Abstract
This study is an empirical examination of integrating ESG and corporate governance for financial sustainability in Nigeria using selected deposit money bank data in Nigeria between 2012 and 2022. The first objective examined the impact of corporate governance on bank performance in Nigeria with the aid of Stata and Python library to analyse the data through generalised method of moments (GMM). The findings show that corporate governance variables like non-executive directors and credit risk management have a positive impact; on the other hand, larger board sizes and higher levels of independence had a negative impact on the performance of deposit money banks using risk-adjusted return on assets (RAROA), whereas corporate governance variables do not significantly determine bank performance using risk-adjusted return on equity (RAROE), except for a negative association with lending rates.
The second objective examined the relationship between ESG integration and bank performance using ordinary least squares with the aid of E-Views and Python library. The findings show that a positive relationship exists between environmental resource efficiency and RAROA of Nigerian deposit money banks. On the other hand, environmental emissions, waste reduction and environmental innovation have negative impact bank performance using RAROA. Furthermore, workforce factors positively influence bank performance using RAROA, while human rights show an inverse relationship. A positive relationship exists between community engagement and bank performance RAROA; therefore aligning with stakeholder theory. In addition, there is a positive but insignificant relationship between corporate social responsibility (CSR) and bank performance using RAROA, whereas management oversight and stakeholder rights positively correlate with bank performance using RAROA. However, using RAROE for bank performance, the findings reveal that a positive relationship exists between environmental resource efficiency and bank performance using RAROE, while emissions and waste reduction have a negative effect, indicating a trade-off between sustainability efforts and financial returns. Environmental innovation has an insignificant relationship, suggesting the need for cautious adoption of green initiatives. This insignificant effect may reflect measurement limitations associated with voluntary ESG disclosures, the long-term nature of returns from green investments, and the limited short-term market incentives within the Nigerian banking environment. Workforce development and community engagement enhance bank performance using RAROE, while human rights policies show no significant impact on bank performance using RAROE. In governance, stakeholder rights...