Do Public and Private Banks Value ESG Differently- An Empirical Analysis from India

ABSTRACTThis study investigates the impact of Environmental, Social, and Governance performance on the financialoutcomes of selected Indian private and public sector banks, using Return on Assets and Return on Equity asdependent variable . Data was employed from CRISIL,both public and private sector banks, and the majorvariables were data was sourced from the screener and analysed through the lenses of Stakeholder Theory,Legitimacy Theory, Resource-Based View, Institutional Theory, and Signalling Theory.Findings of the studysuggest that while governance and environmental factors are well-developed, the social dimension remainsunderdeveloped.ESG rating does not show a strong short term indicator of financial performance moreover, ithad hold an potential for long-term risk transfer and in benefiting the stakeholder trust.Ownership had as amoderating variable, with private banks leveraging ESG for market differentiation and public banks focusing onsocial impact.The study highlights the need for enhanced ESG disclosure aligned with global standards andrecommends incorporating non-financial key performance indicator for better transparency. It also develops thefuture research using panel data methods and structural equation modelling to uncover causal pathways. Overall,ESG integration should be viewed not only as a compliance tool but as a strategic driver of sustainable bankingand long-term value creation in the Indian context.