The impact of commercial banks’ financial performance and governance variance on esg practices: the case in Vietnam

Abstract

This study explores the factors influencing the ESG (Environmental, Social, and Governance) practices of commercial banks in Vietnam from 2015 to 2023. Additionally, the study analyzes whether there are any differences between the top 4 leading banks in Vietnam and other banks in terms of ESG standards implementation. The data for this study was collected from the reports of 15 commercial banks in Vietnam between 2015 and 2023. The authors used Stata17 software to run regression models and perform model tests to analyze the results. The analysis shows that growth in the number of shares held by strategic investors will boost the ESG performance of banks, and the board of directors (BoD) and the board of managers (BoM) play a critical role in enhancing the ESG performance of banks. Additionally, factors related to the bank's financial performance have a notable impact on the evaluation of ESG activities in Vietnamese banks. However, factors such as whether the bank is state-owned or Big4 banks in Vietnam do not show any significant differences when compared to other banks. Finally, the study proposes policy recommendations based on the research findings and suggests areas for future research