Bui Thi Thu Loan

Environmental, social, and governance (ESG) disclosure becomes vital for banks to be transparent and accountable for their investments and lending decisions to shareholders, regulators, and society. The potential enhancement of shareholder value through ESG disclosure is still inconsistent. Empirical studies on the association between ESG disclosure and financial performance are mixed and limited in emerging economies. This study aims to examine whether ESG disclosure impacts the financial performance of 24 Vietnamese commercial banks in terms of return on assets (ROA), return on equity (ROE), and net interest margin (NIM). The study uses the feasible generalized least squares estimation method based on panel data from 2018 to 2022. The study employs content analysis on 12 themes related to environmental, social, and governance pillars to score policy disclosure based on the Fair Finance Guide Methodology. The results highlight the positive effects of ESG policy disclosure, individual environment disclosure (E), and individual governance disclosure (G) on bank financial performance. Notably, ESG, E, and G have the largest influence on ROE, with coefficients of 0.051, 0.036, and 0.027, respectively, at a 5% significance level. However, the study does not provide evidence of a statistically significant association between social disclosure and financial performance. These results provide empirical evidence for regulators and bank managers to shape ESG policies and practices aligning with international standards.

Acknowledgment
ESG disclosure score of 11 banks as primary data in this study is conducted under the project coordinated by the Fair Finance Vietnam coalition, as part of Fair Finance International.

Type of the article: Research Article

Abstract
Integrating environmental, social, and governance factors into the credit granting process is an imperative requirement for financial risk management. This study aims to quantify the impact of the perceived corporate environmental, social, and governance (ESG) information disclosure on Credit Decision-Making Orientation and determine the mediating role of the intention to use sustainability information. Research data were collected through a survey of 235 credit officers and managers at 32 commercial banks in Vietnam from February to August 2024 and subsequently analyzed utilizing partial least squares structural equation modeling. The empirical results indicate that the disclosure levels of environmental, social, and governance information do not have a direct impact on credit decision-making orientation. However, these three factors positively affect the intention to use sustainability information, wherein the environmental factor exerts the most substantial influence (β = 0.447), followed by governance (β = 0.416) and social factors (β = 0.363). Furthermore, the intention to use sustainability information acts as a full mediator, exerting a strong positive impact on credit decision-making orientation (β = 0.558) and explaining 26.2% of the variance in the dependent variable. The study concludes that subjective credit appraisal orientations among banking personnel are primarily driven by their cognitive intention to integrate sustainability data rather than the mere presence of corporate disclosures.