Influence of cultural dimensions on ESG performance in the banking sector

Purpose This study aims to examine the indirect influence of national cultural dimensions on environmental, social and governance (ESG) engagement among publicly listed European banks. It highlights the critical role of cultural context in shaping responsible financial practices and supports the design of culturally informed marketing strategies that foster genuine sustainability in the financial sector. Design/methodology/approach The analysis covers 174 banks from 14 European countries, using data from the ORBIS database (2019–2023) for firms classified under NACE code 6419. It employs the forgotten effects methodology, a quantitative approach rooted in the mathematics of uncertainty, to assess the indirect impacts of Hofstede's national cultural dimensions on ESG criteria. Findings The results reveal significant indirect effects of cultural dimensions on ESG criteria that have been previously underestimated. Power distance and masculinity exhibit strong second-order impacts on governance and social aspects of ESG, respectively. Long-term orientation and uncertainty avoidance emerge as critical amplifiers of these indirect effects, underscoring the complexity of cultural influences on corporate sustainability. Practical implications These findings underscore the importance of incorporating cultural context into ESG marketing strategies. Banks and policymakers should consider national cultural profiles to enhance the effectiveness and customer acceptance of sustainability initiatives, improving both brand loyalty and competitive positioning. Originality/value This research introduces a novel perspective by integrating cultural analysis with the forgotten effects methodology, providing fresh insights into the overlooked role of indirect cultural influences on ESG performance. It bridges the gap between cultural context and financial marketing, highlighting the need for culturally sensitive ESG strategies.