Bridging Climate Finance and Corporate Sustainability: The Mediating Role of Board Monitoring and Corporate Strategy in the Banking Sector

ABSTRACT Climate finance is critical for banks in emerging economies to support the low‐carbon transition, yet how it translates into corporate sustainability remains underexplored. The effectiveness of climate finance depends on governance mechanisms that guide resource allocation, strategic implementation, and accountability. This study examines whether board oversight, management willingness, and corporate strategy mediate the climate finance–sustainability link. Using a cross‐sectional survey of 304 bank officers in Bangladesh and PLS‐SEM analysis, this study finds a significant direct effect of climate finance on sustainability. Board oversight and corporate strategy act as partial mediators, but management willingness does not. This reveals that climate finance fosters sustainability not through managerial goodwill alone, but when embedded into formal governance structures. It offers strategic insights for bank leaders and policymakers.