Socially Responsible Banking: Towards a New Firm–Bank Relationship

The purpose of this chapter is to analyse how and why banks are engaging in socially responsible initiatives, from an evolutionary perspective. The first part draws from the “Schumpeterian view” and introduces the social role of the banking system. With these premises established, the second part analyses the growing phenomenon of the integration by banks of ESG. Indeed, it is well accepted in the literature that not only do banks have direct responsibilities towards society, but they also bear an indirect responsibility as a function of the level of social and environmental engagement of their borrowers. Indeed, the banking system has attracted frequent criticism for its inability to take into account the impact on society of its strategies and operations. Against this backdrop, banks are being called on to demonstrate the fulfilment of their social obligations, as such, engagement in ESG initiatives represents one of the most valuable ways in which to recover lost reputation and improve relationships with stakeholders. Accordingly, in the last section, the chapter makes a comparison between the financial results of so-called ethical banks and those of conventional ones.