How sustainable finance practices affect South African banks’ financial performance?

Purpose The study investigates how sustainable finance practices affect the financial performance of South African banks. Design/methodology/approach Using panel data from South African banks over a specific period, this research employs random effects models and fully modified ordinary Least Squares (FMOLS) to assess both the short-term and long-term effects of ESG scores on financial performance. Findings The findings highlight a significant positive impact of ESG factors on the financial performance of South African banks, with notable benefits observed over the long term. Originality/value This study contributes valuable insights to banking literature by addressing a critical gap, offering regional perspectives, emphasizing the importance of sustained ESG practices and suggesting practical implications for banks, investors and policymakers.