Banking in sustainability: an integrated MCDM framework for evaluating the environmental, social, and governance (ESG) sustainable banking performance

Purpose This study aims to develop a framework for evaluating environmental, social and governance (ESG) factors in the context of commercial banks, addressing the need for a more robust and transparent assessment of ESG subfactors. Design/methodology/approach Using an integrated multi-criteria decision-making approach, this study uses rough stepwise weight assessment ratio analysis (R-SWARA) to determine the weights of ESG factors, followed by the combined compromise solution (CoCoSo) method to assess the sustainability performance of five major commercial banks. This study involves insights from 15 experts in the banking sector, ensuring a comprehensive understanding of ESG integration. Findings The research reveals that governance is the most significant ESG factor in the banking sector, followed by social and environmental factors. The CoCoSo method’s results, aligning with the R-SWARA findings, identify the top-performing banks regarding ESG practices, highlighting the importance of robust governance structures for sustainable banking operations. Research limitations/implications This study provides a strategic framework for banks to prioritize and implement ESG initiatives effectively. It provides insights into allocating resources toward areas with the most significant impact on ESG performance, thereby enhancing operational efficiency and stakeholder trust. Originality/value This study contributes to the existing literature by offering a unique, integrated approach to ESG evaluation in the banking sector, combining the qualitative and quantitative aspects of ESG factors. It addresses the subjectivity issue inherent in ESG evaluation and provides a comprehensive ranking system for ESG factors in commercial banks.