Impact of Operational Efficiency, Market Value, and Sustainable Financial Growth on ESG Disclosure in Egyptian Banks

This research explores how different aspects of financial performance can influence Environmental, Social, and Governance (ESG) disclosure in the Egyptian banking sector, reversing the traditional focus on ESG’s impact on financial outcomes. Using a sample of 25 banks—including listed Islamic, listed conventional, and unlisted conventional banks—over the period 2020–2024, the research examines the effects of operational efficiency, market value, and sustainable financial growth on ESG disclosure levels.
ESG disclosure was assessed using a composite index, while financial metrics such as cost-to-income ratio, asset utilization, Tobin’s Q, book value of capital, sustainable growth rate, and financial sustainability ratio served as independent variables. Control variables included bank size, ROE, and loan-to-deposit ratio. Panel data regression analysis revealed a negative relationship between operational efficiency and ESG disclosure, suggesting efficient banks may prioritize cost control over non-financial reporting. Conversely, market value and sustainable financial growth showed positive effects on ESG disclosure, indicating that financially stronger banks are more likely to invest in transparent, ethical, and sustainable practices.
The research also found that listed conventional banks lead in environmental and social reporting, while unlisted banks focus more on governance disclosures. These insights offer valuable guidance for regulators, investors, and financial institutions seeking to integrate sustainability into their business strategies.