The Effect of Stakeholder Engagement on Environmental Sustainability Orientations and Financial Performance of Commercial Banks in Nepal

The study investigates the effects of stakeholder engagement on environmental sustainability orientation (ESO) and financial performance in commercial banks in Nepal. Adopting a convenience sampling method, a cross-sectional survey was conducted among employees of a commercial bank, collecting data from 217 respondents. The causal research design was followed to investigate the hypothesized relationship using partial least squares structural equation modelling (PLS-SEM). The study revealed that stakeholder engagement significantly improves the bank’s ESO and financial performance. Additionally, the empirical results assert the strong mediating role of ESO in the relationship between stakeholder engagement and financial performance. This study offers empirical evidence by highlighting the importance of integrating sustainability into banking operations; the research underscores the potential for banks to achieve long-term success while fulfilling sustainability responsibilities. This empirical study contributes valuable knowledge to the field and lays the foundation for further inquiry into the intricate relationships among stakeholder engagement, ESO, and financial performance in the banking sector.

JEL Codes: G21, G30, M14, Q56, Q01, O16, O53