ESG criteria in the banking industry: A systematic literature review

Sustainable development has raised, in recent decades and especially after the global financial crisis, the interest of policy makers, managers, academics and, in general, stakeholders. As a multifaceted concept, it cannot exclude the financial and banking institutions as their fundamental role on channeling funds and supporting an efficient resource allocation into the economy. Especially after the recent financial crisis, banks are increasing their attention on socially responsible aspects in order to reinforce trust among stakeholders (Coulson, 2009). The concept of sustainable development often recalls the role played by the firm, as a viable system, in the context in which it operates (Beer, 1985; Golinelli, 2016; Barile et al., 2018). Furthermore, there is an interrelation between the sustainability and the vitality of the firm, which needs to be formalized into practices, metrics and assessment criteria, that are instrumental to achieving survival, a goal common to the generality of viable systems (Golinelli, 2016). In the banking industry, the implementation of sustainability metrics is attributable to the desire to raise the credibility and the confidence among stakeholders, pursuing an aim that goes beyond the neoclassical concept of maximizing profit for shareholders (i.e. shareholders theory) (Friedman 1970; Brenner & Cochrane, 1991; Key, 1999; Stormer, 2003), and consider a three-dimensional financial logic, such as risk, return and social impact (Amini & Bienstock, 2014; Ziolo et al. 2019), with the aim of creating value for all the stakeholders (Freeman, 1984). Moreover, Stubbs & Cocklin (2008), with reference to the traditional neoclassical concepts, argue that they have to be transformed rather than supplemented, by environmental and social aspects and priorities. At the same time, environmental, social and governmental (“ESG”) criteria have become a new theme for academics in the field of management, and a number of contributions covering various issues and aspects have been published. However, a systematic formulation of all these contributions is still lacking in management literature. Therefore, this paper aims to analyze and classify the main contributions published on the topic of ESG and the banking industry of developed countries in management literature, i.e. international literature on ESG impacts in the banking industry, seeking to provide a map of the existing intellectual territory, discover gaps still remaining in literature and outline future avenues of research in this domain. A systematic review of the literature of has been used as methodology to achieve the aim of the paper.