ESG Factors Impact European Eco-Financial Institution Selection: A TOPSIS and Entropy Research

European financial institutions that follow environmental, social, and governance (ESG) standards are assessed for eco-efficiency using the entropy and TOPSIS model. Essential traits like environmental education and administration will classify financial firms. How well their ESG performance matches eco-efficiency will be assessed. The research classifies European financial institution eco-entrepreneurs using ESG methods. The study examines how effective management, environmental training, and financial institution ecological performance are related. The entropy and TOPSIS model assessed ESG practices in European financial institutions and found varying eco-efficiency. Interestingly, the research found that institutions with high ESG performance may not always have the highest eco-efficiency. They stress that financial institutions must operate sustainably. This research offers valuable insights to enhance financial institutions’ ESG performance and eco-efficiency. It also improves sustainable finance discussions by giving policymakers at these institutions environmental training and management information. This suggests that the ESG framework has to be reevaluated since ESG scores do not reflect ecological efficacy. The study’s results are significant for refining the ESG framework and supporting sustainable practices among financial institutions, particularly those with lower eco-efficiency ratings.