ESG and the banking sector

: an overview: evolution of the sustainability perception by banks and its impact on financial performance

Abstract

This dissertation aims to study and investigate the ESG evolution in the banking sector and the corporate social responsibility effect on the financial performance of institutions in the same industry. To perform the analysis, non-financial and financial data was extracted from Refinitiv Datastream using an appropriate European index of banks (the regulation mentioned in this dissertation is for firms in the European Union). One of the goals was to analyze the evolution of the ESG scores over the years, the top 15 and bottom 15 banks in each category (environmental, social and governance), its relationship with the implementation of regulation by the European Commission, mainly the Non-Financial Reporting Directive that aims to mitigate greenwashing and increase transparency among institutions in Europe. The results obtained are shown in the section of results and conclusions, but it demonstrated a negative impact on the environmental score in 2017, the first year of certain mandatory disclosures of non-financial information of large institutions. A brutal downfall in 2017 of the mean environmental score in the banking sector shows that, on average, various banks provide voluntary misleading information to the public and, with mandatory disclosures, their score dropped a lot. Along with the objective of studying the ESG Scores and regulations related to sustainability, this dissertation also aims to perform a brief analysis of the impact of Corporate Social Responsibility on the financial performance of the European banking sector.

Date of Award	13 Jul 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Paulo Alves (Supervisor)