The Role of Banking in sustainable Development: A study of Environmental and social Governance Factors

Global economic tides have shifted, and sustainability has key priorities stemming from these trends — where banks have a fundamental function in addressing and funding sustainable processes. This paper seeks to investigate the significant influence of the banking sector in facilitating sustainable development by adopting it through the inclusion of Environmental, Social, and Governance (ESG) considerations in their operations, investment activities and policies. The paper explores how public and private sector banking institutions can urge corporates to align themselves with corporate and green financing by conducting an ESG practice in the finalizing of financial positions. The study employs a mix of primary and secondary data to examine the degree to which ESG is embedded in banking strategies and had influence on lending, risk management, and stakeholder engagement. The results show that banks with proactive ESG policies make, on average, a strong contribution on all three dimensions of ESG: environmental protection, social welfare and long-term economic sustainability. With this study proposes policy recommendations that would aid ESG compliance and bolster the role of banks as drivers for sustainable development in India and abroad.