Bank climate change initiatives, ownership structures and corporate governance mechanisms: Evidence from emerging economies

Adu, Douglas A.; Roni, Naheed N.

Abstract

Motivated by the growing attention on climate change acceleration, we examine the interrelationships among corporate governance disclosure index, bank ownership structures, and bank climate change initiatives through the lens of multi-theoretical framework. We conduct a fixed-effects and dynamic two-step system generalized method of moments models over an extensive dataset. Based on a panel data of 220 banks (2,785 observations) from 16 Sub-Saharan Africa emerging economies between 2007 and 2022, the study observes that banks with higher levels of corporate governance disclosure index engage in more climate change initiatives. The study shows that ownership by institutional and foreign investors is associated with more bank climate change initiatives, while government ownership reduces climate change initiatives. Further, we document that director ownership has no impact on climate change initiatives. The study documents that the association between bank ownership structures and bank climate change initiatives is positively moderated by the extent of corporate governance disclosure index. This moderating impact improves for banks with high corporate governance mechanisms. Finally, we show that the bank ownership structures-climate change initiatives linkage and the moderating effect of corporate governance mechanisms on this nexus vary significantly across banks' operating periods. We identify corporate governance disclosure as the potential channel through which bank ownership structures and climate change initiatives are interlinked. Our findings call for banks to adopt and implement good governance disclosure to improve climate change initiatives. The findings make significant theoretical and regulatory contributions.

Citation

Adu, D. A., & Roni, N. N. (2024). Bank climate change initiatives, ownership structures and corporate governance mechanisms: Evidence from emerging economies. Business Strategy and the Environment, 33(4), 3039-3077. https://doi.org/10.1002/bse.3640

• Journal Article Type: Article
• Acceptance Date: Nov 8, 2023
• Online Publication Date: Dec 7, 2023
• Publication Date: 2024-05
• Deposit Date: Oct 24, 2024
• Publicly Available Date: Oct 25, 2024
• Print ISSN: 0964-4733
• Electronic ISSN: 1099-0836
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 33
• Issue: 4
• Pages: 3039-3077
• DOI: https://doi.org/10.1002/bse.3640
• Keywords: Corporate governance; Bank ownership structures; Climate change initiatives; Environmental policy; Sustainable development goals 2
• Public URL: https://nottingham-repository.worktribe.com/output/40866030
• Publisher URL: https://onlinelibrary.wiley.com/doi/10.1002/bse.3640