Advanced Research in Economics and Business Strategy Journal
Volume 7, Numéro 1, Pages 160-177
2026-06-30
The Impact Of Bank Esg Initiatives On Loan Portfolio Quality: Evidence From Zimbabwean Commercial Banks
Authors : Chikeya Cloudio . Nyashanu Tarisai .
Abstract
This study examines the impact of Environmental, Social, and Governance (ESG) performance on the loan portfolio quality of Zimbabwean commercial banks. The paper employs the fixed effects (FE) model, pearson multilinear correlation, and boxplot visualisations on data extracted from published bank financial statements. The findings reveal that robust governance, significantly reduces non-performing loans (NPLs), with each percentage-point increase in independent directors correlating with a 0.15% decline in NPLs. Gender diversity shows non-linear benefits, becoming impactful only when female representation exceeds 30%. CSR spending alone does not improve loan quality; instead, targeted programs aligned with borrower risks such as agricultural training yield measurable default reductions. Green loans for climate-resilient projects demonstrate the strongest risk-mitigation effects, with default rates 4.9% lower than conventional loans and have a negative effect on NPLs. The results imply that environmental and governance initiatives are useful tools in managing loan portfolios for banks. Therefore, banks should strive to enhance board diversity and independence, increase green loans and focus CSR initiative on activities that promote customer loyalty and build repayment capacity.
Keywords
ESG initiatives ; non performing loans ; loan portfolio quality ; Zimbabwe ; commercial banks
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