Abstract

The purpose of this study is to analyze the effect of green banking practices (GBP) and digital capabilities (DCB) on sustainable bank performance (SBP). The study uses quantitative methods, with secondary data taken from banking sector companies listed on the Indonesia Stock Exchange (IDX). The data was acquired from annual reports, sustainability reports, and/or company websites, with the research period spanning 2018 to 2023. This study uses two test models—balanced panel data with a total of 252 observations and unbalanced panel data with a total of 255 observations—processed using EViews as a statistical tool. The results showed that, while GBP have a significant positive effect on SBP, DCB have no significant effect on it. These results prove that GBP can encourage banks to contribute to the sustainable development goals (SDGs), namely climate action (SDG 13), because banks tighten lending procedures to companies related to the environment and climate change. The results also show that control variables such as board gender diversity (BGD), audit committee size (ACS), firm age (FAG), bank size (BSZ), and total debt to equity (DER) have no significant effect on SBP. Banks can focus on improving activities such as research and development to address environmental issues, utilization of energy-efficient equipment, and employee training related to environmental protection. In addition, they can provide loans at lower interest rates to companies that are environmentally oriented to achieve sustainable development. Thus, banks can enhance SBP in environmental, social, and economic aspects.