Evaluating the relevance of green banking practices on Saudi Banks’ green image: The mediating effect of employees’ green behaviour

Abstract

A considerable number of companies focus solely on maximizing their profit and give less or almost no concern about environmental sustainability and protection. Financial institutions being a part of these developmental entities tend to play a crucial role in economies' development and sustainability due to their intermediary role between economies and the investing industries. Despite the belief that banks do not directly contribute to the emission maximization or carbon footprint still, evidence reported that they are indirectly contributing to that by financing those projects which may harm the environment and its surroundings. Accordingly, the concept of green banking practices has been recently introduced in support of the theory of socially responsible investment (SRI), which looks for both financial return and social/environmental good to bring about social change regarded as positive by proponents. Hence, this study investigates green banking practices' relevance among banks in Saudi Arabia and their effect on the Saudi banks' green image with the mediating effect of the employees' green behaviour. The study targeted all banks operating in Saudi Arabia, and results were tabulated and analyzed with the help of the structural equation modeling partial least square (PLS) and SPSS software. The study's findings revealed a significant positive relationship between green banking practices and the Saudi banks' green image, indicating that the more green banking practices are practiced, the more the banks' image improves. The results further disclosed that the green behaviour of employees is affected by green banking practices directly. However, employees' green banking behaviour does not mediate the relationship between green banking practices and the Saudi banks' green image. Since green banking practices impact the banks' green image, banks should spread awareness among their employees, clients, and other stakeholders to ensure more benefits. Since it is in some studies reported as a voluntary behaviour, not a compulsory one, which may affect the seriousness of employees to follow it.