Factors affecting environmental performance: evidence from banking sector in Bangladesh

Abstract

Analysis of environmental impacts of production of goods or services helps assess environmental performance of any activity. This paper aims at determining the factors that influence environmental performance of banks in Bangladesh. Bank's Environmental Performance Score (EnPS) is calculated based on the Global Reporting Initiative (GRI) Sustainability Guidelines, 2002. All the necessary data are collected from the content analysis of the audited annual reports of 31 scheduled commercial banks for the financial year ending December 2012. Applying multiple regression technique this study finds that bank's credit rating score is positively related to EnPS, whereas premium in share price and bank's longevity in service are negatively associated with EnPS. Contrary to the common perception that a large and highly profitable bank would be environmentally more concerned, the result shows no such association between these variables. Policy-makers, therefore, may urge large and highly profitable banks to lead environmental initiatives towards green banking revolution in Bangladesh.