The Impact of ESG (Environmental, Social, and Governance) Disclosures on Banks in GCC (Gulf Cooperation Council)

Environmental, Social, and Governance (ESG) issues have become essential in determining the strategy and operations of financial institutions in the constantly evolving global finance sector. ESG criteria, which began with socially responsible investing in the early twentieth century, today include environmental sustainability, social responsibility, and governance practices in addition to financial indicators. The emergence of ESG considerations shows a growing recognition that financial success does not have to be at the expense of ethical and sustainable practices. By addressing key research questions, his literature review investigates the transformative impact of ESG disclosures on the financial and operational performance of both conventional and Islamic banks in the Gulf Cooperation Council (GCC). The study is inspired by the growing importance of ESG disclosures as financial decision-making drivers, notably in the GCC. The review tries to unravel the nuanced complexity of how ESG factors emerge in the varied financial frameworks of conventional and Islamic banking models in the GCC. Various research’ findings indicate a complex relationship between ESG disclosures and financial performance, with some indicating a negative impact and others showing a positive correlation. The impact of ESG factors is influenced by factors such as the specific pillars of sustainability, temporal variations, and the diverse nature of financial institutions. Furthermore, the legislative framework plays an important role in developing ESG practices in the GCC, influencing the general consistency and comparability of ESG disclosures. Regulations that are clear and enforceable can foster a collective commitment to responsible banking practices. Through evidence from academic journals, this literature review not only provides insights into the intricate relationship between ESG discoursers and the financial landscape, but it also contributes to informed decision-making and regulatory enhancements for sustainable banking practices in the GCC.