Cimahi, West Java – The Impact of
Green Banking on the Financial Performance of Banks Listed on the Indonesia
Stock Exchange in 2020–2024. This research was conducted by Siti Hafizd Nur
Syahrani Az'zahra and Rosmini Ramli from the Faculty of Economics and Business,
Jenderal Achmad Yani University (UNJANI) Cimahi in a scientific article
published in the East Asian Journal of Multidisciplinary Research in
2026.
Research conducted by Siti Hafizd Nur
Syahrani Az'zahra and Rosmini Ramli revealed that the implementation of green
banking has a positive impact on bank profitability, especially in the Return
on Assets (ROA) and Return on Equity (ROE) indicators.
Green
banking as a business strategy, not just a social responsibility
In recent
years, the issue of climate change and sustainability has become a global
concern, including in the financial sector. Banks not only play a role as
financial intermediary institutions, but also as drivers of investment
direction through financing provided to various economic sectors.
Az'zahra and
Ramli's research emphasizes that the concept of green banking encourages banks
to integrate environmental aspects in every operational activity, such as
digitizing services to reduce paper use, energy efficiency, and financing
environmentally friendly projects.
This approach
is in line with the concept of a triple bottom line that balances profit,
people, and planetary aspects. This means that environmental sustainability is
no longer seen as an additional burden, but as a strategy that can create
long-term economic value.
Research
methodology: analysis of 39 banks over five years
The research
was conducted by analyzing 39 banks listed on the Indonesia Stock Exchange
during the 2020–2024 period. The data is taken from the company's annual reports
and sustainability reports.
The researchers
used the Green Banking Disclosure Index (GBDI) to measure the level of
implementation of green banking, which includes a variety of indicators such
as:
1.
financing of renewable energy projects,
2.
the use of digital technology to reduce paper,
3.
energy efficiency and water saving,
4.
environmental risk evaluation in financing,
5.
transparency of sustainability reporting.
Statistical
analysis was conducted using the Structural Equation Model (SEM) based on
Partial Least Square to see the relationship between green banking and
financial performance.
Key findings
of the study
The results of
the study show a positive relationship between green banking practices and the
financial performance of banks. Some of the key findings include:
- Green banking has been proven to increase Return on
Assets (ROA), showing that banks' ability to generate profits from their
assets has been better.
- The impact on Return on Equity (ROE) is even
stronger, as sustainability reputation boosts investor confidence.
- Operational efficiency is improved through
digitalization and reduced use of physical resources.
- Sustainable financing practices help reduce the risk
of non-performing loans from sectors that are not environmentally
friendly.
- Transparency of environmental reporting increases
stakeholder trust.
Statistically,
green banking accounts for about 14.2% variation in ROA and 22.9% variation in
ROE, which means that these factors are significant although not the only
determinant of a bank's financial performance.
Reputation
and investor trust are key factors
According to
Az'zahra and Ramli, the implementation of green banking gives a positive signal
to the market that banks have a long-term vision and management that is
adaptive to global changes. Reputation as an institution that cares about the
environment is able to attract new investors, increase customer loyalty, and
open access to funding at lower costs.
In addition,
banks that apply sustainability principles tend to be more selective in providing
financing. Environmental risk evaluation can help avoid high-risk projects,
making asset quality more stable.
Challenges
of implementing green banking
Although it
provides benefits, the implementation of green banking also has challenges,
especially the need for a large initial investment in digital technology and
environmentally friendly operational systems. In the short term, implementation
costs can increase operational costs, but the long-term benefits in the form of
efficiency and reputation are considered greater.
The study also
noted that not all green banking indicators are applied equally across banks.
For example, the allocation of special budgets for green banking programs still
varies between institutions, indicating that implementation is still in the
development stage.
Implications
for industry and public policy
The results of
this study provide an important message for the banking sector and policymakers
in Indonesia. Green banking is not only a global trend, but can be a competitive
strategy to improve financial performance and business sustainability.
Some of the
strategic implications highlighted include:
- Banks can increase profitability through operational
efficiency based on environmentally friendly technology.
- Sustainable financial regulation has been proven to
support the stability of the banking industry.
- Investors are increasingly considering environmental
factors in their investment decisions.
- Digital transformation is an important part of the
green banking strategy.
With increasing
public awareness of environmental issues, banks that adapt faster have the
potential to gain a competitive advantage in the future.
Author
profile
•
Siti Hafizd Nur Syahrani Az'zahra –
Faculty of Economics and Business, Jenderal Achmad Yani University (UNJANI)
•
Rosmini Ramli – Faculty of Economics and
Business, Jenderal Achmad Yani University (UNJANI)
Research
source
Az'zahra, S. H. N. S.,
& Ramli, R. (2026). The Impact of Green Banking on Indonesia Stock
Exchange-Listed Banks' Financial Performance from 2020 to 2024.
East Asian
Journal of Multidisciplinary Research (EAJMR), Vol. 5 No. 2, pp. 371–386.
DOI: https://doi.org/10.55927/eajmr.v5i2.5
Official URL: https://mtiformosapublisher.org/index.php/eajmr
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