Painting or glossing my brand? Revealing greenwashing practices through the ESG impact on bank’s brand value

Purpose This study aims to investigate the relationship between ESG commitment and brand value in the banking industry, exploring the moderation effect of bank size and risk. Design/methodology/approach Based on a sample of 120 banks operating worldwide in the period 2009–2022, a panel regression with fixed effects is used to explore the relationship between ESG score, a proxy of ESG commitment and brand value. The brand value was retrieved from the Brand Finance database, and the ESG score from the Morgan Stanley Capital International (MSCI) dataset. Findings The results reveal that the ESG score does not impact brand value. However, when considering the moderating effects of bank size and risk, a significant positive relationship emerges. For large and risky banks, ESG commitment positively affects brand value. Analyzing the individual ESG pillars' impact shows that only the governance pillar is the most influential factor in this effect. Results are robust to different controls. Practical implications These results have theoretical and practical implications. From a theoretical standpoint, our results provide useful insights to explore in more detail how the adoption of sustainable practices by banks influences customers' behaviors and the antecedents of financial brand value. From a practical point of view, the work offers food for thought for bank managers in order to understand how the market evaluates bank commitment to sustainability and which areas investors consider most important. Originality/value This work sheds light on the relationship between ESG commitment and brand value that is still unexplored in the banking literature. Second, we provide evidence on the mechanisms (moderation effect) that could impact such a relationship. To the best of our knowledge, both contributions are novel in the banking literature.