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Volume 11 Issue 3, July-September 2023 

ISSN: 2836-9416 

Impact Factor: 5.57 

Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, 

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SUSTAINABLE BANKING PRACTICES AND ENVIRONMENTAL 
PERFORMANCE: INSIGHTS FROM SRI LANKA 

 
 

1Dr. Shaumy Fernando and 2Prof. Anton Arulrajah 
1Specialization in HRM, Eastern University, Sri Lanka 

2Department of Management, Eastern University, Sri Lanka 
 

Abstract: In recent decades, global awareness of environmental issues has surged, drawing 
attention from governments, policymakers, advocacy groups, businesses, and the public worldwide. 
These concerns encompass a wide range of issues, including environmental degradation, climate 
change, ethical considerations, social responsibility, marginalization, and the emergence of 
influential activist groups. This growing societal focus on environmental performance has 
transformed environmental protection from a concern primarily for households and communities 
into an imperative for businesses. Environmental responsibility is now seen as adding value to 
organizations, attracting investors and shareholders who take pride in supporting environmentally 
responsible activities. 
The industrial development of the past has significantly contributed to global environmental 
challenges such as global warming, ozone depletion, air and water pollution, soil erosion, and 
deforestation. Recognizing the urgency of these global environmental problems, organizations are 
increasingly prioritizing environmental performance alongside their social and economic goals. 
International and local environmental standards, environmental regulatory bodies, and 
environmentally conscious consumers exert pressure on organizations to enhance their 
environmental performance. Compliance with strict environmental norms and obtaining 
environmental protection licenses (EPL) have become mandatory for industries seeking to operate in 
today's environmentally conscious landscape. 
Keywords: environmental performance, sustainability, corporate responsibility, environmental 
standards, environmental protection license 
  
1. Introduction   
In the last few decades, the awareness of environmental issues by governments, policy makers, 
advocacy groups, business firms, and the public is given much importance in all over the world 
(Banerjee, 2002). There have been numerous debates about the issues of environmental degradation, 
climate change, ethics, social responsibility, marginalization and formation of strong voices of groups, 
radicalism and protest on capitalism since the society is more concerned about the environmental 
performance (Jabbour & Santos, 2008). Environment protection activity that was limited to 
households and community in the past has now become a compulsion on commerce (Gunathilaka, 
Gunawardana, & Push pakumari, 2015). It adds value to businesses. So investors and shareholders take 
pride in being associated with such activities. The industrial development which has enhanced global 
warming, ozone depletion, air and water pollution, soil erosion, and deforestation are now widely 

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recognized as global environmental problems demanding immediate solutions (Banerjee, 2001). 
Hence, organizations are seriously focused on the environmental performance in addition to the social 
and economic performance. Moreover, several international and local environmental standards, 
environmental authorities and environmental oriented customers emphasize on the environmental 
performance of the organizations. Environmental authorities have given organizations very strict 
norms to follow and are much more vigilant as this issue has caused much uproar in the recent past 
with the society. Further, environmental protection license (EPL) is mandatory today for an industry 
to operate.   
Hence, organizations are focusing much attention to protect the environment in their day to day 
activities. As society is more concerned about the environmental performance, it has led companies to 
adopt environmental management practices. So, companies voluntarily implement environmental 
management system (EMS) for this purpose. An environmental management system is a set of 
management processes that requires firms to identify the measures and controls their environmental 
impact (Bansal & Hunter, 2003). It provides a management framework for achieving environmental 
performance. Hence, companies insist on implementing environmental management systems to 
enhance control over the company’s negative environmental impact. It helps the company in preventing 
pollution and saving company’s money by reducing wastes, reducing energy consumption, carrying 
recycling activities and overall enhancing the corporate image. Moreover, some authors suggest that 
environmental management may be a tool, which helps and cited by organizations to improve their 
competitiveness (Hart, 1995; Porter & Linde, 1995). In order to achieve competitive advantage, 
commitment to safeguard natural environment has become an urgent issue within the current 
competitive scenarios. Further, Miles and Covin (2000) stated that environmental performance of an 
organization improves its reputation and goodwill. It contributes to environmental and economic 
benefits to the organizations. It reveals that environmental issues (e.g. climate change, pollution and 
energy crisis etc.) create not only challenges but also opportunities for business organizations 
(Thevanes & Arulrajah, 2016a and 2016b).  
For a long time, these environmental issues were regarded as hardly relevant to the financial sector. 
Within the last few decades this view has changed, and banks have recognized that the sector is 
increasingly affecting, and is affected by, environmental issues (Kiernan, 2001; McKenzie &Wolfe, 
2004). Since banking sector is one of the major sources of financing to the many industries and 
businesses, it creates huge responsibility and accountability to the banks because, this may indirectly 
lead to environmental pollution if banks fail to exercise strong verification measures regarding the 
negative environmental impact of those industries and businesses prior to financing. So, encouraging 
environmentally accountable investments and lending must be the prime responsibilities of banks 
(Thombre, 2011). If a bank finances environmental polluting industries and businesses, that particular 
bank will definitely contribute to the environmental degradation. On the other hand, banks should play 
a pro-active role to oblige industries for mandated investment for environmental management, use 
appropriate technologies and management systems (Masukujjaman & Aktar, 2013). Thus, banks can 
act as an ethical organization by the disbursement of loans only to those organizations, which have 
environmental concerns (Muhamat, Jaafar, &Azizan, 2011; Goyal & Joshi, 2011; Thombre, 2011). In 
this way, banks can contribute to improve the overall environment, the quality and conservation of life, 

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level of efficiency in using materials and energy, quality of services and products even though 
environmental protection is not a primary goal of banking industry.   
In the industrialized nation of developing countries, the issues related to the environment have become 
very critical and their dependence on natural resources for the growth and development underline the 
need of implementing policy and plans for sustainable use of resource (Stockholm Environment 
Institute Report, 2013). Paying greater attention on the environmental issues across the globe has 
exerted pressure on all industries, including financial services particularly banks to go green which are 
till now considered as environmental friendly. Banks have to address environmental issues, both in 
terms of their obligations and opportunities by virtue as a responsible corporate entity. Usually banking 
activities are not physically related to the environment, but the external impact of their customer 
activities is substantial. So, there is a need for banks to adopt green banking practices into their 
operations, buildings, investments and financing strategies. Thus, green banking contributes in 
reducing carbon footprints by providing assistance to companies involved in renewable and clean 
energy technology (Sahoo&Nayak, 2007; Bihari & Pradhan, 2011).    
The ultimate objective of green banking is to protect and safeguard the natural environment. Basically, 
it can take place in two ways. They are: (1) technological innovation in banking, (2) behavioral and 
management innovations in banking practices (Shaumya & Arulrajah, 2016a and 2016b). Technological 
innovation in banking can help banks to reduce their negative environmental impact or to improve 
their positive environmental impact. For example, using online banking instead of traditional banking 
system, online bills payment system instead of manual payment system, and etc. Similarly, behavioral 
and management innovations in banking practices can also contribute to reduce negative 
environmental impact of the banks. For example, energy saving behavior of bank staff in their 
respective branches, waste reduction efforts of bank employees, environmental friendly initiatives of 
bank employees, providing loans to the environmental friendly project and etc. According to Rashid 
(2010), banks should prioritize in providing loans to the sectors that promote various environmental 
protection activities.   
So, it can be concluded that green banking approach involves using environmentally friendly practices 
at every level from adapting environment friendly practices within the banking organizations and also 
considering the environmental aspect of the projects while funding and investing in commercial 
projects. Therefore, green banking has gained unique position in the recent research since it advances 
towards achieving bank’s environmental performance.    
Today, many Sri Lankan banks are making efforts to “go green” through offering various green products 
and services to their customers and taking initiatives in their day to day business operations for the 
environmental concerns. So in this context, it is very imperative to study the green banking practices 
towards bank’s environmental performance. Apparently, there are lacunas in empirical studies 
undertaken in Sri Lankan context regarding green banking practices together with bank’s 
environmental performance. In order to fulfill this gap, this study was conducted theoretically and 
empirically in Sri Lankan banks. Hence, the objective of this paper is to measure the impact of green 
banking practices on bank’s environmental performance.    
To empirically find the impact of green banking on bank’s environmental performance, the paper is 
divided into following sections, section 1 presents insights of environmental performance, green 

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banking and its current needs, section 2 provides a brief review of literature, section 3 gives 
methodology, followed by analysis and interpretations of results contained in section 4. Finally, section 
5 indicates conclusions, implications and future directions.    
2. Literature Review    
2.1 Green Banking   
The concept of green banking was established in 1980 at Triodos bank from Dutch origin which started 
the environmental sustainability in the banking sector from the very first day. In 1990, the bank 
launched ‘green fund’ for funding environment friendly projects and all the other projects followed later 
(Dash, 2008). Taking this bank as example, the banks all over the world are motivated to proceed with 
green banking initiatives. Moreover, the first green bank commenced its operations in Mt. Dora, 
Florida, United States in 2009.   
Green can be defined as an area of land covered with grass, plants and trees without buildings. 
Generally, it can be referred as something that is related with natural environment. “Green” in green 
banking principally indicates banks’ environmental accountability and environmental performances in 
business operations (Bai, 2011). A green banking is an ethical banking/social banking (banks with a 
conscience) as there is a strong building block which is corporate social responsibility (CSR) within the 
agenda of green banking (Benedikter, 2011). It is a kind of banking conducted in selected area and 
technique that helps in the reduction of internal carbon footprint and external carbon emissions (Bahl, 
2012). Banks can reduce their carbon footprints by adopting the following measures such as paperless 
banking, energy consciousness, using mass transportation, green building, go online, save paper, use 
of solar and wind energy (Chaurasia, 2014). Green banks’ intention is to use resources, avoid waste and 
give priority to environment and society (Habib, 2010).    
Green banking has many benefits and advantages (Ragupathi & Sujatha, 2015). They are: (1) basically 
green banking avoids paper work and all the transactions are done through online banking, (2) creating 
awareness to business people about environmental and social responsibility enabling them to do an 
environmental friendly business practice, and (3) banks follow environmental standards for lending, 
which is really an excellent idea and it will make business owners to change their business to 
environmental friendly which is good for the future generations. Ginovsky (2009) stated that banks 
should launch new banking products which promote the sustainable practices and also need to 
restructure their back office operations in order to implement ecologically friendly practices. The 
author suggested two strategies which banks should follow to go for green banking. They are: (1) use of 
paperless banking which results in reducing the carbon footprint from internal banking operations and 
cost saving to banks, and (2) adoption of Green Street lending, which means offering low rate of interest 
to consumers and businesses for installing solar energy systems and energy-saving equipments.  
According to Dharwal and Agarwal (2013), green banking is a key in mitigating the credit risk, legal risk 
and reputation risk. The authors had suggested some green banking strategies like carbon credit 
business, green financial products, green mortgages, carbon footprint reduction, energy consciousness, 
green buildings and social responsibility services towards the society. Based on the above literature, the 
researchers define green banking as an environmental oriented banking practice that safeguards the 
environment from the negative impact to achieve environmental goals of the banks. In this perspective, 
banks implement several green banking practices such as environmental training, usage of energy 

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efficient equipments, constructing green buildings, and etc. Therefore, through these practices banks 
can achieve their environmental goals.  
In this context, the green banking practices can be considered as good evidences to prove that, banks 
are very keen in reducing their carbon footprint and energy consumptions. It is seen that banks around 
the world have started giving high priority and attention to green banking. However, several literatures 
and studies have been found regarding ‘Green Banking’ in USA, Europe, China, India and Bangladesh 
(Shakil, Azam, &Raju, 2014), if these factors hold true for other countries and contexts need further 
investigation.  
2.2 Environmental Performance   
Environmental performance is not just a corporate environmental protection; it is something much 
broader to include a proactive, transparent and long-term administration to meet certain well defined 
objectives in corporate planning to protect natural resources and competitiveness of firms. Corporate 
environmental performance defines the sustainability targets that articulate the goals of the companies 
by achieving set targets to satisfy shareholders, creditors, employees, customers, suppliers and 
community and to comply with the regulatory compliance and legal requirements in organizations. As 
suggested by Karagozoglu and Lindell (2000), environmentally proactive strategies promote ecological 
innovation and can lead to competitive advantage.  
Environmental performance is a matter of output in environmental management, which refers to the 
firm’s activities and products on the natural environment (Klassen & Whybark, 1999). It reflects an 
output demonstrating the degree to which firms are committed to protecting the natural environment. 
Horvathova (2010) identified environmental performance by ratio of toxic wastes, penalties paid for 
the violations of environmental regulations, adoption of ISO 14001 and environmental efficiency score. 
Qi, Zeng, Shi, Meng, Lin, and Yang (2014) adopted the emission intensity to measure the environmental 
performance. Hence, it is found that the environmental impact of the firm can be measured by rating, 
index or environmental score. Further, Tung, Baird, and Schoch (2014) pointed out that the efficient 
use of material is the best metrics to measure the environmental performance of the firms.   
2.3 Green Banking and Bank’s Environmental Performance   
The term green banking is now very popular worldwide. It is for preventing the environmental 
degradation and making this planet habitable. As it is an environmental friendly practice, banking 
sector is started to practice green banking concept recently. Because, banking is never considered as a 
polluting industry, the present scale of banking operations have considerably increased the carbon 
footprint of banks due to their massive use of energy (e.g., excessive usage of lighting, air conditioning, 
electronic/electrical equipments, IT, etc.), high paper wastage, lack of green buildings, and etc. In Sri 
Lanka, banking sector has started practicing green banking concept recently. This sector consists of 25 
licensed Commercial Banks (LCBs) and 7 licensed specialized banks (LSBs) in Sri Lanka (Central Bank 
of Sri Lanka-CBSL, 2015). These banks are the pioneering banks in adopting green banking concept in 
Sri Lanka. Hence, green banking has become an issue of concern in Sri Lanka’s banking sector. 
Many authors state that green banking is environmental concern practice and it reduces the negative 
environmental impact (Bai, 2011; Azam, 2012; Singh & Singh, 2012). According to Azam (2012), green 
banking is an eco-friendly or environment friendly banking to stop environmental degradation to make 
this planet more habitable. It signifies encouraging environment friendly practices and plummeting 

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carbon footprint by banking activities through various environment friendly acts (Singh & Singh, 2012). 
Green banking includes promoting social responsibility where banks consider before financing a 
project whether it is environment friendly and has any future environmental implications (Bihari, 
2011).Bhardwaj and Maholtra(2013) state that it makes the industries grow green and restore the 
natural environment. Hence, it is visible that green banking is the way of conducting the banking 
business along with considering the social and environmental impacts of its activities (Jha & Bhome, 
2013; Mishra, 2013; Biswas, 2011).   
Therefore, the green bank is known to focus entirely on environmentally friendly banking practices.By 
greening the business operations, banks started to take various initiatives for the concern of 
environmental protection and sustainability. The degree to which firms are committed to protecting 
the natural environment reflects environmental performance. Lober (1996) mentioned that 
environmental performance can be evaluated by a set of indicators such as low environmental releases, 
prevention of pollution, waste minimization, and recycling activities. These indicators are addressed by 
green banking by creating an effective and far reaching market based solutions. Hence, green banking 
practices in the banks lead to improve the environmental performance of the banks by reducing 
negative environmental impact (reducing paper usage, reducing the energy conservation, reducing fuel 
consumption and emission) and improve the positive environmental impact (improving environmental 
training and awareness of employees, establishing green building and usage of solar and wind energy) 
of the banks. Since environmental issues are emerging rapidly in banks, their dire need, now, is to adopt 
green banking practices, so that it would ultimately result in saving the environment and enhancing 
environmental performance of banks.    
The literature review reveals that with the exception of a few, no wide-ranging study deals with the 
impact of green banking on environmental performance around the world. Especially in Sri Lanka, this 
study needs to be explored thoroughly. So, the present study is an attempt to take a step forward 
towards the analysis of the impact of green banking practices on bank’s environmental performance. 
Hence, this study has been initiated in Sri Lankan context in order to fill this empirical knowledge gap. 
Based on the above cited literature evidences, hypothesis for this study has been developed as:   
Hypothesis 1: Green banking practices have positive and significant impact on bank’s environmental 
performance.   
3. Conceptual Model   
The research model of this paper was shaped from two comprehensive variables including green 
banking practices and bank’s environmental performance. Based on theoretical background and review 
of the previous literature, a conceptual model was developed to examine the impact of green banking 
practices on bank’s environmental performance. Figure 1 presents the research model. 
 
 
 
 
 
 
 

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Figure 1: Conceptual Model  

    
4. Method   
The objective of this study is to measure the impact of green banking practices on bank’s environmental 
performance. The study was done in the natural environment where work was preceded normally. None 
of the variables were controlled or manipulated. Hence the study was a non-contrived study. This study 
depended on the primary data. The primary data were collected through self-administrated 
questionnaire. The structured questionnaire of this study consists of three parts. Part I: data on 
employee profile. Part II: regarding green banking practices. Finally, in part III: employees were asked 
to provide their views on environmental performance of their banks. Five point Likert scale was 
assigned to measure the variables of the study and all are closed questions. 
The survey was carried out among the sample of 155 employees of selected Commercial Banks in 
Batticaloa Region of Sri Lanka. The sample method of the survey was disproportionate stratified 
sampling, because to assure representation of employees belonging to different grades in the selected 
banks. The primary data collected from the sample were analyzed using the computer based statistical 
data analysis package, SPSS (version 19.0) to measure the descriptive statistics, simple regression and 
multiple regression analysis. The data analyses include univariate, bivariate and multivariate analyses.   
5. Measures 
Shaumya and Arulrajah (2016b) developed a 16 items instrument with four key dimensions to measure 
the green banking. This tested instrument was used in this study.The dimensions are:(1) employee 
related practice was measured by three items such as environmental training and education, green 
performance evaluation and green reward system, (2) daily operation related practice was measured by 
using four items such as reduce paper usage, energy efficient equipments, e-waste management and 
eco-friendly banking practices, (3) customer related practice was measured by four items such as green 
loan, green projects, facilitate green enterprises and green credit evaluation, and (4) bank’s policy 
related practice was measured using five items such as green branches, green policy, green partnership, 
green strategic planning and green procurement. Each item of this instrument was rated using a five 
points Likert scale (1 = strongly disagree to 5 = strongly agree) to indicate how respondents agree or 
disagree regarding availability of green banking practices in their banks. The instrument had a good 
degree of reliability with a Cronbach’s alpha of 0.94. Table 1 shows the quality of the four dimensions 
of their instrument 
 
 
 
 

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Table 1: The Reliability Analysis of the 4 Dimensions of Green Banking  
    
Employee related Practice     

Daily Operation related 
Practice  

   

Customer related Practice     

Bank’s Policy relatedPractice     

a 
AVE (Average Variance Extracted)   
b CR (Composite Reliability)   

(Source: Shaumya &Arulrajah, 2016b)   
The bank’s environmental performance (dependent variable) was measured by an opinion question 
through five point Likert scale (1 = very low to 5 = very high) that was the perceived level of bank’s 
environmental performance. This study has used only a single item question to measure the bank’s 
environmental performance. Hence, its alpha value is 1.   
6. Results and Discussion   
The profile of sample consists of bank, job position, gender, age, educational qualification and working 
experience of 155 employees of selected Commercial Banks in Batticaloa Region of Sri Lanka. The 
frequencies and percentages are shown in Table 2. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Table 2: Sample Profile 
Sample 
Profile  

Category  Frequency  Percentage  

Banks  

Commercial Bank of Ceylon PLC  13  8.4  
HNB PLC  29  18.7  
Seylan Bank PLC  15  9.7  
Sampath Bank PLC  20  12.9  
People’s Bank  27  17.4  
DFCC Bank PLC  7  4.5  
NDB PLC  15  9.7  
NTB PLC  11  7.1  
Union Bank PLC  11  7.1  
Pan Asia Banking Corporation PLC  7  4.5  

Job 
position  

Manager  12  7.7  
Assistant Manager  15  9.7  
Officer  33  21.3  
Banking Assistant  61  39.4  
Banking Trainee  21  13.5  
Other  13  8.4  

Gender  
Male   92  59.4  
Female  63  40.6  

Age  

18-28years  87  56.1  
29-38years  53  34.2  
39-48years  11  7.1  
Over 49years  04  2.6  

Educational 
qualification  

Ordinary Level  -  -  
Advance Level  117  75.5  
Graduate  30  19.4  
Postgraduate  08  5.2  

Working 
experience  

3 years and below  49  31.6  
4-5 years  33  21.3  
Above 5 years  73  47.1  

                 (Source: Survey data)  
The result shows, the Coefficient of Correlation (r) is 0.769. Based on the decision rule, there is a strong 
positive correlation between green banking practices and bank’s environmental performance. The 
significance level is 0.000 which is below 0.05 (p < 0.05). Therefore, we conclude that there is a positive 
relationship between green banking and bank’s environmental performance. This means that the extent 
of implementation of green banking has positive effect on the level of bank’s environmental 
performance. This implies that banks that implement green banking practices tend to improve the 
environmental performance of banks. Based on the objective and hypothesis of the study, the 
researchers applied the simple regression analysis. Tables 5 and 6 represent the test of the hypothesis 
by using simple regression analysis, based on the significant level of (0.05).  

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It could be indicated from Table 2 that among the respondents, 8.4% are from Commercial bank, 18.7% 
are from HNB, 9.7% are from Seylan bank, 12.9% are from Sampath bank, 17.4% are from People’s 
bank, 4.5% are from DFCC, 9.7% are from NDB, 7.1% are from NTB, 7.1% are from Union bank and 
4.5% are from Pan Asia bank. Out of 155 respondents, 7.7% are managers, 9.7% are assistant Managers, 
21.3% are officers, 39.4% are banking assistants, 13.5% are banking trainees and 8.4% are other staffs. 
Among the respondents, 59.4% are males and 40.6% are females and 56.1% of the respondents are 
between 18 to 28 years of age, 34.2% are between 29 to 38 years of age, 7.1% are between 39 to 48 years 
of age and 2.6% of the respondents are above 49 years of age. Based on the educational qualification, 
75.5% of the respondents are advance level, 19.4% of the respondents are graduates and 5.2% of the 
respondents are post graduates. And based on the working experience, 31.6% of the respondents have 
3 years and below 3 years of experience, 21.3% have 4 to 5 years of experience and 47.1% of the 
respondents have above 5 years of experience. The results of univariate analysis for green banking and 
bank’s environmental performance are presented in Table 3.  
Table 3: Univariate Analysis  

  N  Mean  Standard 
Deviation  

Green Banking  155  3.99  0.65  
Bank’s 
Environmental 
P 

155  4.10  0.82  

(Source: Survey data)   
Mean and standard deviation for green banking is 3.99 and 0.65 respectively and mean and standard 
deviation for environmental performance is 4.10 and 0.82 respectively. Correlation between the green 
banking and bank’s environmental performance is shown in Table 4.  
 Table 4: Correlations between the Green Banking and Bank’s Environmental 
Performance 

 
  

Green 
Banking  

Bank’s 
Environmental 
Performance  

Green Banking  Pearson 
Correlation  
Sig. (2-tailed)  

1  .769**  

  .000  

N  155  155  
Bank’s 
Environmental 
Performance  

Pearson 
Correlation  

.769**  1  

Sig. (2-tailed)  .000    

N  155  155  
**. Correlation is significant at the 0.01 level (2-
tailed).  

 

(Source: Survey data)  

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The result shows, the Coefficient of Correlation (r) is 0.769. Based on the decision rule, there is a strong 
positive correlation between green banking practices and bank’s environmental performance. The 
significance level is 0.000 which is below 0.05 (p < 0.05). Therefore, we conclude that there is a positive 
relationship between green banking and bank’s environmental performance. This means that the extent 
of implementation of green banking has positive effect on the level of bank’s environmental 
performance. This implies that banks that implement green banking practices tend to improve the 
environmental performance of banks. Based on the objective and hypothesis of the study, the 
researchers applied the simple regression analysis. Tables 5 and 6 represent the test of the hypothesis 
by using simple regression analysis, based on the significant level of (0.05).  
 Table 5: Model Summary of Impact of Green Banking Practices on Bank’s 
Environmental Performance 

Model  R  R square  Adjusted R 
Square  

Std. Error of 
the Estimate  

1  .769a  .592  .589  .528  
a. Predictors: (Constant), Green 
Banking Practices  
b. Dependent Variable: Bank’s 
Environmental Perform ance  

 

  
(Source: Survey data)  
 Table 6:Coefficientsof Green Banking Practices on Bank’s Environmental Performance  

Model  Unstandardized 
Coefficients  

Standardized 
Coefficients  

t  Sig.  

B  Std. Error  Beta  
(Constant)  .250  .262    .952  .343  
Green Banking 
Practices  

.965  .065  .769  14.892  .000  

 Dependent Variable: Bank’s 
Environmental Performance  

   

(Source: Survey data)  
The impact of green banking practices on bank’s environmental performance has been studied using 
simple regression analysis. The results revealed R at 0.769, which represents positive correlation 
between green banking practices and bank’s environmental performance and R square at 0.592, which 
implies that 59.2% of variability in bank’s environmental performance is accounted by the green 
banking practices. In other words, 40.8% of variance of bank’s environmental performance is affected 
by other variables (Table 5).   
The t-value (14.892, Sig. <0.001) further confirms that green banking is associated with the improved 
environmental performance and thus leads to the acceptance of the hypothesis i.e. green banking 
practices have positive and significant impact on bank’s environmental performance (Table 
6).Moreover, to analyze the impact of each dimensions of green banking on bank’s environmental 

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performance stepwise multipleregression analysis was used. The results are shown in Tables7, 8, and 
9.  
Table 7: Model Summary of the Impact of each Dimensions of Green Banking on Bank’s 
Environmental  
Performance  

Model  R  
R 
Square  

Adjusted 
R Square  

Std. Error 
of the 
Estimate  

Change Statistics   

R 
Square 
Change  

F 
Change  

df1  df2  
Sig. F  
Change  

1  .743a  .552  .549  
.570  

.553  .552  188.818  1  153  .000  
2  .759b  .575  .540  .023  8.251  1  152  .005  
3  .769c  .591  .583  .532  .016  5.768  1  151  .018  
a. Predictors: (Constant), Bank’s Policy Related Practice  
b. Predictors: (Constant), Bank’s Policy Related Practice, Employee Related 
Practice  
c. Predictors: (Constant), Bank’s Policy Related Practice, Employee Related 
Practice, Daily Operation Related Practice  

 

 (Source: Survey data)  
 Table 8: ANOVA Model  

Model  Sum of Squares  df  Mean Square  F  Sig.  
1  Regression  
Residual  
Total  

57.641  1  57.641  188.818  .000a  

46.707  153  .305      

104.348  154        

2  Regression  
Residual  
Total  

60.046  2  30.023  103.008  .000b  

44.302  152  .291      

104.348  154        

3  Regression  
Residual  
Total  

61.676  3  20.559  72.749  .000c  

42.672  151  .283      

104.348  154        
a. Predictors: (Constant), Bank’s Policy Related Practice  
b. Predictors: (Constant), Bank’s Policy Related Practices, Employee Related 
Practices  
c. Predictors: (Constant), Bank’s Policy Related Practices, Employee Related 
Practices, Daily Operation Related Practices d. Dependent Variable: 
Environmental Performance  

 

  (Source: Survey data) 
As shown in Table 7, the extent to which these individual dimensions have contributed separately to 
the bank’s environmental performance. Among these dimensions, bank’s policy related practices have 
an impact on 55.2%, employee related practices have an impact on bank’s environmental performance 
was 2.3%, and daily operation related practices have an impact of 1.6% on bank’s environmental 

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performance. Finally, out of four dimensions, these three dimensions totally contribute 59.1% to the 
bank’s environmental performance. Table 8 indicates that this prediction model was statistically 
significant, F(3,151) = 72.749, p < .001. The final model included bank’s policy related practice, 
employee related practice and daily operation related practice. However, the final model has excluded 
customer related practice. 
Table 9: Coefficient Model 

Model  

Unstandardized 
Coefficients  

Standardized 
Coefficients  

t  Sig.  

B  Std. Error  Beta  

1  (Constant)  
Bank’s Policy Related Practice  

.715  .251    2.854  
13.741  

.005  

.856  .062  .743  .000  

2  (Constant)  
Bank’s Policy Related Practice  
Employee Related Practice  

.600  .248    2.420 
4.995  
2.872  

.017  

.576  .115  .499  .000  

.311  .108  .287  .005  

3  (Constant)  
Bank’s Policy Related Practice  
Employee Related Practice  
Daily Operation Related 
Practice  

.241  .286    .843  
3.806  
2.415  
2.402  

.401  

.466  .122  .404  .000  

.262  .108  .242  .017  

.235  .098  .185  .018  

a. Dependent Variable: 
Environmental Performance  

    

   (Source: Survey data) 
Table 9 depicts that bank’s policy related practice (beta = 0.404), employee related practice (beta = 
0.242) and daily operation related practice (beta = 0.185) have positive and significant impact on bank’s 
environmental performance. At the same time, customer related practice was not a significant predictor 
of bank’s environmental performance. Hence, it was excluded from the model.    
7. Conclusion   
Green banks are at startup mode in Sri Lanka. They should expand the use of environmental 
information in their business operations, credit extension and investment decisions. The endeavor will 
help them proactively to improve their environmental performance. As green banking is becoming an 
urgent need for banks in order to eliminate or reduce environmental degradation, both researchers and 
practitioners have called for more research works.   
Although, many research works have been done on green banking, however, exploring the impact of 
green banking on bank’s environmental performance has not been done so far. Hence, researchers have 
conducted this study in order to fulfill this empirical gap. The present study examined the impact of 
green banking practices on bank’s environmental performance. So, the analysis has made use of 
descriptive statistics, correlation, and regression analyses.  
Based on hypothesis testing, this research has confirmed a statistically significant and positive impact 
of green banking practices on bank’s environmental performance.  As such, higher the green banking 
practices the higher would be the bank’s environmental performance. Similarly, the simple regression 

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analysis showed green banking could be significantly explained by the variance of bank’s environmental 
performance. This result provides a support to the hypothesis of this study. Further, stepwise multiple 
regression analysis proved that bank’s policy related practice, employee related practice, and daily 
operation related practice were found to have positive and significant impact on bank’s environmental 
performance however, customer related practice was not a significant predictor of bank’s 
environmental performance. Even though customer related practice is one of the green banking 
practices, it does not directly contribute to the environmental performance of banks, as it deals directly 
with customers’ or general environmental performance. This may be the reason to exclude it from the 
final model of this study. At the same time, bank’s policy, employee and daily operations related 
practices are directly contribute to reduce the negative environmental impact and to improve the 
positive environmental impact of banks. Due to that they contribute to the final model of the study.    
Banking sector is generally considered as environmental friendly in terms of emissions and pollutions. 
Based on the results of the study, green banking has significant impact on bank’s environmental 
performance. So, through the green banking practices, banks can improve their environmental 
performance. It enables the banks to safeguard the environment and build an image as the good 
corporate citizens. Hence, green banking can be an avenue to reduce pollution and save the 
environment.  
8. Implications of the Study  
The study has implications for both academicians and practitioners. For the academics, this study 
contributes to understand the impact of green banking practices on bank’s environmental performance 
and findings of the study also contribute to green banking literature. And this study is useful to banks 
that are intended to become greener banks as well as to achieve environmental goals. Firstly, it helps 
other banks which may have plans to implement green banking practices in future more effectively. 
Secondly, the banks which are practicing green banking concept can compare with other green banks 
and understand the strength and weakness of their own green practices and performance through this 
study. Thirdly, this study also promotes and motivates green banking practices of banking sector in Sri 
Lanka. Through this study, the employees of the banks will become knowledgeable about green banking 
practices and successfully achieve environmental performance of banks by involving in implementation 
of green banking practices in future. Finally, this study may contribute to environmental protection and 
management.  
Further, taking care about environmental performance would help the banks to get subsidies from the 
government for implementing green banking practices. Also this study may guide the banks to use 
modern plants and machineries which save energy, generate low CO2 emission and ensure water 
conservation for the better environmental performance. These practices would help the banks to 
practice sustainable practices and improve their competitiveness. The better environmental 
performance of the bank would help to attract the socially responsible investors across the globe to 
invest their investments and create investment opportunities. In the light of these implications, this 
study is considered to be important for the sustainability of banks.    
9. Limitations and Future Directions  
There are some limitations that exist in this study. Firstly, the current study is carried out based on the 
information collected only from the selected Commercial Banks in Batticaloa region of Sri Lanka. 

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Secondly, data were collected at one point of time, applying a cross sectional design. Thirdly, sample 
size of the study is limited. Fourthly, this study is mainly conducted based on the data collection through 
the questionnaire. Finally, antecedent variables are not taken into consideration. Despite these 
limitations, it is believed that this study makes a significant contribution to the existing literature on 
green banking. The current study is a cross-sectional study. Therefore, it is important for future studies 
to validate the current findings in a longitudinal designs could be more appropriate than cross-sectional 
ones. The current study only applies a quantitative research design. Therefore, future studies may 
consider collecting deeper data from the respondents. In addition to that, future studies have the 
further opportunities to consider the antecedent variables related to this study. And the findings of this 
study are methodologically limited into Batticaloa region of Sri Lanka, which not permit the 
generalization of findings. Hence, it is suggested that it is possible to conduct the study in the public 
and private sector banks in Sri Lanka and all over the island. In order to overcome these limitations, 
further studies are needed.   
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Appendix-1: Questionnaire  
Part I: Personal Information  
1. Bank  Commercial Bank of Ceylon PLC  
    HNB PLC  
      Sampath Bank PLC  
      Seylan Bank PLC  
      People’s 
Bank  
            
2. Job position  Manager  
      Assistant Manager  
      Officer  
3. Gender   Male        
              
4. Age  18-28years    
      29-38years  
           
5. Educational   Ordinary Level     qualification 
 Advance Level  
6. Working  3 years and below   Above 5 years   experience 4-5 years    
Please mark "X" in appropriate boxes or fill the details in the space 
provided.  
  
 
 
 
Part II: Information Regarding Green Banking Practices  
Please mark "X" to show to what extent you agree with the following statements.  
  

No  Statements  1  2  3  4  5  
01  My bank provides training and education to the staff on 

environmental protection, energy sa 
v          

02  My bank has environmental (green) performance evaluation 
practices (environmental sustain 

          

03  My bank implements environmental (green) reward system in 
the branches who support the  

          

    1  2  3  4  5  
04  My bank has initiatives to reduce paper usage and other 

wastage of materials.  
          

05  My bank has introduced energy efficient equipments, system 
solutions and practices (ATMs,   

          

  Pan Asia Banking 
Corporation PLC  
NTB PLC  
NDB PLC  
DFCC Bank PLC 
Union Bank PLC  

  
    
    
    
      Banking Assistant  

Banking Trainee  
Other  

  
    
    

  Female    

  39-48years  
Over 49years  

  
    

  
    

  Graduate  
Postgraduate  

  
    

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06  My bank uses e-waste management practices.            
07  My bank has environmental friendly banking practices (e-mail, 

intranet, e-statements, online  
a          

    1  2  3  4  5  
08  My bank provides loan to environmental protection and energy 

saving related projects.  
          

09  My bank implements certain independent and unique green 
initiatives, projects, and etc. (e.g. 

           

10  My bank promotes and facilitates environmental oriented 
enterprises through special grants,  

          

11  My bank uses social and environmental management system 
or any other mechanisms to eva 

          

    1  2  3  4  5  
12  My bank involves in setting up green branches (energy efficient 

buildings/green buildings).  
          

13  My bank has environmental (green) policy.            
14  My bank has environmental related agreements with relevant 

parties/stakeholders (suppliers, 
          

15  In my bank, head office level or top management involves in 
environmental protection relat e 

          

16  My bank purchases its stationeries, equipments and other 
items from environmental friendly 

           

Part III: Information Regarding Environmental Performance  
1 - Strongly 
disagree  

2 - 
Disagree  

3 - 
Uncertain  

4 - Agree  5 - Strongly 
agree   

 Please mark "X" to show to what extent you agree with the following statements.   
1 - Very low  2 - Low  3 - Moderate  4 - High  5 - Very high   

  
N 
o 

Statements  1  2  3  4  5   

01  My bank provides training and education to the staff on 
environmental protection, energy sa 

v           

 

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