(1), 159–79. doi: 10.1108/SRJ-11-2016-0202
Islam, M.T., Kokubu, K., & Nishitani, K. (2021). Corporate social reporting in the banking industry of Bangladesh: A test of legitimacy theory. Social Responsibility Journal, 17(2), 198–225. doi:10.1108/SRJ-05-2019-0185
Issa, A., Zaid, M.A.A., Hanaysha, J.R., & Gull A.A. (2022). An examination of board diversity and corporate social responsibility disclosure: Evidence from banking sector in the Arabian Gulf Countries. International Journal of Accounting and Information Management, 30(1), 22–46. doi:10.1108/IJAIM-07-2021-0137
Jahid, M.A., Rashid, M.H.U., Hossain, S.Z., Haryono, S., & Jatmiko, B. (2020). Impact of corporate governance mechanisms on corporate social responsibility disclosure of publicly-listed banks in Bangladesh. Journal of Asian Finance, Economics and Business, 7(6), 61–71. doi:10.13106/jafeb.2020.vol7.no6.061
Jeucken, M., & Bouma, J.J. (2017). The changing environment of banks. Sustainable Banking: The Greening of Finance, (27), 24–38. doi: 10.9774/gleaf.978-1-909493-18-6_3
Jizi, M.I., Salama, A., Dixon, R., & Stratling, R. (2014). Corporate governance and corporate social responsibility disclosure: Evidence from the US Banking Sector. Journal of Business Ethics, 125(4), 601–15. doi: 10.1007/s10551-013-1929-2
Katmon, N., Mohamad, Z.Z., Norwani, N.M., & Al Farooque, O. (2019). Comprehensive board diversity and quality of corporate social responsibility disclosure: Evidence from an emerging market. Journal of Business Ethics, 157(2), 447–81. doi: 10.1007/s10551-017-3672-6
Khan, H.U.Z. (2010). The effect of corporate governance elements on corporate social responsibility (CSR); Reporting: Empirical evidence from private commercial banks of Bangladesh. International Journal of Law and Management, 52(2), 82–109. doi:10.1108/17542431011029406
Khan, H.Z., Bose, S., Mollik, A.T., & Harun, H. (2021). Green washing’ or ‘authentic effort’? An empirical investigation of the quality of sustainability reporting by banks. Accounting, Auditing and Accountability Journal, 34(2), 338–69. doi: 10.1108/AAAJ-01-2018-3330
Khan, M.H.U.Z., Islam, M.A., Fatima, J.K., & Ahmed, K. (2011). Corporate sustainability reporting of major commercial banks in line with GRI: Bangladesh evidence. Social Responsibility Journal, 7(3), 347–62. doi: 10.1108/17471111111154509
Kiliç, M., Kuzey, C., & Uyar, A. (2015). The impact of ownership and board structure on corporate social responsibility (CSR) Reporting in the Turkish Banking Industry. Corporate Governance International Journal of Business in Society, 15(3), 357–74.
La Torre, M., Leo, S., & Panetta, I.C. (2021). Banks and environmental, social and governance drivers: Follow the market or the authorities? Corporate Social Responsibility and Environmental Management, 28(6), 1620–34. doi: 10.1002/csr.2132
Lamanda, G., & Tamásné Vőneki, Z. (2024). Is ESG disclosure associated with bank performance? Evidence from the Visegrad Four Countries. Management of Environmental Quality: An International Journal, 35(1), 201–19. doi: 10.1108/MEQ-02-2023-0064
Makarenko, I., & Makarenko, S. (2023). Multi-Level benchmark system for sustainability reporting: EU experience for Ukraine. Accounting and Financial Control, 4(1), 41–48. doi:10.21511/afc.04(1).2023.04.
Mazumder, M.M.M. (2024). An empirical analysis of SDG Disclosure (SDGD) and board gender diversity: Insights from the banking sector in an emerging economy. International Journal of Disclosure and Governance, 0123456789. doi: 10.1057/s41310-023-00223-2.
Menicucci, E., & Paolucci, G. (2023). The influence of Italian board characteristics on environmental, social and governance dimensions. Management Decision, 61(10), 3082–3105. doi: 10.1108/MD-09-2022-1224
Miralles-Quirós, M.M., Miralles-Quirós, J.L., & Redondo-Hernández, J. (2019). The impact of environmental, social, and governance performance on stock prices: Evidence from the banking industry. Corporate Social Responsibility and Environmental Management, 26(6), 1446–56. doi:10.1002/csr.1759
Moufty, S., Clark, E., & Al-Najjar, B. (2021). The different dimensions of sustainability and bank performance: Evidence from the EU and the USA. Journal of International Accounting, Auditing and Taxation, 43(February 2022). doi: 10.1016/j.intaccaudtax.2021.100381
Nurunnabi, M. (2016). Who cares about climate change reporting in developing countries? The market response to, and corporate accountability for, climate change in Bangladesh. Environment, Development and Sustainability, 18(1), 157–86. doi: 10.1007/s10668-015-9632-3
Park, H., & Kim, J.D. (2020). Transition towards green banking: Role of financial regulators and financial institutions.
Rouf, M.A. (2017). Firm-specific characteristics, corporate governance and voluntary disclosure in annual reports of listed companies in Bangladesh. International Journal of Managerial and Financial Accounting, 9(3), 263. doi: 10.1504/ijmfa.2017.10007758
Rouf, M.A., & Hossan, M.A. (2021). The effects of board size and board composition on CSR disclosure: A study of banking sectors in Bangladesh. International Journal of Ethics and Systems, 37(1), 105–21. doi: 10.1108/IJOES-06-2020-0079
Safari, M., & Areeb, A. (2020). A qualitative analysis of GRI Principles for defining sustainability report quality: An Australian case from the preparers’ perspective. Accounting Forum, 0(0), 1–32. doi:10.1080/01559982.2020.1736759
Sobhani, F.A., Amran, A., & Zainuddin, Y. (2012). Sustainability disclosure in annual reports and websites: A study of the banking industry in Bangladesh. Journal of Cleaner Production, 23(1), 75–85. doi: 10.1016/j.jclepro.2011.09.023
Tamásné Vőneki, Z., & Gabriella, L. (2020). Content analysis of bank disclosures related to ESG Risks. Economy & Finance, 7(4), 412–24. doi: 10.33908/ef.2020.4.3
Tőzsér, D., Lakner, Z., Sudibyo, N.A., & Boros, A. (2024). Disclosure compliance with different ESG reporting guidelines: The sustainability ranking of selected European and Hungarian banks in the socio-economic crisis period. Administrative Sciences, 14(3), 1–19. doi:10.3390/admsci14030058
Uddin, S., Siddiqui, J., & Islam, M.A. (2018). Corporate social responsibility disclosures, traditionalism and politics: A story from a traditional setting. Journal of Business Ethics, 151(2), 409–28. doi:10.1007/s10551-016-3214-7
Volz, U. (2017, February). On the role of central banks in enhancing green finance. United Nations Environment Programme, pp. 1–48.
Weber, O., & Chowdury, R.K. (2020). Corporate sustainability in Bangladeshi banks: Proactive or reactive ethical behavior? Sustainability (Switzerland), 12(19), 1–18. doi: 10.3390/su12197999
Zheng, Y., Rashid, M.H.U., Siddik, A.B., Wei, W., & Hossain, S.Z. (2022). corporate social responsibility disclosure and firm’s productivity: Evidence from the banking industry in Bangladesh. Sustainability (Switzerland), 14(10). doi: 10.3390/su14106237
