Do banks speak the same ESG language? A text-based clustering approach

• EFRAG has introduced general standards to guide companies' ESG reporting • We assess ESG narrative convergence in non-financial reports by Italian banks • Many banks fail to ensure consistent and comparable ESG disclosures • Low heterogeneity raises greenwashing risk and weakens disclosure motivations ESG disclosure is currently considered the primary tool for evaluating the coherence of banks' choices with the principles of sustainable development. Nevertheless, a lack of uniformity regarding which behaviors and actions to report and how still persists. Due to this gap, evaluations of the same ESG disclosure tend to differ, making it challenging to make temporal and spatial comparisons and understand the effectiveness of this disclosure. The study evaluates the narrative uniformity of disclosure concerning ESG practices published by leading Italian banks, specifically examining to what extent banks converge toward standard reporting practices or exhibit firm-specific disclosure patterns. The aim is to assess the transparency, comparability, and communicative value of reporting. To this purpose, we apply the Cosine Similarity method, The results confirm that banks do not follow an approach based on shared principles about narrative practices. Four clusters were identified. Each reflects a distinct perception of regulatory pressures, awareness of disclosure purposes, stakeholder expectations, and customer characteristics. Robustness checks confirm the reliability of the results. Considering these findings, the need to introduce more detailed standards about non-financial reporting emerges. Banks must share and agree upon these standards to minimize the risk of greenwashing and assign themselves an active role in sustainability paths by, in turn, requesting ESG ratings from their customers.