Sustainability in Corporate Governance and Banking

In short, regulatory and social impulses have directed the actions of the banking enterprise toward issues of social responsibility, in order to acquire, preserve and increase consensus around its strategic-operational choices under a constraint of responsiveness to instances and needs, not only economic, on the part of the various stakeholders with which it weaves relationships to ensure its survival in a highly competitive environment (Chih H. L., Chih H. H., Chen T. Y. (2010), “On the determinants of corporate social responsibility: international evidence on the financial industry”, Journal of 130 Business Ethics, vol. 93, n. 1: 115–135; Barile S., Sancetta G., Simone C. (2013), Business Management, Cedam, Padova; Oliveira et al., .Meditari Accountancy Research 27:196–227, 2019). In particular, any negative impact of such factors, so-called “ESG risks,” may manifest itself through the traditional risk categories (credit, market, liquidity, and operational) in a double-materiality perspective (financial and environmental), as institutions may be affected (outside-in perspective) through their counterparties or invested assets, which in turn may be affected by (outside-in perspective) or impacted by (inside-out perspective) ESG factors. Both perspectives should be taken into account when assessing ESG risks. This short paper is intended to make a contribution to the continuing evolution of risk related to ESG variables in banking operations as understood in risk assessment and management.