Exploring the impact of green finance, CSR and green banking on environmental sustainability performance in Indian banks

Purpose This study addresses a gap in empirical research by examining how sustainable banking practices influence the environmental sustainability performance (ESP) of banks in emerging economies like India. Specifically, it explores the direct and indirect effects of green banking practices (GBPs), green finance (GF) and CSR practices on ESP. Design/methodology/approach A quantitative research approach was adopted, utilizing a structured questionnaire to collect data from Indian banking institutions. The relationships among the study variables are examined using structural equation modeling. This technique enabled the assessment of both direct and indirect effects. Findings The results indicate that GBPs have a significant and positive effect on ESP, GF and CSR practices. Additionally, GF positively influences both CSR practices and ESP. GBPs were found to exert indirect effects on ESP through both CSR practices and GF. Furthermore, GBPs influence CSR practices indirectly via GF, while GF has an indirect effect on ESP through CSR practices. These findings emphasize the interconnected roles of GBPs, GF and CSR in driving ESP in banking institutions. Originality/value This study contributes to the literature on sustainable banking by focusing on ESP in the Indian banking sector, including often-overlooked institutions like regional rural banks and small finance banks. It uniquely integrates GBPs, GF and CSR practices to assess their combined impact on ESP. Additionally, the research extends legitimacy theory to explore how banks align with societal expectations through sustainability efforts. By analyzing both direct and indirect effects, it offers practical insights for policymakers and managers to enhance sustainability performance in banking.