The role of Environmental, Social, and Governance (ESG) practices in promoting sustainable finance in the banking sector: A case study of Arab Bank

Abstract

This study aims to investigate the role of Environmental, Social, and Governance (ESG) practices in enabling banks to provide sustainable financing that contributes to the achievement of sustainable development. By examining the ESG practices adopted by Arab Bank, as disclosed in its 2025 Sustainable Finance Report, the study reveals that the bank has extended sustainable financing at both the environmental and social levels. Such financing has supported projects in renewable energy, including wind and solar power generation, clean transportation through the acquisition of freight transport and electric vehicles, the development of environmentally sustainable green buildings, and the financing of small and medium-sized enterprises (SMEs), particularly micro-enterprises. Although the report did not explicitly address the governance dimension in terms of financing activities, the bank continues to implement various governance-related practices and stakeholder engagement initiatives. The financed projects have contributed to the development of environmentally sustainable initiatives, the reduction of greenhouse gas emissions, the generation of renewable energy, carbon sequestration, and the creation of new employment opportunities. These outcomes underscore the significant role of ESG practices in promoting sustainable finance and supporting sustainable development.