Sustainable Finance and Green Banking Transformation an Empirical Investigation of ESG Integration, Climate Risk Management, and Financial Performance in Emerging Economies

The sustainable finance and the green banking transformation is connected with the financial performance of banks in an emerging economy. The banking sector of Bangladesh is used as the setting. The study integrates all the aspects of ESG integration, green banking, climate risk management and digital banking into a single whole. The type of research method is quantitative research and the data information obtained from the research is secondary data obtained from 5 commercial banks in private ownership during 2020 - 2024. BRAC Bank PLC, Eastern Bank PLC, City Bank PLC, Jamuna Bank PLC and NCC Bank PLC are the banks. The data has been collected from the activities reported by the annual reports, sustainability report, ESG report, climate disclosure report and published reports in Bangladesh bank. The study employs descriptive analysis and association based on evidence, as it is not yet completed for the whole bank year panel regression. The results presented in this report show that the percentage of green and sustainable finance has increased markedly during the period under study. Green finance disbursement increased from BDT 11,929.93 crore in 2020 to BDT 30,653.78 crore in 2024 and the proportion of sustainable finance to all loans disbursed jumped to 39.66% in 2024. However, there is also a positive relationship between the financial performance and the sustainability leadership of banks, with the most financially performing banks being Bank City, BRAC Bank and Eastern Bank. The ESG disclosure and performance are linked in a positive direction and there is partial support for green banking and positive directional links between ESG and climate risk management. The relationship appears to be strengthened with bigger banks. It is a study that has three contributions to the sustainable finance literature. It introduces climate risk to the ESG and performance discussion, it widens the discussion beyond China/India and it provides practical advice for banks and regulators. The findings show that the sustainability-related banking is a responsibility and strategy in Bangladesh.