The Impact Of Esg Integration On Financial Performance In Indian Banks: Assessing Profitability

Abstract

The study explores the influence of Environmental, Social, and Governance (ESG) inclusion on the financial performance of prominent Indian banks, emphasizing profitability metrics. As ESG issues become more significant in establishing sustainable finance practices, comprehending their impact on financial results is essential for stakeholders. This study analyzes five prominent Indian banks—State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank, and Punjab National Bank—over a specified time frame, evaluating the relationship between ESG adoption and key profitability indicators, including Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin. The study employs a mixed-method approach that integrates analysis of secondary data from ESG reports, sustainable disclosures, and financial statements to identify patterns and disparities in ESG performance and its correlation with financial growth. Initial studies indicate that banks with elevated ESG ratings often exhibit more profitability, superior risk management, and increased stakeholder trust, but the correlation differs across banks and ESG aspects. This research enhances existing research on sustainable banking in developing nations and provides policy implications for the incorporation of ESG frameworks in banking legislation and corporate governance procedures. The findings may assist the banking sector, investors, and authorities in integrating ESG factors for sustainable wealth development.