Social Responsibility Journal

Developing a framework for assessing sustainable banking performance of the Indian banking sector
Kishore Kumar, Ajai Prakash,
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Kishore Kumar, Ajai Prakash, (2018) "Developing a framework for assessing sustainable banking performance of the Indian
banking sector", Social Responsibility Journal, https://doi.org/10.1108/SRJ-07-2018-0162
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 Developing a framework for assessing
sustainable banking performance
of the Indian banking sector
Kishore Kumar and Ajai Prakash

Abstract Kishore Kumar and

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Purpose – Sustainable development has now been recognised as the pivot around which development Ajai Prakash are both
activities should revolve. Banking is an important component in the same and adoption of sustainable based at the Department of
banking practices by various banking institutions is a strong driver to achieve sustainable development. Business Administration,
The purpose of this paper is to study the level of adoption of sustainable banking tools and the extent to University of Lucknow,
which banking institutions practice the same in India. In addition, the banking institutions have been
Lucknow, Uttar Pradesh,
ranked and categorised on basis of their sustainable banking performance.
India.
Design/methodology/approach – The proposed framework focuses on the environmental and social
conduct of the banks, who address the issues of sustainability in Indian banking sector. As there is a
difference in the economic standards of developed and developing countries, the review of literature
helps to figure out the gap in specific frameworks for assessing sustainable banking practices in
developing countries. Previous researchers have made an attempt to develop a general framework for
assessing the sustainable banking efforts of the banking sector. These studies fall short of indicators on
the social dimension of sustainability specifically in the context of less developed countries like India, the
social dimensions are is equally a major thrust area along with environmental indicators. Content analysis
technique has been used to evaluate sustainable banking performance of the banks and Mann–Whitney
U test used to determine the differences in sustainable banking performance of the banks in India.
Findings – In Indian banking sector, the adoption of the international sustainability code of conduct is still
in its nascent stage. The research indicates that sustainability issues which are of the highest priority for
the banks are directly related to their business operations such as financial inclusion, financial literacy
and energy efficiency, and banks are more focussed on addressing social dimension of sustainability in
banking rather than important dimensions of sustainable banking, namely, environmental management,
development of green products and services and sustainability reporting.
Practical implications – The application of the proposed framework reflects the status quo of
sustainable banking in India. This study is useful for the banks and all the stakeholders in understanding
more about the shortcomings in integrating sustainability issues in banking. Further, the present study
also redresses the extant research dearth in the field of sustainable banking in the Indian context.
Originality/value – This is one of the first studies evaluating the sustainable banking performance of the
Indian banking sector.
Keywords Sustainable development, Sustainability reporting, Sustainable banking,
Nonfinancial performance, Responsible banking, Sustainable banking performance framework
Paper type Research paper

Introduction
Today, integrating sustainability into the corporate strategy is an important driver for the
corporate world. Development of sustainable business not just by focussing on economic
performance but also by delivering on environmental and social performance has become
Received 6 July 2018
imperative for businesses across the world (Van Marrewijk, 2003). Businesses are under Revised 7 August 2018
immense pressure from various stakeholders to address the issues of sustainability and Accepted 10 August 2018

DOI 10.1108/SRJ-07-2018-0162 © Emerald Publishing Limited, ISSN 1747-1117 j SOCIAL RESPONSIBILITY JOURNAL j
 incorporate triple bottom line approach (Adams and Frost, 2008). Numerous studies
emphasising the role of corporate sustainability for achieving sustainable development
(Dyllick and Hockerts, 2002; Salzmann et al., 2005; Weber et al., 2008) appeared since the
turn of the century. The banking industry plays a crucial role in promoting sustainable
development as an important driver for inclusive economic growth in the country, (Jeucken
and Bouma, 1999; UNEP FI, 2016). Banks are moving beyond traditional banking and
increasingly adopting sustainable practices by integrating environment, social and
governance (ESG) criteria into their core strategy (Hermes et al., 2005). In the past two
decades, various sustainability codes of conduct have been developed which are widely
used by the organisations to improve their social and environmental performances, these
are Global Reporting Initiative (GRI), UNEP FI, United Nation Global Compact (UNGC)
principles, ISO 14001-26000, Equator principles (Isaksson and Steimle, 2009; Gupta and
Mohanty, 2014; Mitra and Schmidpeter, 2017). Many studies have been conducted in the
field of sustainable banking in developed countries (Jeucken, 2001; Amacanin, 2005;
Scholtens, 2009; Roca and Searcy, 2012; Weber, 2016; Carè, 2018a), but there is scant
literature available on developing countries (Khan et al., 2011) and rather unexplored in
Indian context (Prakash et al, 2018). Most of the studies were focussed on the role of
adoption of green banking for internal environmental management and CSR activities of the
banks in India. Sahoo and Nayak (2007) concluded not many initiatives have been taken by
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the Indian banking sector with regards to sustainable banking. The green banking practices
of most of the banks in India were limited to paperless banking, internet banking, ATM,
installation of solar panel, etc. (Biswas, 2011). Rajput et al. (2013) concluded the Indian
banking sector has been slow in adopting sustainable banking practices, and banks are ill
prepared for addressing the issues of sustainable banking. Some kind of policy
recommendation from the RBI (Central Bank of India) can play an instrumental role in
promoting sustainable banking in India. Yadav and Pathak (2014) examined green banking
approaches adopted by top performing public sector banks (PSBs) and private sector
banks in India for environmental sustainability. Studies in India related to sustainability
largely focus on green banking strategies adopted by the banks in India (Bihari, 2010; Bahl,
2012; Jha and Bhome, 2013; Tara and Singh, 2014) and CSR activities of the banks
(Narwal, 2007; Sharma and Mani, 2013). Furthermore, there is a general lack of studies on
how banks in India address the issues of sustainability. The researches on the standardised
framework that comprehensively incorporate environmental and social dimensions of
sustainability to assess the extent of sustainable banking performances of the banks could
not be traced and this is a gap. This study aims to address this research gap. The primary
objective of this study is to develop a general framework for assessing sustainable banking
and examines the sustainable banking performance of the PSBs and private sector banks
operating in India. The present study also redresses the extant research dearth in the field
of sustainable banking in the Indian context.
The rest of this article is organised as follows: Section 2 discusses the initiatives taken to
promote corporate sustainability in India and reviews the existing literature on sustainable
banking. Section 3 presents the purpose of the study and research hypothesis. Section 4
presents the development of a sustainable banking performance framework (SBPF) and
research methodology adopted for carrying out this study. Section 5 presents the results
and findings of the analysis. The final section discusses the conclusion, research
implications and limitations of the study.

Initiatives to promote corporate sustainability in India

The Government of India (GOI) has taken few notable initiatives to promote greater
participation of corporate to contribute towards sustainable development. These initiatives
are aimed at creating greater responsibilities in business conduct and embed a culture of
corporate sustainability to ensure harmony between economic growth and sustainable

j SOCIAL RESPONSIBILITY JOURNAL j

 development (Mitra and Schmidpeter, 2017). The national voluntary guidelines (NVGs) on
social, environmental and economic responsibilities of business were launched in July
2011, to review the CSR practices and to promote responsible business conduct at par with
global standards on sustainability (e.g. GRI, UN global compact etc.). This was followed by
Securities Exchange Board of India (SEBI) guidelines for mandatory disclosure of CSR
initiatives by top 100 BSE and NSE listed companies and adherence to the NVGs through
business responsibility report (SEBI, 2012). In 2013, India became the first country in the
world to enact mandatory CSR expenditure by businesses. Section 135 of India Companies
Act 2013, mandates all companies operating in India, having a net worth of more than 5
billion rupees, or turnover of more than 10 billion rupees, or net profit or more than 50 million
during the financial year are required to spend at least 2 per cent of average profits during
the past preceding years on CSR activities. The schedule VII of Companies act 2013
provides the list of ten activities that can be undertaken by a company to deliver its CSR
obligations. It also prescribes the CSR committee of three or more Board of Directors has to
be constituted. These directors will be responsible for the formulation and review of CSR
policy of the company. However, unlike other emerging market economies, there is no
specific sustainability policy for the banking sector in India. The Reserve Bank of India
along with The Ministry of Finance is working on formulating green banking policy
framework for Indian banking sector similar to other nations that are already having such
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policies (Roy, 2017).

Sustainable banking
As an integral pillar and enabler of economic development in the economy, the banking
sector plays an important role in promoting sustainable development (Weber, 2005). In the
past decades, there has been a rising trend of incorporating sustainability in banking.
Banks in India too are increasingly recognising the central role of the same in achieving
sustainable development (Rebai, 2014). The concept of green banking has evolved in
promoting environmentally friendly practices in the banking sector. Green banking is the
form of banking that directs the bank’s core operation towards environment management
(Dewi and Dewi, 2017). However, the concept of green banking dwells only on the
environmental dimension of sustainability in the banking sector. Bose et al. (2018) defined
green banking as the adoption and promotion of environmentally friendly technologies in
the internal and external operations of the banks to reduce carbon footprints and
environment management. The concept of green banking, ethical banking, social banking
and CSR falls within the ambit of sustainable banking. The concept of sustainability in
banking has been continuously evolving; it started with:
䊏 social banking – involving philanthropy, community development programme for social
development;
䊏 ethical banking – incorporating business values and ethical practices into banking
operations;
䊏 green banking – incorporating environment management system, refraining from
financing environmentally hazardous industries; and
䊏 sustainable banking – incorporating ESG issues and managing the environmental and
social impact of banking activities for sustainable development (Weber and Feltmate,
2016).

Sustainable banking implies carrying out banking business by incorporating environmental

social and ethical considerations into business strategy and promoting sustainable
development.
“Sustainability in banking can be adopted by banks in two ways; first through the adoption of
environmental and social responsibility in a bank’s day to day operations by undertaking

j SOCIAL RESPONSIBILITY JOURNAL j

 environmental consideration initiatives (i.e. zero waste, paperless banking, energy efficiency
techniques, etc.) and social development initiatives (e.g. financial inclusion efforts, financial
literacy, community welfare programme, etc.). Second, by incorporating environmental and
social considerations into the bank’s core strategy (i.e. environmental and social impact
criteria into financing activities, development of sustainable financial products, etc.). To be
sustainable; banks are required to establish their own environment risk management system
and social conduct policy for incorporating sustainability into business strategy (UNEP and
World Bank Group, 2017).
Now, the banks are increasingly engaged in profiling their sustainable banking practices
and integrating environmental and social dimensions in their business strategy than ever
before (Weber, 2016). Innovative sustainable products and services like climate change,
sustainability funds, green mortgages, environmental loans and green bond have been
developed by the banks to address mounting environmental challenges. The social
development considerations are also pushing banks towards the development of financial
inclusion (BSBD) initiatives, branchless banking and microcredit product and services
(Lehner, 2016). The development of sustainable products and services has a significant
strategic and commercial dimension for banks. There are several benefits of incorporating
sustainable banking into the banking business, ranging from improved reputation to
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sustainable competitive advantage and stakeholders confidence (IFC, 2007). The adoption
of environmental management system, environmental policies, ISO 26000, social
development practices (community development programme, health and education, etc.)
and their disclosure is taking place through sustainability reporting. This has become an
important factor for promoting sustainability banking. In the past decade, various
sustainability code of conduct (i.e. GRI, EPs, UNEP FI, ISO 14001, ISO 26000 and UN
global compact principles) are widely adopted by the organisations to assess, report and
improve their nonfinancial performances. The adoption of these standards and guidelines
enables the organisations to manage and communicate sustainability initiatives undertaken
and directed at environmental management, human rights, social welfare, anti-corruption,
etc. Despite being voluntary in nature, adopting organisations interpret them as a
responsibility which leads to the improved non-financial performance of the business and
reputational benefits (Carè, 2018b).
Various countries have also developed policies, guidelines and principles to embed
sustainable banking practices in the banking system. The adoption of these guidelines,
policies, and principles reflects the orientation of the state to integrate sustainability issues
in the banking system. For example, in 2007, China adopted green credit guidelines,
Bangladesh introduced environment risk management guidelines in 2011, Brazil introduced
the socio-environmental liability policy in 2012 and Columbia launched Green protocol in
2012. Similarly, countries like Peru, Indonesia, Kenya, Vietnam, Turkey and Mongolia have
adopted sustainable banking guidelines in their financial system (Oyegunle and Weber,
2015).

Sustainable banking performance framework

The integration of sustainability in banking has become imperative for ensuring the
sustainable development in any country (Achua, 2008). Jeucken (2001) developed a
framework for sustainable banking and evaluated the sustainable banking performance of
34 international banks. This framework was further tested and in the UK banking sector by
Amacanin (2005) and Papastergiou and Blanas (2011) in Greece banking sector. But this
framework and its assessment were limited to developed countries and less thrust was
given to social indicators of sustainable development in the framework which is equally a
significant aspect along with environmental indicators in developing countries like India.
Similarly, Scholtens (2009) also came up with the framework to assess the social
responsibility of banks and applied it to more the 30 banking institutions. However,

j SOCIAL RESPONSIBILITY JOURNAL j

 indicators on the role of banks towards the society in developing countries were also not
fully addressed in this framework. Sustainable banking practices of banks are highly
variable depending on the different region, level of socio-economic development, consumer
preference and regulatory environment in the country (UNEP FI, 2016). The expectations of
the society towards the role and responsibilities of bank and challenges that banks are
facing in developing countries are different unlike in the developed countries. The banks in
developing countries need to play a larger role in the economy to bolster economic growth
with social development. The aim of this article is to develop the framework that
comprehensively incorporates the all the dimension of sustainability in banking especially,
in the context of developing countries like India. Following is the list of 40 major indicators of
different dimensions of sustainability in banking derived from the review of literature and
discussion with sustainability officials in Indian banking sector.
SBPF uses various indicators of sustainable banking derived from previously developed
frameworks of Jeucken (2001) and Scholtens (2009), prominent sustainability code of
conduct and discussions with business responsibility and sustainability heads in Indian
banking industry. The sources of each indicator are presented in Table I. The framework
has been applied to the population of 42 banks (PSBs and private sector banks) operating
in India. This framework specifically focuses on environmental and social conduct of the
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banks to address issues of sustainability in banking. To evaluate the sustainable banking

performance of the bank, 40 indicators were categorised into five broad groups with
specific indicators representing specific adoption tools in conjunction with the broad
outlines of the groups:

䊏 sustainable products and services;

䊏 environment management dimension indicators;
䊏 social development dimension indicators;
䊏 internal socio-ethical conduct; and
䊏 sustainability code of conduct, reporting, ESG indexing.
Group 1 represents the financing and lending activities of banks incorporating social and
environmental concerns. The indicators of the second group reflect the commitment of
banks towards environmentally responsible behaviour through the initiatives taken by the
banks to adopt environmental management system. The third group indicators reflect the
socially responsible behaviour of banks and how banks actually creating a social
development in the society. The fourth group reflects banks commitment towards
maintaining high socio-ethical standards in the banks through policies towards anti-
corruption, human right and business ethics, etc. The last group reflects the bank to what
extent the bank is committed to global sustainability code of conduct and engaging with all
its stakeholders in disclosing the nonfinancial performance of the bank.
To evaluate the sustainable banking performance score of the bank, points are allocated to
each indicator in all five groups. To each group, a maximum of 20 points can be awarded;
hence, the bank adopting complete sustainability banking practices on all 40 indicators of
the proposed framework can accrue a maximum of 100 points. Further, specific weight is
assigned to each group depending upon the relevance of the sustainable development
influence the group has in promoting sustainable development initiative. For example, in
case of banking, the most important contributor to sustainability is sustainable products and
services of the banking institutions, the study has assigned a 40 per cent weight to this
influencer, 20 per cent weight has been attributed to environmental management and social
development dimensions each and 10 per cent each to internal socio-ethical conduct and
sustainability code of conduct, reporting, ESG indexing. The weight to each of the
categories is based on brainstorming and unstructured interviews with business

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 Table I List of 40 major indicators of different dimensions of sustainable banking
SBPF indicators
Group 1: Sustainable product and services
Sustainable financing
Climate fund
Environmental loan
Micro-finance
Sustainable advocacy services
Green mortgage
Socially responsible investment
Financial inclusion product
Venture capital for environmental saving product
Green bond
Group 2: Environmental management dimension indicators
Certified environmental management system (ISO 14001) Jeucken (2001), Scholtens (2009); Govindan et al. (2013), Raut et al. (2017);
Sector specific exclusion
Environmental risk management in lending policy
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Quantitative target about environment care initiatives Jeucken (2001), Scholtens (2009); Islam et al. (2016); GRI G4-EN18
Adoption of environmentally friendly technologies
Group 3: Social development dimension indicators
Community involvement programme
Charity and sponsoring
Financial literacy and financial counselling
Training and skill development programme
Community consultations
Targets for community investment
ISO 26000 certification
Health care and sanitation programme
Access points for financial services in low populated or
remote areas of the country
Improve access to financial services for disadvantaged
people
Group 4: Internal socio-ethical conduct
Policy and procedure concerning anti-corruption
Policy and procedure concerning human rights
Policy on business ethics/values
Policy on labour practices
Gender equity and diversity
Group 5: Sustainability code of conduct, reporting, ESG indexing
Sustainability report disclosure
Business responsibility report disclosure
Environment policy
GRI membership
Signatory to Equator Principles
Adherence to UN Global Compact principles
Signatory to UNEP FI
Adherence to NVGs disclosure (country specific
guidelines)
BSE GREENEX Indexing
Member of Dow Jones Sustainability Index
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Sources of derived indicators
Jeucken (2001), Scholtens (2009); Rahman and Barua (2016), Islam et al.
(2016); GRI G4-FSS1,7
Jeucken (2001), Scholtens (2009); Islam et al. (2016); GRI G4-FSS1,8, EN6
Jeucken (2001); GRI G4-FSS1
Jeucken (2001), Basu and Srivastava (2005); Scholtens (2009); GRI G4-FSS8
Jeucken (2001), Scholtens (2009); Islam et al. (2016); GRI G4-FSS1,8
Jeucken (2001);
GRI G4-FS1,2; Scholtens (2009)
Sarma and Pais (2011), Chibba (2009)
Jeucken (2001)
Campiglio (2016); Carè (2018a, b)
Babiak and Trendafilova (2011)
Jeucken (2001), Rahman and Barua (2016); GRI G4-FS2,11; Islam et al.
(2016)
Scholtens (2009), Weber et al. (2010); Islam et al. (2016)
Rahman and Barua (2016), Islam et al. (2016); Raut et al. (2017); UNGC P9
GRI G4-26; Mitra and Schmidpeter (2017), Hossain and Reaz (2007)
Jeucken (2001), Scholtens (2009); GRI G4-EC1; Islam et al. (2016), Shukla
and Donovan (2014)
GRI FSS 16; Sahoo and Nayak (2007), Islam et al. (2016); Chibba (2009)
Scholtens (2009), Hackston and Milne (1996); Islam et al. (2016)
GRI G4-26; Islam et al. (2016)
GRI G4-EC1; Islam et al. (2016)
Brown et al. (2009), Hahn (2013); Tschopp and Nastanski (2014), Sethi et al
(2017)
Narwal (2007), Hossain and Reaz (2007)
GRI FSS 13; Kumar (2013)
GRI FSS 14; Sarma and Pais (2011), Hossain and Reaz (2007)
GRI G4 SO3,4; UNGC P10
Linthicum et al. (2010), Dhaliwal et al. (2012); GRI G4 HR1,2; UNGC P1,2
Hung (2011), Scholtens (2009); Mitra and Schmidpeter (2017)
GRI G4 LA 2,6,9,16; UNGC P3,4,5,6
Scholtens (2009); GRI G4 LA12
Jeucken (2001), Mishra and Suar (2010); Burritt and Schaltegger (2010),
Khan et al. (2011); Islam et al. (2016)
Mishra and Suar (2010), Khan et al. (2011); Goyal et al. (2013), Mitra and
Schmidpeter (2017)
Hackston and Milne (1996); UNGC P7,8;Scholtens (2009)
khan et al. (2011), Brown et al. (2009)
Scholtens (2009), Wright (2012)
Islam et al. (2016)
Scholtens (2009), Islam et al. (2016);
Shukla and Donovan (2014), Mitra and Schmidpeter (2017); Gupta and
Mohanty (2014)
Tripathi and Bhandari (2015), Tara et al. (2015)
Scholtens (2009), Consolandi et al. (2009); Searcy and Elkhawas (2012)
 responsibility heads, sustainability heads, other officials in Indian banking industry. The
brainstorming centred around how much weight each of the factors carried with regards to
overall sustainable banking landscape.
The sustainability banking performance score obtained from each bank was grouped into
four different categories. This score reflects the level of adoption of sustainable banking by
each of the banks under study. This categorisation was developed based on brainstorming.
This approach provides insight into the extent of sustainable banking practices of the
sample banks from an insignificant level of adoption of sustainable banking to the strong
and substantial adoption of sustainable banking practices, which in turns reflects the status
quo of sustainable banking in commercial banks in India. The score-wise categories have
been formulated as below: (Table II).

Purpose of the study

This study aims to explore the extent of adoption of sustainable banking practices in Indian
banking sector through the application of SBPF. Research objectives of the study are as
follows:
䊏 to develop a framework for assessing the current state of sustainable banking in India;
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and
䊏 to rank and categorise all the PSBs and private sector banks operating in India on the
basis of sustainable banking performance of the banks.

Hypotheses
After analysing the sustainable banking performance of banks in India, aligning with the
second research objective this study further examines the difference in sustainable banking
performance across various categories of banks, namely, PSBs and private sector banks
and large and medium-small banks. The hypotheses developed to find out whether the
sustainable banking performance of the banks differs according to the size of the banks
and is there any significant difference in the sustainability performance between PSBs and
private sector banks in India.
The size of the bank is closely associated with the extent of a nonfinancial performance of
the banks (Kaur, 2018). Previous researches in the area of CSR/sustainability found that
large-sized banks are more inclined in addressing issues of sustainability due to
reputational benefits, better resources and to gain competitive advantage (Hossain and
Reaz, 2007) as compared to medium-small banks. The Indian banking sector is largely
dominated by the PSBs as they account for more than 70 per cent of the total banking
assets (RBI, 2017). The PSBs in India play a crucial role in promoting sustainable

Table II Shows the score-wise categories of the level of adoption of sustainable banking
practices
Stage Score Level of adoption of sustainable banking practices

First stage 0-5 Insignificant adoption (signifies reluctance of bank to voluntarily adopt
SB practices)
Second stage 6-10 Beginning to adopt (signifies bank start adopting internal environment
management along with social welfare programs)
Third stage 11-15 Satisfactory adoption (signifies banks actively adopt number of
environmental management and social welfare practices)
Fourth stage 16-20 Substantial adoption (signifies bank understand and incorporate various
dimensions of sustainability in banking and play a crucial role in
promoting sustainable development)

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 development especially by addressing the social dimension of sustainability in banking,
whereas private banks have adopted more proactive approach towards adoption of
sustainable banking so as to gain competitive advantage and build a reputation (Sharma
and Mani, 2013). The concept of sustainable banking is still new to the Indian banking
sector. It is evident from the fact that very few banks in India have subscribed to the
international standards on sustainability, and there is no uniform policy or principles to
promote sustainable banking in India (Prakash et al., 2018); therefore, it is pertinent to
examine the current state of sustainable banking in India. In this connection, following
hypotheses were tested:
H1. There is a significant difference in the sustainable banking performance of large-
sized bank and mid-small banks.
H2. There is a significant difference in the sustainable banking performance of the PSBs
and private sector banks in India.

Research methodology
Sample
The sample of the study consist of all (42) PSBs and private sector banks in India. The
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official websites of the banks were relied on for data; the sustainability report, business
responsibility report, corporate social responsibility report and annual reports (FY 2015-16
and 2016-17) were investigated using the content analysis technique. This analysis was
conducted to assess and measure the sustainable banking performance of the banks
through SBPF as proposed above.
Given the significant role of the banking sector in sustainable development and the
paradigm shift of banking towards sustainability, this research examines the current state of
sustainable banking in India through the development of SBPF. The population of 42 PSBs
and private sector banks in India has been sampled in the present study. Banks have been
tools of rapid economic growth in India and their role is attributable to the indispensable role
played by the PSBs and private sector banks in India (Bapat, 2012). The scheduled
commercial banking structure in India consists of 21 PSBs (where majority of equity stake in
the banks is held by the government), 21 private banks (where greater parts of equity stake
are held by private shareholders) and 45 foreign banks (banks headquartered outside
India, operate through wholly owned subsidiaries or branches). Total Indian banking sector
assets reached US$1.98tn in FY17, with over 90 per cent of total assets accounting in
favour of PSBs and private banks in India (RBI, 2017). The ownership in the Indian banking
sector in terms of market share and total banking activity predominantly remains with PSBs
and private sector banks. Furthermore, as the adoption of sustainable banking practices to
promote sustainable development is in the embryonic stage in India, the PSBs and private
banks are at the forefront of carrying out sustainable banking in Indian banking sector. This
drives strongly the reason to conduct a study on the India banking sector with a special
focus on PSBs and private sector banks as how much of sustainable banking is conducted
by these banks.

Content analysis
This study uses content analysis technique, a widely used technique to assess the data
from reports or other documents (Miles and Huberman, 1994). Content analysis helps in
capturing data from reports or any other document and quantifies the presence or absence
or extent of the required information (Gray et al., 1995). Prior studies suggest that analysis
of CSR/sustainability performance and disclosure through content analysis provides valid
results. Thus, allowing the researcher to investigate the nature and extent of nonfinancial
performance of the organisations (Guthrie and Farneti, 2008; Déjean and Martinez, 2009).

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 Similar to the previous studies in the field of nonfinancial performances and the disclosure
of the same by the organisations (Adams and Frost, 2008; Haque and Deegan, 2010;
Gamerschlag et al., 2011; Islam and McPhail, 2011; Landrum and Ohsowski, 2018; Jamali
and Karam, 2018), this study uses content analysis to quantify the amount of information
disclosed on the basis of selected indicators of SBPF. The keywords for the analysis were
derived from the list of 40 indicators outlined in SBPF (Appendix Table A1). One or more
keywords were used to define every indicator to improve the validity of the results. The
banks disclose all the information related to sustainable banking practices adopted by
banks on the official website, sustainability report, CSR report, BRR, annual report, so these
were considered for data sources in the present study. Emphasises was placed on
exploring the presence or absence of each of the indicators of SBPF. The degree and
impact of the indicators was not taken into consideration in the present study.

Results and discussion

This section reports the results of the application of SBPF to the group of 42 PSBs and
private sector banks in India. Figure 1 shows a sustainable banking performance score
obtained by each PSB. The largest lending bank in India, SBI is the only PSB which
publishes sustainability report and adheres to international standard like GRI. None of the
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PSB has subscribed to prominent international guidelines and standards like Equator
principle, UNEP FI, UNGC principles. SBI with the highest score of 14.8 spearheads the
drive of sustainable banking among PSBs in India. Other PSBs report their economic and
social performance through BRR disclosure except for Indian Overseas Bank (IOB). With
the establishment of NVGs and SEBI (2012) regulation mandating top 100 listed companies
to disclose business responsibility report, all PSBs have started to intensify their action with
regards to impact on the environment and society. All PSBs offer basic saving bank deposit
(BSBD) to support financial inclusion drive in the country and microcredit. As shown in
Figure 1, 15 out of 21 PSBs obtained the score between 5 and 10. The primary reason for
this score is PSBs are more active in addressing social dimension of sustainability through
activities for the welfare of society at large as almost all the PSBs have undertaken practices
like community development programme, charity and sponsorship programme, health and
sanitation programme and financial literacy programme. PSBs have also performed better
in internal socio-ethical conduct with almost all PSBs having established policy for anti-
corruption, labour practices, human rights and business ethics. The environmental
consideration initiatives of the PSBs are limited to mere establishment of environmental
policy as it is a mandatory requirement of disclosure under NVGs, but when it comes to
actions the environmental care practices are limited to paperless banking, installation of
solar panel, adoption of energy efficient technology etc. The establishment of environmental

Figure 1 Sustainable banking performance score of PSBs in India

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 management system, quantitative information about the environmental care practices,
development of innovative sustainable product and services like green bond, sustainable
financing have not been disclosed by PSBs except SBI. IOB is the only PSB neither
adhering to the NVGs nor disclosing BRR and the same is reflected with its lowest 4.4
sustainable banking performance score among all PSBs in India.
Figure 2 shows the sustainable banking performance score of private sector banks in India.
Sustainable banking performance of large private sector banks is relatively better as they
are more engaged in subscribing international sustainability code of conduct and offers
innovative sustainable product and services. Six private sector banks have achieved
sustainable banking performance score of more than 10. YES Bank, India’s fourth largest
private sector bank, achieved the highest score of 16. It has emerged as the main bank
driving sustainability banking agenda in the Indian banking sector. YES Bank is the only
bank from India who is signatory to UNEP FI, indexed in Dow Jones Sustainability Indices
(DJSI). It is also the first bank in India to release sustainability report with an “A level” check
certificate from GRI G4 sustainability reporting guidelines. Four private sector banks have
ISO 14000 certification and three banks offered green bond in 2017. Five private sector
banks publish a sustainability report, whereas 15 publish BRR and six banks do not publish
any separate nonfinancial performance report. Furthermore, only 11 private sector banks
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report NVGs. Medium sized private sector banks have shown a poor sustainable banking
performance as 11 banks scored between 0 and 6. These banks do not report non-financial
performance through BRR and their disclosure is limited to corporate social responsibility
policy statement. They are also completely indifferent to disclosure of environmental
care practices in banking operations (i.e. environment management system, environmental
risk management in lending policy, disclosure of any kind of quantitative data about
environmental care) and adoption of any kind of national and international sustainability
code of conduct such as NVGs, GRI, UNGC principle, EPs and UNEP FI.
Figure 3 shows the sustainable banking practices of the banks are varied and uncoordinated as
there has been no regulatory policy or guideline for the banks to uniformly adopt sustainable
banking practices. In total, 70 per cent of the sample banks scored less than 10 points which
clearly reflects the level of adoption of sustainable banking practices by banks in India is still in
nascent stage. Five banks (one PSB and four private sector banks) are in “insignificant
adoption” category which signifies the indifference of these banks towards the adoption of
sustainable banking strategy. Their reluctance to address the environmental and social
dimensions of sustainable development is clearly evident in their low sustainable banking
performance score. The sustainable banking performance of these banks is limited to fulfilment
of minimal requirement mandated by the regulations (i.e BSBD, microcredit, etc.) and

Figure 2 Sustainable banking performance score of private sector banks in India

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 Figure 3 The level of sustainable banking adoption by the PSBs and private sector banks
in India

expenditure on CSR activities. Twenty four (57 per cent) out of 42 sample banks are in
“beginning to adopt” category. The banks under this category have initiated adoption of
sustainable banking practices and comply with the voluntary guidelines like NVGs to report their
environmental and social performance. However, their efforts are largely limited to internal
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environmental management system (i.e. energy efficient technology, paperless banking) and
social development programmes. Eleven banks (five PSBs and six private sector banks) are in
“satisfactory adoption” category which signifies that these banks offer innovative sustainable
products, address various dimensions of environmental consideration in their strategy, actively
engage in subscribing international code of conduct on sustainability and publish separate
report for their environmental and social performance disclosure. YES bank (private sector
bank), is the only bank in the highest “substantial adoption” category. No other private sector
bank and PSBs was able to achieve sustainable banking performance score to reach this
highest category. This category represents that bank has been able to comprehensively adopt
practices addressing all the dimensions of sustainability and has performed on all the major
sustainable banking performance indicators like offering various sustainable product and
services, environmental management, social development, internal socio-ethical conduct and
sustainability disclosure in line with the international code of conduct on sustainability (Table III).

Differences in the sustainable banking performance of banks in India

The nonparametric, Mann–Whitney U test was performed to understand the difference in
the sustainable banking performance according to the size of the bank. The market
capitalisation was taken as an indicator of the size of the bank (Schildbach, 2017). All 42
PSB and private sector bank were further categorised into two groups (19 large-cap and 23
mid-small cap banks). The result reveals that there is significant difference in the
sustainable banking performance score of large-cap bank (mean = 27.24) and mid-small
cap banks (mean = 16.76), U = 109.5, z = 2.758, p = 0.006. H1 was supported, in
consistent with prior researches that large banks are more inclined towards the adoption of
sustainable practices (Kaur, 2018). The sustainable banking performances of the large
banks were significantly higher and they were more proactive in adopting sustainable
banking practices as compared to other medium-small banks. It was found that most of the
large banks have incorporate sustainability strategy for carrying out environmental and
social initiatives and actively engaged in subscribing to various national and international
standards for promoting sustainability. The Mann–Whitney U test was also performed to
determine if there is a significant variation in sustainability banking performance score of
PSBs and private sector banks in India. The results of Mann–Whitney U test reveals that
there is no significant difference in the sustainable banking performance score of PSBs
(mean = 24.36) and private sector banks (mean = 18.64), (U = 160.5, z = 1.511, p =
0.133). H2 was not supported as most of the PSBs and private sector banks in India are in

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 Table III Shows the level of adoption of sustainable banking practices and sustainable
banking performance score of the banks in India
Bank Type of bank Score Rank Level of adoption

YES Bank Private sector bank 16 1 Substantial adoption

State Bank of India Public sector bank 14.8 2 Satisfactory adoption
Axis Bank Private sector bank 13 3 Satisfactory adoption
HDFC Bank Private sector bank 12.8 4 Satisfactory adoption
IDFC Bank Private sector bank 12.6 5 Satisfactory adoption
IDBI Bank Private sector bank 12 6 Satisfactory adoption
Canara Bank Public sector bank 11.8 7 Satisfactory adoption
IndusInd Bank Private sector bank 11.6 8 Satisfactory adoption
ICICI Bank Private sector bank 11.2 9 Beginning to adopt
Kotak Mahindra Bank Private sector bank 11.2 10 Beginning to adopt
Bank of Baroda Public sector bank 10.6 11 Beginning to adopt
Vijya Bank Public sector bank 10.2 12 Beginning to adopt
Andra Bank Public sector bank 9.8 13 Beginning to adopt
United Bank of India Public sector bank 9.4 14 Beginning to adopt
Punjab National Bank Public sector bank 9.2 15 Beginning to adopt
Punjab & Sind Bank Public sector bank 9 16 Beginning to adopt
Bank of India Public sector bank 8.4 17 Beginning to adopt
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Bank of Maharashtra Public sector bank 8.2 18 Beginning to adopt

UCO Bank Public sector bank 8.2 19 Beginning to adopt
Corporation Bank Public sector bank 7.8 20 Beginning to adopt
Dena Bank Public sector bank 7.4 21 Beginning to adopt
OBC Bank Public sector bank 7.4 22 Beginning to adopt
Union Bank of India Public sector bank 7.4 23 Beginning to adopt
Jammu & Kashmir Bank Public sector bank 7.4 24 Beginning to adopt
Central Bank of India Public sector bank 7 25 Beginning to adopt
Syndicate Bank Private sector bank 7 26 Beginning to adopt
Karnatak Bank Public sector bank 7 27 Beginning to adopt
Karur Vysya Bank Private sector bank 7 28 Beginning to adopt
Allahabad Bank Public sector bank 6.8 29 Beginning to adopt
Indian Bank Public sector bank 6.6 30 Beginning to adopt
Federal Bank Private sector bank 6 31 Beginning to adopt
South Indian Bank Private sector bank 6 32 Beginning to adopt
Lakshmi Vilas Bank Private sector bank 6 33 Beginning to adopt
DCB Bank Private sector bank 5.6 34 Beginning to adopt
Catholic Syrian Bank Private sector bank 5.4 35 Beginning to adopt
RBL Bank Private sector bank 5.2 36 Beginning to adopt
Bandhan Bank Private sector bank 5 37 Insignificant adoption
Nainital Bank Private sector bank 4.8 38 Insignificant adoption
City Union Bank Private sector bank 4.6 39 Insignificant adoption
Dhanaxmi Bank Private sector bank 4.6 40 Insignificant adoption
Tamilnad Mercantile Bank Private sector bank 4.6 41 Insignificant adoption
Indian Overseas Bank Public sector bank 4.4 42 Insignificant adoption

the initial stage of adoption of sustainable banking (Rajput et al., 2013; Prakash et al., 2018).
The sustainable banking performance score also shows that almost 70 per cent of the PSBs
and private sector banks were in ‘insignificant adoption and “beginning to adopt” stages of
sustainable banking performance. Except for the few banks, the integration of sustainable
banking was largely limited to social banking and compliance of mandatory CSR activities.
Hence, the sustainable banking performance score is low for most of the banks.

Conclusion
The growth carries an important challenge of progressing sustainably. The banking sector
is the fulcrum of sustainable development for any economy, and the banks in India can play
a crucial role of facilitator in sustainable development. However, the results of the research

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 exhibit that the banking industry in India has not been fully able to take on this challenge as
the adoption of sustainable banking practices in India is still in nascent stage. In the present
study, the application of framework resulted in sustainable banking performance score of
42 banks (21 PSBs and 21 private sector banks). The result of the study shows that most of
the small private sector banks and more than half of the PSBs are poor performers. It was
found that sustainability issues which are of the highest priorities for the banks are directly
related to their business operations such as financial inclusion, financial literacy and energy
efficiency. Although banks appeared to be responsive in addressing the need of
comprehensive social welfare in the country through various initiatives (access of financial
services to the downtrodden section of the society, microcredit, community welfare
programme, etc.), but integration of environmental consideration in the corporate strategy
(development of innovative sustainable product & services, establishment of environment
management system) has been completely ignored in the policy making of most of the
banking institutions. YES Bank, Axis, IndusInd, HDFC, SBI, IDFC and IDBI bank have
performed better and lead the sustainable banking drive in the Indian Banking Industry.
YES Bank is leading from the front with the highest sustainable banking performance score
of 16 and is the only bank from India indexed in DJSI. YES Banks embraces most of the
international code of conduct on sustainability. Barring few banks, most of the banks have
not even subscribed to any of the international code of conduct on sustainability like GRI,
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UNGC principle, UNEP FI, EPs. Majority of banks in India have adopted NVGs as the
guiding tool for environmental and social performance, but it was found that the
implementation of NVGs was limited to mere policy disclosure or reporting of qualitative
information for each indicator provided in the NVGs. The disclosure of quantitative data on
the sustainable banking actions was absent in most of the cases which strengthen the view
that the banks are low on adoption of sustainable banking practices. So far, sustainable
banking in Indian banking sector leaves more to be desired. To improve sustainable
banking performance, banks should adopt the international code of conduct on
sustainability such as UNEP FI, GRI, UNGC principles and Equator principles. These could
be used as guiding tools to incorporate sustainable banking. In the absence of any external
regulatory policy on sustainable banking, it is imperative for the banks to integrate
conscious self-regulation for adopting and promoting sustainable banking in Indian banking
sector. Taking a cue from the top performing banks in India, other banks need to develop
innovative sustainable products and services and undertake further standardisation of
nonfinancial performance. The banks should consider moving beyond from mere
compliance of mandatory CSR requirements to the adoption of sustainability banking.

Research implications and limitations of the study

This study is an attempt to develop framework for sustainable banking performance
assessment based on publicly available information from nonfinancial reporting documents
and information from official websites of banks. The study reflects significant implications for
sustainable banking in India and developing countries. This framework can be further
applied in similar settings in different developing countries. As this framework takes into
account the indicators of sustainable banking specifically required in the context of
developing and underdeveloped countries, it can also be easily tested for assessment of
sustainable banking performance of the banking industry with minor changes for example
country specific guidelines and policies could be replaced, e.g. NVGs as in the case of
India. This study will help the banks and all stakeholders in understanding more about the
shortcomings in implementing sustainable banking and will provide opportunities for
improving sustainability banking performance.
Despite providing a significant insight into nature and extent of sustainable banking in India,
this study has few limitations also. This study is based on the quantity of information
publically disclosed by the banks; the degree and impact of sustainable banking

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 performance of the banks has not been taken into consideration. The financial performance
indicators were also not considered in the present study and sample of the study does not
include foreign banks operating in India. This study has used 40 indicators to measure
sustainable banking performance. More indicators of sustainable banking can be used to
tune future studies. Longitudinal research focussing on comparison of sustainable banking
performance of different periods can be attempted in future to evaluate improvements in
sustainable banking performance of the institutions.

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 Further reading
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 Appendix

Table AI Sustainable banking performance framework

S.No. Elements Points Source

Group 1: Sustainable product and services (40 per cent)

1 Sustainable financing Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
2 Climate fund Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
3 Environmental loan Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
4 Micro-finance Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
5 Sustainable advocacy services Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
6 Green mortgage Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
7 Socially responsible investment Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
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8 Financial inclusion product Adopted; Yes(2) Website or Sustainability

or No (0) reports/BRR/AR
9 Venture capital for environmental saving Adopted; Yes(2) Website or Sustainability
product or No (0) reports/BRR/AR
10 Green bond Adopted; Yes(2) Website or Sustainability
or No (0) reports/BRR/AR
Group 2: Environmental management dimension indicators (20 per cent)
11 ISO 14001 certification Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
12 Sector specific exclusion Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
13 Environmental risk management in lending Adopted; Yes(4) Website or sustainability
policy or No (0) reports/BRR/AR
14 Quantitative information about environment Adopted; Yes(4) Website or sustainability
care initiatives or No (0) reports/BRR/AR
15 Adoption of environmentally friendly Adopted; Yes(4) Website or sustainability
technologies or No (0) reports/BRR/AR
Group 3: Social development dimension indicators (20 percent)
16 Community involvement programme Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
17 Charity and sponsoring Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
18 Financial literacy and credit counselling Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
19 Training and Skill development programme Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
20 Community consultations Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
21 Targets for community investment Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
22 ISO 26000 certification Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
23 Health care and sanitation programme Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
24 Access points for financial services in low Adopted; Yes(4) Website or sustainability
populated or remote areas of the country or No (0) reports/BRR/AR
25 Improve access to financial services for Adopted; Yes(4) Website or sustainability
disadvantaged people or No (0) reports/BRR/AR
(continued)

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 Table AI
S.No. Elements Points Source

Group 4: Internal socio-environment conduct (10 percent)

26 Policy and procedure concerning Anti- Adopted; Yes(4) Website or sustainability
corruption or No (0) reports/BRR/AR
27 Policy and procedure concerning Human Adopted; Yes(4) Website or sustainability
right or No (0) reports/BRR/AR
28 Policy for business ethics/ values Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
29 labour practices Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
30 Gender equity & diversity Adopted; Yes(4) Website or sustainability
or No (0) reports/BRR/AR
Group 5: Sustaibility code of conduct, reporting, ESG indexing (10 percent)
31 Sustaibility report disclosure Adopted; Yes(2) Website or sustainability
or No (0) reports/BRR/AR
32 Business responsibility report disclosure Adopted; Yes(2) Website or sustainability
or No (0) reports/BRR/AR
33 Environment policy Adopted; Yes(2) Website or sustainability
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or No (0) reports/BRR/AR
34 GRI membership Adopted; Yes(2) www.globalreporting.
or No (0) org
35 Signatory to Equator Principles Adopted; Yes(2) www.equatorprinciples.
or No (0) com
36 Adherence to UN Global Compact Adopted; Yes(2) www.
principles or No (0) unepglobalcompact.org
37 Signatory to UNEP FI Adopted; Yes(2) www.unepfi.org
or No (0)
38 Adherence to NVGs disclosure (country Adopted; Yes(2) Website or sustainability
specific guidelines) or No (0) reports/BRR/AR
39 BSE GREENEX Indexing Adopted; Yes(2) BSE GREENEX data
or No (0)
40 Member of Dow Jones Sustainability Index Adopted; Yes(2) DJSI world constituent
or No (0) data

About the authors

Kishore Kumar is a PhD candidate working under the supervision of Dr Ajai Prakash in the
Department of Business Administration at the University of Lucknow. Kishore graduated
from Galgotia University with a master’s in business administration in finance. For his
doctoral dissertation he is studying sustainable development dynamics of Indian banking
sector. His research interests are sustainable development, responsible banking and
incorporation of environmental and social concerns into banking core strategy. Prior to
pursuing his PhD, he was working as an Assistant Professor since 2010. Kishore Kumar is
the corresponding author and can be contacted at: akishore001@gmail.com

Dr Ajai Prakash is a Professor of management and international business with more than 20
years of global teaching experience of teaching (especially India and Africa). He is
currently teaching at University of Lucknow, India, and his interests are in working on
Strategic Issues of Social Entrepreneurship. During his career, Dr Prakash has served as
Dean, School of Graduate Studies at KCA University, Nairobi, Kenya and has been actively
involved with UN Principles for Responsible Management Education (UNPRME) working
groups on anti-corruption, gender issues and poverty alleviation. He developed a globally
applicable responsible management education toolkit under the United Nations Global
Compact Principles for Responsible Management (Anti-Corruption Curriculum) with special

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 emphasis on a module on Behavioural Science. The principles for responsible management
education and the toolkit have been adopted by over 500 institutions imparting
management education globally covering all the inhabited continents of the world. He is a
Visiting Researcher at Instituto Sperior de Administracao Economica (ISAE), Curitiba Brazil
and is currently the State Convener for Centre of Excellence for Governance, Ethics and
Transparency Global Compact Network India.
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