The Role of Digital Transformation in Advancing Green Banking Practices Through Environmental Factors Mental, Social and Governance Factors (ESG) Integration

The following paper aims at understanding how factors of environmental, social and governance (ESG) impact green banking in the financial industry. As sustainability has emerged as a key global theme, banks are gradually incorporating ESG factors into their activities to meet the urgent needs of the world, for example, climate change, resource depletion, and social justice. The study focuses on the effects of the environment on sustainable banking, the effects of social aspects, and the effects of governance structures on sustainable banking practices. A pilot study followed by data collection from questionnaires, interviews, and documents was used to test the research model and SEM analysis was used to test the hypotheses between ESG factors and green banking adoption. The study also reveals that the environmental factors are the most influential factors for promoting Green banking practices with social and governance factors influencing they are different but are interrelated in promoting green banking practices. These findings are in line with the Literature supporting a systems perspective on integrating ESG factors in order to promote sustainability. The study enriches the existing literature on green banking and provides important policy implications for policymakers, financial institutions, and stakeholders to promote sustainable development with the principles of responsible banking. It also presents the basis for further research to analyze the factors within the region and the technical advancement that can be applied in the banking industry as well as the long-term effects and sustainability of the results.