Sustainability Orientation Paradox: Do Banks Ensure Strategic Sustainable Development?

Abstract

In this study, we examine banks’ sustainability orientations (SOs) in the Baltic region, focusing on how institutional, stakeholder, national culture, and leadership factors influence strategic alignment with the Sustainable Development Goals (SDGs). We assess how Baltic banks integrate sustainable development using a bibliometric review, financial performance analysis, Spearman’s rank correlation, and content analysis of sustainability-related disclosures for 2023, and interpret Hofstede’s cultural dimensions of the Baltic countries alongside these results. Our bibliometric review reveals limited research on SO and SD in banking, with a gradual annual increase of 14.8%. Our content analysis findings suggest that smaller banks are more broadly aligned with the SDGs; however, 36.4% of the largest banks in the region did not have a dedicated sustainability report a year before ESRS and CSRD requirements became mandatory. Notably, the reporting approach shows no statistically significant correlation with assets, size, global/local coverage, or the number of aligned SDGs. Furthermore, our content analysis findings reveal a persistent sustainability paradox: while economic and environmental goals are strategically prioritised, social SDGs are significantly underrepresented. We propose that this reflects a lack of demand for socially sustainable development rooted in regional contexts and national culture, which shape SO and organisational and leadership responses.

1. Introduction

The banking sector has undergone significant changes in recent years, shifting from its traditional role as a financial intermediary to active engagement in sustainable development (SD) [1]. According to the European Central Bank’s glossary, banks are still defined as financial intermediaries that receive deposits and issue loans. Still, their function has evolved as an essential catalyst for economic stability and progress [2]. Banks are also increasingly expected to adopt SD processes in line with frameworks such as the United Nations Sustainable Development Goals (SDGs), which are to be achieved initially by 2030 and at a net-zero level by 2050 [3]. By allocating deposits to financial instruments such as loans and bonds, banks can act as enablers of SD and drive overall SD progress. Despite this expectation, there are still questions to be answered about how banks implement strategic intent for SD in their operations, processes, products, and services while strategically aligning with the SDGs.

Traditionally, banks have focused on maximising profits and minimising risks [4,5]. This raises a question of whether banks’ recent shift towards SD represents a genuine strategic commitment or a compliance-driven response to increasing pressures. From an institutional theory perspective [6,7], increasing regulatory, normative, and cognitive pressures, including the impact of national culture, is changing how banks address SD challenges and adjust their strategic intent. This strategic intent requires a strategic orientation to SD that guides bank activities towards better viability and performance [8].

Sustainability orientation (SO) refers to an organisation’s strategic commitment to sustainability across all three SD dimensions (economic, environmental, and social) [9,10]. An effective SO balances these dimensions and acts as an organisational resource and a dynamic capability that can be a source of competitive advantage [11,12] and resilience [13,14]. However, not all definitions of SO emphasise this balance. For example, some studies define SO in environmental terms, focusing on green products that support natural systems and communities, leading to superior green innovation performance [15,16]. We argue that this lack of consensus on SO’s definition can lead to a sustainability paradox, where organisations prioritise specific SD dimensions or elements over others, resulting in unbalanced efforts and potential conflicts between SD goals [17,18]. Moreover, a selective focus can create competitive disadvantages in markets where stakeholders and institutions increasingly demand accountability across all dimensions.

In this context, culture, defined as the collective programming of the mind, distinguishes one group from another [19], establishes norms of appropriateness [20], and emphasises the variations in how and why people from different cultures make different decisions [21]. Thus, leadership should consider cultural differences when strategically aligning with the SDGs and stakeholder interests. However, empirical research on SD, leadership, culture, and the banking sector is limited [22]. Therefore, based on transformational leadership theory [23,24], we argue that leaders in organisations undergoing SD transformation should inspire cultural and strategic change, integrating SD goals into operations and processes in line with the SDGs.

As sustainability-related disclosures should generally reflect a bank’s strategic intent and alignment with the SDGs, we suggest reviewing SO based on these reports. In this context, stakeholder theory [25,26] further indicates that stakeholder demands (investors, regulators, customers, communities, etc.) shape organisational priorities and influence a bank’s strategic intent, as well as the extent to which its SO is aligned with the SD and SDGs. However, aligning banking activities with SD poses challenges, particularly in developing SO as a dynamic capability to manage complexity, drive organisational change [22], and avoid sustainability paradoxes.

Furthermore, despite growing research interest in SD, there is still a lack of understanding of how organisations effectively manage SD processes [13]. While previous studies have examined broad sustainability topics, such as reporting/disclosures [27,28]; corporate social responsibility (CSR) [29]; social linkage with financial performance [30]; leadership [31]; environmental, social, and governance (ESG) activities [32]; etc., findings and recent reviews indicate that SO research in the banking sector remains underdeveloped and sustainability disclosure in banking still lacks sufficient exploration [33]. In response, we ground our research in institutional, transformational leadership and stakeholder theories and address the research questions (RQs) summarised in

Table 1. Summary of research questions applied in this research.

No.	Research Question
RQ 1	What are the main trends in the academic literature on SD in the banking sector, particularly regarding SO?
RQ 2	How are the engagement with stakeholders and the role of leadership in advancing SD reflected in Baltic banks’ sustainability-related reports?
RQ 3	How do Baltic banks strategically align with the UN SDGs, demonstrating their SO in practice?
RQ 4	How does national culture help to explain the differences in the strategic alignment with the UN SDGs of the Baltic banking sector?

Source: Created by the authors.

.

With one of the most highly capitalised and liquid markets in the European Union (EU), the Baltic region offers an intriguing case study [34], positioned at the intersection of EU regulatory harmonisation and post-Soviet institutional legacies. Regional studies in the social sciences provide insights into local cultures and histories that are often overlooked in global analyses and help to understand regional dynamics and their role in promoting sustainability [35]. Studying this region before the new EU sustainability reporting requirements, the EU’s Omnibus I (Omnibus I directive (https://commission.europa.eu/publications/omnibus-i_en (accessed on 3 April 2025))) sustainability simplification package, and other events such as the US withdrawal from the Paris Agreement (decision of the US to withdraw from the Paris Agreement (https://www.whitehouse.gov/presidential-actions/2025/01/putting-america-first-in-international-environmental-agreements (accessed on 5 April 2025))) and the UN Loss and Damage Fund (decision of the US to withdraw from the UN Loss and Damage Fund (https://www.lossanddamagecollaboration.org/resources/what-does-the-u-s-withdrawal-from-the-board-of-the-fund-for-responding-to-loss-and-damage-mean-for-loss-and-damage (accessed on 5 May 2025))), as well as the revision of its membership of UNESCO (decision of the US to review membership in UNESCO (https://www.whitehouse.gov/presidential-actions/2025/02/withdrawing-the-united-states-from-and-ending-funding-to-certain-united-nations-organizations-and-reviewing-united-states-support-to-all-international-organizations (accessed on 5 April 2025))), take effect allows us to observe voluntary practices and distinguish innovative approaches from compliance-driven ones between large international and smaller local banks.

Although our study focuses on the Baltic countries, we argue that our findings have broader implications for other EU banks and post-Soviet banking contexts. All EU banks operate under a harmonised regulatory framework based on Basel principles (the EU harmonised prudential rules (https://www.eba.europa.eu/single-rulebook (accessed on 16 December 2024))), and similar cultural and institutional characteristics may yield comparable SO challenges and paradoxes. In the following section, we outline the theoretical framework of our analysis. We then describe our methodology. This is followed by a review of the Baltic banking context and the results for each part of the analysis, a discussion of their implications, and conclusions regarding the study’s contributions and practical implications.

2. Theoretical Framework

We use institutional theory as an overarching theory to understand how banks, as highly regulated entities [36], align their strategic intent and SO with the SDGs and the role of national culture in this process. Additionally, we incorporate insights from transformational leadership and stakeholder theories to account for both internal leadership dynamics and external stakeholder influences.

2.1. Institutional Theory

Institutional theory examines the formation and change of organisations, which are primarily shaped by symbolic actions and external influences rather than functional factors [7]. Institutions consist of rules, norms, and cognitive elements that provide stability and coherence to social behaviour [37]. This theory has evolved from phenomenological roots towards structural determinism, incorporating institutional agency and change [38].

The regulative pillar of this theory focuses on how laws and regulations guide organisational actions and ensure compliance with societal expectations [39]. In this context, the Brundtland Report laid the groundwork for defining sustainability as meeting current needs without jeopardising future generations [40,41]. Furthermore, based on the European Banking Authority’s harmonised prudential requirements for EU banks, regulatory pressures could result in isomorphic behaviour, with banks implementing similar SD processes to remain compliant and legitimate. These regulations can cascade, encouraging banks to urge borrowers and partners to improve environmental and social performance, propagating sustainability norms through financial networks [42].

The EU has established one of the most comprehensive regulatory frameworks globally for sustainable banking through various directives and regulations, including the EU Taxonomy Regulation, CSRD, ESRS, the Capital Requirements Directive, the ESG risk management guidelines, etc. [43]. The framework encompasses three main pillars: Pillar 1 (minimum capital requirements), Pillar 2 (supervisory review and evaluation process, SREP), and Pillar 3 (market discipline through disclosure requirements) [44]. Despite the EU’s progress in implementing Pillar 3 requirements [45], sustainability has not been effectively implemented in Pillar 2 and the stress testing framework. We argue that this absence may further contribute to a sustainability paradox in the banking sector, given that the SREP should ensure that EU banks have adequate strategies, processes, and capital to manage risks (Supervisory Review and Evaluation Process (https://www.bankingsupervision.europa.eu/activities/srep/html/index.en.html (accessed on 4 July 2024))).

In addition to the regulative pillar, the normative pillar emphasises values and norms guiding behaviour and decision-making, while the cognitive pillar focuses on cognitive schemas for perceiving and interpreting environments [46,47]. Banks integrate SD when these pillars are strong, as it is seen as the right thing to do or how business is done. Research shows that integrating SD can align with long-term financial performance, such as lower costs and improved returns [48]. Thus, beyond regulations, normative and cognitive forces guide banks towards aligning with the SDGs. However, other studies have found no significant impact on financial performance [49]. Thus, a sustainability paradox can also arise in cases where organisations adopt sustainability practices superficially while still adhering to institutional norms that neglect or oppose SD objectives [50].

As banks are highly regulated entities [51,52], the institutional theory provides a framework for interpreting their SO as a response to regulatory, normative, and cognitive pressures. We use it to examine the pressures that affect the SO and alignment with SDGs, noting that global initiatives like the SDGs shape the institutional environment for change. The SDGs cover economic, social, and environmental goals, but organisations differ in their classification and prioritisation of these goals [53,54]. This lack of a consistent understanding of how the SDGs fall under the SD dimensions may contribute to the sustainability paradoxes. To guide our further analysis of banks’ SD alignment, in Figure 1 we categorise the 17 SDGs under the three traditional SD pillars: we consider SDGs 1, 3, 4, 5, and 16 as primarily social; 2, 8, 9, 12, and 17 as mainly economic; and 6, 7, 11, 13, 14, and 15 as primarily environmental, while recognising their impacts on other SD dimensions.

Firms are embedded in broader institutional environments and often adopt practices to gain legitimacy and support from key stakeholders [55,56]. Additionally, culture influences managerial decisions and the adoption of regulations [57], affecting how resources are managed and how sustainability initiatives are approached [58]. Furthermore, national culture can influence firm behaviour, including entrepreneurial orientation and green innovation [59]. Therefore, organisations aiming to enhance their performance and sustainability should consider the influence of institutional environments and cultural factors.

2.2. Transformational Leadership Theory

Leadership can drive banks beyond compliance and actively pursue SD transformations. In this context, the transformational leadership theory suggests that leaders inspire followers to prioritise organisational goals over personal interests [60]. Such leaders articulate a compelling vision, serve as role models, foster team unity, and set high-performance standards, elevating followers’ commitment and performance [24], which is vital for incorporating SD. This leadership style can guide organisations through complex changes [22] and encourage innovation and creativity, essential for addressing sustainability challenges [61]. In this context, managing paradoxes is crucial for tackling these issues [62].

In applying transformational leadership theory, we focus on how the role of management at the top of banks is reflected in their sustainability-related reports. However, this theory has been criticised for resembling corporate cultism [63]. In this context, trust in leadership plays a mediating role; for example, employees’ extra-role behaviours for sustainability are more assertive when they trust leadership’s commitment [64]. Leaders who adopt a transformational style can integrate SD into corporate governance, foster innovation in sustainable products and processes, and inspire employees to embrace sustainability values [65]. By effectively aligning the organisation’s operations with the SDGs rather than treating SD as a mere checkbox exercise, transformational leadership can help banks overcome internal resistance and avoid superficial compliance.

2.3. Stakeholder Theory

Prior research shows that stakeholder pressures significantly influence sustainability priorities, pushing companies toward more sustainable practices and innovations [66]. In banking, stakeholders increasingly expect banks to mitigate adverse sustainability impacts and enhance positive outcomes through their intermediary role. We argue that banks must consider these expectations, as stakeholders provide them with funding and are their customers, investors, regulators, and suppliers. In this context, the stakeholder theory emphasises equitable benefits for all legitimate business interests, highlighting companies’ connections to their external environment [26,67]. These companies operate within a societal framework, and their legitimacy and success depend on meeting the expectations of this broader market and legal network [25].

Through stakeholder theory, we propose to view banks’ SO as a response to and decision-making concerning these societal needs and the norms set by stakeholders. The SDGs promote innovative business processes that support people, the planet, and prosperity [68]. However, stakeholder theory has been critiqued for its inadequate support of sustainability criteria, suggesting that enhancements are necessary [69]. In practice, managing a socially sustainable organisation involves balancing multistakeholder interests, which often entails psychological conflicts and paradoxical tensions [70]. This suggests that while stakeholder pressure is crucial, it must be complemented by genuine strategic leadership commitment and consideration of institutional pressures to achieve meaningful SD integration.

2.4. Interconnection of Theoretical Pillars

Table 2. Integrative view of the theoretical pillars.

Theory	Key Focus	Contribution	Limitation If Used Alone
Institutional Theory	Regulatory, normative, and cognitive pressures [37]	Highlights isomorphic behaviour and external legitimacy via compliance	Overlooks internal agency and strategic variability
Stakeholder Theory	External stakeholder expectations and demands [26,67]	Shows how legitimacy and trust shape disclosure and strategic responses	May assume uniform stakeholder salience or access
Transformational Leadership Theory	Internal dynamic capabilities and organisational response [22,61]	Highlights internal change mechanisms and strategic SDG alignment	Underplays structural constraints and external influences

Source: Prepared by the authors based on integrating the three theoretical pillars.

synthesises how each theory contributes uniquely to understanding banks’ SOs. Institutional theory provides the context of requirements and norms that guide banks toward SD. Stakeholder theory further emphasises the external demands and expectations that banks must meet, while transformational leadership theory illuminates the internal dynamic capabilities that shape a bank’s response. We argue that these three perspectives are interconnected: external pressures (regulatory and stakeholder-driven) set the stage, and leadership determines whether the organisational response will be passive compliance or active transformation. Moreover, this holistic perspective highlights the broader impact of banks beyond their walls. As they respond to pressures, banks transmit sustainability practices (or the lack thereof) to their clients and markets, effectively acting as conduits for sustainability norms across the financial network. This integrated framework guides the methodology section and discussion of the results as we analyse bibliometric trends, the existing literature, the financial context, and disclosure processes to understand where Baltic banks stand regarding SO.

We argue that using this multidimensional approach enables a more complete explanation of SO and helps diagnose sustainability paradoxes. Under this view, regulatory, leadership, and stakeholder pressures, alongside cultural characteristics, may encourage alignment with specific SDGs. Still, negative inertia and gaps in these areas can hinder progress in other SD dimensions, perpetuating the paradox if left unaddressed. In this context, the following section provides an overview of the materials and methods used in this study.

3. Materials and Methods

Table 3. Mapping of methods to research questions and data sources.

Method	Research Question(s)	Data Sources
Bibliometric analysis	RQ1	Academic literature on sustainable development and sustainability orientation in banking
Financial review	RQ2, RQ3	Financial data of banks
Correlation analysis	RQ3, RQ4	Financial data of banks, sustainability-related reports of banks, and Hofstede cultural dimensions
Content analysis	RQ2, RQ3, RQ4	Sustainability-related reports of banks and Hofstede cultural dimensions

Source: Created by the authors.

outlines our research design in this context, mapping each research question to data sources and methods. The study design included a bibliometric analysis of the academic literature up to 2023; a financial performance analysis, correlation analysis, and market analysis of Baltic banks; as well as a content analysis of sustainability-related disclosures for 2023. Furthermore, we reviewed how banks are strategically aligned with the SDGs, interpreting this in the context of national culture based on Hofstede’s cultural dimensions [71,72]. The Baltic region was chosen as an unexplored example of a smaller European market context integrated into EU financial regulations. This allowed us to compare large international banks with smaller local banks with limited resources and to examine banks’ SOs in a controlled regulatory environment. Furthermore, it allowed us to link theoretical insights with real-world processes and national culture.

3.1. Approach to Bibliometric Analysis

Our analysis begins with a bibliometric analysis of research on SD (Queries 1 and 2) and SO (Query 3) in the banking sector, as outlined in Appendix B (

Table A2. Search queries and database parameters used for bibliometric analysis.

Name	Scopus Query Code	Web of Science Query Code	Results
Query 1	((TITLE-ABS-KEY(bank *) AND TITLE-ABS-KEY(sustainability) OR TITLE-ABS-KEY(sustainable AND development)))	bank * (Topic) and sustainable development (Topic) or bank * (Topic) and sustainability (Topic)	Scopus: 11,982; WoS: 5760
Query 2	((TITLE-ABS-KEY(bank *) AND TITLE-ABS-KEY(sustainability) OR TITLE-ABS-KEY(sustainable AND development)) AND PUBYEAR > 1979 AND PUBYEAR < 2024 AND (LIMIT-TO (SUBJAREA,”BUSI”)) AND (LIMIT-TO (DOCTYPE,”ar”)) AND (LIMIT-TO (SRCTYPE,”j”)) AND (LIMIT-TO (LANGUAGE,”English”)))	bank * (Topic) and sustainable development (Topic) or bank * (Topic) and sustainability (Topic) and 2023 or 2022 or 2021 or 2020 or 2019 or 2018 or 2017 or 2016 or 2015 or 2014 or 2013 or 2012 or 2011 or 2010 or 2009 or 2008 or 2007 or 2006 or 2005 (Publication Years) and Business or Management or Business Finance (Web of Science Categories) and Article (Document Types) and English (Languages)	Scopus: 1296; WoS: 1015
Query 3	((TITLE-ABS-KEY(bank *) AND TITLE-ABS-KEY(orientation) AND TITLE-ABS-KEY(sustainability) OR TITLE-ABS-KEY(sustainable AND development)) AND PUBYEAR > 1979 AND PUBYEAR < 2024 AND (LIMIT-TO (SUBJAREA,”BUSI”)) AND (LIMIT-TO (DOCTYPE,”ar”)) AND (LIMIT-TO (SRCTYPE,”j”)) AND (LIMIT-TO (LANGUAGE,”English”)))	bank * (Topic) and sustainable development (Topic) and orientation (Topic) or bank * (Topic) and sustainability (Topic) and orientation (Topic) and 2023 or 2022 or 2021 or 2020 or 2019 or 2018 or 2017 or 2016 or 2015 or 2014 or 2013 or 2012 or 2011 or 2010 or 2009 or 2008 or 2007 or 2006 or 2005 (Publication Years) and Business or Management or Business Finance (Web of Science Categories) and Article (Document Types) and English (Languages)	Scopus: 26; WoS: 40

), to identify significant trends in the literature. Notably, we focused on data from the Scopus and Web of Science (WoS) databases, which are considered reliable sources of data for academic research [73]. Furthermore, merging data from both databases enhances the comprehensiveness of bibliometric analyses [74]. Hence, we utilised these databases for their rigorous review processes and extensive research coverage, and to avoid selection bias, particularly from unrepresentative samples that focus on a single academic database.

We focus on peer-reviewed articles published in English business, management, and accounting/finance journals up to 2023, covering the evolution of SD research in banking over the past few decades and aligning with the timeframe of our subsequent analyses. Furthermore, it has been impacted by major and adverse developments such as the global financial crisis, the Paris Agreement, the US–China trade war, the Russia–Ukraine and Israel–Hamas wars, natural disasters, pandemics, and other disruptions that occurred before sustainability reporting became mandatory in the EU for large banks. We analysed the bibliographic data using the Bibliometrix package in R (version 4.3.2) to identify publication trends and citation patterns. Microsoft Excel (version 2402) was used to process and manage the obtained data and organise the information efficiently.

3.2. Approach to Financial Performance Review

The second component of our study is a review of the financial performance and market structure of Baltic banks. Our initial dataset comprised 35 banks across Estonia, Latvia, and Lithuania for which financial information was publicly available. Key indicators gathered were total assets, capital levels, market share (measured by assets), return on equity (ROE), and return on assets (ROA). These data were obtained from publicly available consolidated financial statements for 2023 issued by local Baltic regulators and banking associations (the Bank of Latvia (https://www.bank.lv/en/statistics/stat-data/supervisory-statistics#supervisory-statistics-on-credit-institutions (accessed on 10 October 2024)), Finantsinspektsioon (https://statistika.fi.ee/fistar/#/en/p/FINANTSSEKTOR/147 (accessed on 10 October 2024)), and the Lithuanian Banking Association (https://www.lba.lt/en/a-statistics (accessed on 10 October 2024))). We assessed general performance using the financial metrics and then calculated the Herfindahl–Hirschman Index (HHI) for each country’s banking sector to gauge market concentration. The HHI is a standard measure of market concentration; higher values indicate fewer companies dominating the market (Herfindahl–Hirschman Index (https://www.justice.gov/atr/herfindahl-hirschman-index (accessed on 2 July 2024))). In this context, we used Jamovi (version 2.6.13) to calculate the selected banks’ ROA, ROE, net interest margin, market share, and HHI values.

Considering that sustainability reporting in 2023 was still largely voluntary for banks, we applied purposive data sampling [75] by focusing our content analysis on the institutions most likely to engage in such reporting in the upcoming years. Therefore, we identified the major players in the banking sector by setting a threshold to include banks that cover at least 90% of each country’s banking market in terms of assets. This corresponded to the top five banks in each Baltic country, yielding an initial list of 15 large banks. Notably, given the high market concentration indicated by the HHI values in our results section, we argue that the influence of the excluded smaller institutions is minimal. Furthermore, some large international banks operate in multiple Baltic countries. To prevent double-counting of the same parent bank’s sustainability-related report, we treated each banking group as a distinct entity for content analysis. After merging these entities, our final sample for content analysis consisted of 11 banks.

3.3. Approach to Content Analysis of Sustainability Reports

Our methodology’s third component is narrative content analysis, a method used to systematically interpret and examine the content of narrative data, such as the sustainability-related disclosures of the 11 selected banks for 2023 (published in 2024), following the data collection approach described in Appendix A (

Table A1. Data collection structure for content analysis of bank sustainability-related disclosures.

Position	Description
Name	The official name of the bank.
Head office location	The geographical location of the bank’s head office
Report type	Sustainability report, ESG report, CSR report, etc.
Strategic SDGs	SDGs with which the bank has strategically aligned.
Sustainability orientation:
Economic dimension	A content analysis of how the bank integrates the economic dimension of SD and the SDGs into its activities and decision-making.
Social dimension	A content analysis of how the bank integrates the social dimension of SD and the SDGs into its activities and decision-making.
Environmental dimension	A content analysis of how the bank integrates the environmental dimension of SD and the SDGs into its activities and decision-making.
Role of leadership	A content analysis of the involvement of the bank’s leadership in promoting and implementing SD initiatives.

). The timing is crucial; from 2025 onwards, most will be mandated to comply with the CSRD and ESRS disclosures. Our approach thus reviews the Baltic banking sector’s voluntary and less compliance-driven approach to SO and strategic alignment with the SDGs before this regulatory transition. In cases where a bank did not publish a dedicated sustainability report, we collected their ESG, CSR, information disclosure report, or data on their website.

Our analysis investigated how Baltic banks reflect their leadership, strategic alignment with SDGs, and stakeholder engagement through reporting. Furthermore, to dissect this impact and the reasons behind the strategic alignment with specific dimensions of SD in depth, we applied Hofstede’s cultural dimensions model. While it is widely used in cross-cultural research, we acknowledge the existing criticisms: It can oversimplify culture as static, failing to capture the dynamic evolution of cultural values and organisational subcultures [76]. Additionally, the model’s static nature may fail to account for cultural changes over time [77]. Therefore, our interpretation of cultural impacts on SO is cautious, and future studies should complement it with other cultural models (e.g., GLOBE, Schwartz’s values, and Trompenaars’ model).

Furthermore, we employed Spearman’s rank correlation to quantify the strength of the association between the collected variables. In this context, we utilised IBM SPSS software (version 27.0.1.0). The process involved ranking the data for each variable, computing the difference between the ranks, and subsequently employing these differences to calculate the correlation coefficient without the limitations of parametric assumptions [78]. The summary and description of these variables are provided in Appendix F (

Table A6. Spearman’s correlations between bank characteristics, strategic alignment with Sustainable Development Goals, and Hofstede’s national cultural dimensions, 2023.

	Is_Large	SR	Is_Global	SDG_All	PD	IND	MAS	UA	LTO	IDG	TA
Is_large	1.000	0.069	0.311	−0.648 *	−0.413	0.354	0.000	−0.531	0.000	0.419	0.866 **
		0.840	0.353	0.031	0.207	0.286	1.000	0.093	1.000	0.200	0.001
SR	0.069	1.000	0.179	0.000	−0.244	0.305	−0.366	−0.305	0.122	0.124	0.179
	0.840		0.599	1.000	0.469	0.362	0.268	0.362	0.721	0.717	0.598
Is_global	0.311	0.179	1.000	0.122	−0.854 **	0.854 **	−0.183	−0.854 **	−0.610 *	0.867 **	0.538
	0.353	0.599		0.721	0.001	0.001	0.590	0.001	0.046	0.001	0.088
SDG_All	−0.648 *	0.000	0.122	1.000	0.028	0.100	−0.550	0.199	−0.464	−0.036	−0.408
	0.031	1.000	0.721		0.934	0.771	0.080	0.557	0.150	0.916	0.212
PD	−0.413	−0.244	−0.854 **	0.028	1.000	−0.592	0.033	0.934 **	0.384	−0.976 **	−0.710 *
	0.207	0.469	0.001	0.934		0.055	0.923	0.000	0.244	0.000	0.014
IND	0.354	0.305	0.854 **	0.100	−0.592	1.000	−0.479	−0.744 **	−0.479	0.582	0.413
	0.286	0.362	0.001	0.771	0.055		0.136	0.009	0.136	0.060	0.207
MAS	0.000	−0.366	−0.183	−0.550	0.033	−0.479	1.000	0.052	0.479	−0.038	−0.107
	1.000	0.268	0.590	0.080	0.923	0.136		0.879	0.136	0.911	0.755
UA	−0.531	−0.305	−0.854 **	0.199	0.934 **	−0.744 **	0.052	1.000	0.223	−0.885 **	−0.692 *
	0.093	0.362	0.001	0.557	0.000	0.009	0.879		0.510	0.000	0.018
LTO	0.000	00.122	−0.610 *	−0.464	0.384	−0.479	0.479	0.223	1.000	−0.529	−0.311
	1.000	0.721	0.046	0.150	0.244	0.136	0.136	0.510		0.094	0.352
IDG	0.419	0.124	0.867 **	−0.036	−0.976 **	0.582	-0.038	−0.885 **	−0.529	1.000	0.739 **
	0.200	0.717	0.001	0.916	0.000	0.060	0.911	0.000	0.094		0.009
TA	0.866 **	0.179	0.538	−0.408	−0.710 *	0.413	−0.107	−0.692 *	−0.311	0.739 **	1.000
	0.001	0.598	0.088	0.212	0.014	0.207	0.755	0.018	0.352	0.009

* Correlation is significant at the 0.05 level (2-tailed, values in italics). ** Correlation is significant at the 0.01 level (2-tailed, values in bold).

). We also incorporated data from the 2024 Baltic CFO Survey by PwC (PwC 2024 Baltic CFO Survey (https://www.pwc.com/lv/lv/news/baltijas-cfo-aptauja.html (accessed on 19 December 2024))) as a supplementary source to contextualise findings. This survey of finance executives in the Baltics reported on priorities and readiness in areas such as sustainability-related reporting and strategic alignment, providing additional insight into what leaders perceive as upcoming challenges. Following this methodology overview, the following section provides a background of the Baltic region.

4. Regional Context Background

The most recent UN data indicate that only 17% of the 135 SDGs are globally on track, while 48% are off track and 17% are lagging behind 2015 levels [79]. In this context, the Baltic countries face significant SD challenges, as summarised in

Table 4. Status of Sustainable Development Goal achievement in the Baltic region vs. Sweden.

Region	Country	Economic Goals	Social Goals	Environmental Goals
Baltics	Estonia	Significant challenges	Significant challenges	Significant challenges
	Lithuania	Significant challenges	Significant challenges	Significant challenges
	Latvia	Major challenges	Significant challenges	Challenges remain
Average Baltic countries		Significant challenges	Significant challenges	Significant challenges
Scandinavia	Sweden	Significant challenges	Challenges remain	Significant challenges

Source: Prepared by the authors based on the UN Sustainable Development Report 2024 and the average score in each sustainable development dimension. We have highlighted major challenges in bold and significant ones in italics.

. None of the SDGs have been fully achieved, with 64.7% of “significant” and “major” challenges in Estonia, 70.6% in Lithuania, and 58.8% in Latvia. In contrast, Sweden, home to the parent banks of the two largest Baltic banks, has already achieved 17.6% of the SDGs (11.8% in social domains) and faces fewer significant or major challenges (52.9%).

Table 5. Market concentration of Baltic banking sectors based on the Herfindahl–Hirschman Index, 2023.

Market Type	Thresholds	Lithuania	Latvia	Estonia
Competitive market	<1500	X	X	X
Moderately concentrated market	1000–1800	X	X	X
Highly concentrated market	>1800	2581.5	2602.8	2118.8

Source: Prepared by the authors.

presents Herfindahl–Hirschman Index (HHI) values indicating market concentration in 2023. These 2023 HHI calculations reveal that Latvia, Lithuania, and Estonia have highly concentrated banking markets (HHIs: 2603, 2581, and 2119, respectively), exceeding the threshold of 1800. A few large banks dominate each market, accounting for 94% and 96.4% of assets in Latvia and Lithuania and 90.8% in Estonia. The most significant players across the Baltics are subsidiaries of major Nordic banking groups, as well as a few essential local or regional banks. This high market concentration indicates limited competition and potential market power among significant players, which may hinder sustainable banking innovation and growth [80].

Our analysis of the 2023 financial data in

Table 6. Summary of the banking market share and profitability in the Baltic region, millions of euros, 2023.

Category	Total Assets	Net Profit	Market Share
Top 2 global reviewed banks	70,154	1871	54.7%
Other reviewed global banks	14,273	122	11.1%
Reviewed pan-Baltic banks	37,294	617	29.1%
Other banks not included in the review	6463	84	5.0%

Source: Prepared by the authors based on Bank of Latvia, Estonian Finantsinspektsioon, and Lithuanian Banking Association data. The review covered 11 banks in accordance with Section 3.

and Appendix C (

Table A3. Financial performance and market share of Baltic banks, millions of euros, 2023, %.

Position	Assets, Million EUR			Market Share, %			ROA, %
	LT	LV	EE	LT	LV	EE	LT	LV	EE
Top 1 bank	18,500	9299	15,603	35.4	39.4	29.8	2.4	2.5	1.2
Top 2 bank	13,887	5605	14,399	26.6	23.7	27.5	2.7	2.7	3.0
Top 3 bank	12,085	4863	8464	23.1	20.6	16.2	0.8	2.1	2.7
Top 4 bank	4632	1524	6735	8.9	6.5	12.9	2.1	1.1	2.1
Top 5 bank	1281	913	2287	2.5	3.9	4.4	1.5	1.2	1.8
Other banks	1886	1422	4800	3.6	6.0	9.2	2.1	1.4	1.1
Top 5 banks total	50,385	22,205	47,488	96.4	94.0	90.8	2.1	2.3	2.2
All banking sector	52,270	23,627	52,288	100.0	100.0	100.0	2.1	2.3	2.1

) reveals that the leading banks in each country typically exhibit robust profitability and market share. Notably, the top two global banks (subsidiaries from Sweden) in each country demonstrated above-average profitability, which can be attributed to their significant market share of 54.7% of total Baltic banking assets. Conversely, reviewed local pan-Baltic banks with a significantly smaller market share of 29.1% exhibited a more varied performance, with 85.7% falling below sectoral ROA averages. These stronger financial performers may have more resources to invest in SD programs. In contrast, weaker banks may prioritise the economic dimension of SD. However, we found a significant negative correlation (Appendix F (Table A6)) between banks with assets above the median assets and overall strategic SDG alignment (Spearman’s ρ = −0.648, p = 0.031). This pattern suggests that size and capacity alone do not guarantee a broader commitment to the SDGs.

Consequently, as the 2030 deadline for achieving the SDGs approaches and the net-zero target of 2050 draws nearer, we contend that research on SD and SO in the banking sector necessitates evolution, particularly considering the escalating disruptions, geopolitical events, and discussions about lightening the SD agenda. For example, the EU Omnibus I Simplification Package introduces further uncertainty and risks for banks through potential regulatory changes, which aim to reduce the administrative burden and enhance competitiveness by simplifying, consolidating, and streamlining existing EU sustainability regulations (EU Omnibus Simplification Package: Implications and Banks’ Perspectives (https://www.unepfi.org/events/eu-omnibus-simplification-package-banks-perspectives (accessed on 10 April 2025))).

Key changes of EU Omnibus I include a reduced scope for mandatory sustainability-related reporting in the EU, which may affect the data banks have available for their further reporting, as well as simplify specific due diligence requirements, allowing for voluntary reporting against a simplified standard for companies outside the mandatory requirements, and it introduces an option for partial EU Green Taxonomy alignment reporting (Directive of the European Parliament amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 (https://commission.europa.eu/document/download/892fa84e-d027-439b-8527-72669cc42844_en?filename=COM_2025_81_EN.pdf (accessed on 12 April 2025))). While this package presents potential long-term simplification opportunities, we argue that banks may face challenges related to data availability and quality, adapting to revised regulations, and managing the complexity of ongoing adjustments, for example, concerning Green Asset Ratio reporting (Position of the European Banking Federation on the Omnibus Initiative (https://www.ebf.eu/wp-content/uploads/2025/04/EBF-position-on-the-Omnibus-Level-1-March.pdf (accessed on 13 April 2025)); EBA Consumer Protection (https://www.eba.europa.eu/regulation-and-policy/consumer-protection (accessed on 13 April 2025))). Thus, such regulations, while intended to reduce financial fragility, can also impose significant costs on banks, potentially diluting their charter values and affecting their risk-taking behaviours [81].

In summary, the Baltic banking sector is characterised by high market concentration, with a few major international bank groups and some leading regional banks. The financial performance analysis shows robust profitability among the leading banks, especially the Nordic subsidiaries, which may further facilitate SD investments. However, the national SDG achievements and high market concentration in each Baltic country highlight the risks of directly importing SD practices from more advanced contexts into the Baltic countries without adapting them to local cultures, stakeholder expectations, and management practices. In this context, the following section highlights the results of our bibliometric and content analysis of these banks’ sustainability-related reports, reviews their SO and leadership engagement, and assesses their strategic alignment with the SDGs.

5. Results

5.1. Bibliometric Findings: Trends in Banking Research

The bibliometric analysis reveals a growing academic focus on SD in the banking sector over the past few decades, with a notable acceleration in scientific output after major global events and agreements. Furthermore,

Table 7. Bibliometric summary of the banking, sustainable development, and sustainability orientation literature.

Description	Query 2	Query 3
Focus area	Banking and SD research	Banking, SD, and SO research
Timespan (years)	1982:2023	2010:2023
Sources (number)	626	43
Articles (number)	1763	50
Annual growth rate (%)	15.3	14.8
Article average age (years)	5.5	5.1
Average citations per article (number)	17.7	20.4
Keywords (number)	7729	447
Authors (number)	4415	137
Authors per article (number)	2.5	2.7
International co-authorships (%)	18.2	26

Source: Created by the authors in Bibliometrix based on Queries 2 and 3. We highlight the results of the larger queries in bold to indicate which query yields the larger results.

provides an overview of the development of the academic literature concerning SD, SO, and banking, along with comparative statistics for Query 2 and Query 3.

To contextualise the growth in SD and banking research, Figure 2 illustrates the longitudinal trend in publications. Based on the broadly defined Query 2, we identified 1763 unique (merged from Scopus and Web of Science) publications on SD in the banking sector from 1982 to 2023. The annual growth rate has shown a steady upward trend, increasing by 15.28%. Notably, the average number of articles published was relatively low between the 1980s and 2000s, averaging around 1.7 per year. However, this figure increased significantly to an average of 18.1 between 2000 and 2014 and further surged after 2015, with an average of 163.9. Furthermore, we observed recent spikes in scientific output following key moments such as the 2008 global financial crisis and the Paris Climate Agreement. For instance, the number of relevant publications per year almost doubled from 14 in 2008 to 26 in 2010 and continued to rise in the late 2010s. Similarly, the scientific output has consistently increased after the Paris Climate Agreement, with an average annual growth rate of 25.4%, even during pandemics.

To narrow our focus to the concept of SO research, Figure 3 captures the volume and evolution of research specifically on SD and SO in the banking sector. This refined search, using Query 3 from 2010 to 2023, yielded only 50 unique (merged from Scopus and Web of Science) articles that explicitly addressed banks’ SOs. Notably, 46% of these articles have been published within the last three years, and 78% have been published since the Paris Climate Agreement was signed. However, despite being few in number, these Query 3 articles have a higher average citation rate per article (20.44) than those of the broader Query 2 (17.72). This suggests that the study of SO and SD in banking research has a broader resonance. Furthermore, the co-authorship analysis shows moderate international collaboration in both literature sets (18.2% of publications had international co-authors for Query 2 versus 26% for Query 3), suggesting a globally shared interest in these topics. We found no studies for Query 3 that were created in or focused on the Baltic region or any of the Baltic countries.

The SO and SD literature suggests that banks face pressure from stakeholders to increase transparency about environmental and social impacts [82]. Banks use sustainability reports to provide qualitative information akin to financial statements, aiming for comparability and reliability [83]. However, research indicates that banks are less likely than other sectors to mention environmental, social, and economic sustainability in mission or vision statements [84]. This implies that banks may underrepresent their strategic intent for SD, which could signal a weaker internal SO despite external reporting influenced by regulatory requirements and stakeholder expectations.

Furthermore, the integration of SO poses many challenges. One key issue is the ongoing tension between the pursuit of short-term profitability and the long-term perspective required for SD [85,86,87]. This conflict is often reflected in incentive structures prioritising immediate financial gains and a reluctance to invest in SD initiatives with less immediate financial returns [88]. Therefore, management should implement incentive structures and leadership practices that foster sustainable decision-making across all organisational levels to address such conflicts [89].

5.2. Sustainability Orientation in Baltic Banks

The analysis of the Baltic banks’ sustainability-related reports shows how banks strategically align with the SDGs, their SOs, and how they reflect leadership commitment to SD and stakeholder engagement. While most banks recognise the importance of the SDGs and related topics, the depth and balance of their SOs vary. Therefore, in Figure 4, we map each bank’s strategic focus across economic, environmental, and social SDG dimensions. In particular, we found that economic and environmental SD are emphasised more than social aspects in the strategic alignment of most banks, as described in Appendix D (

Table A4. Summary of sustainability orientation and SDG strategic alignment in Baltic banks, 2023.

Name, Report Type, and Strategic SDGs	Strategic Alignment with Sustainable Development Goals
LHV Pank (ESG report): SDG1, SDG7, SDG8, SDG12, SDG13	Economic: It supports sustainable growth and job creation in Estonia through entrepreneurship and innovation initiatives. It incorporates environmental considerations into lending and offers green financial products to promote responsible consumption.
	Social: It tackles poverty by focusing on financial literacy, empowering individuals and communities to make informed financial decisions that improve economic well-being.
	Environmental: It provides green financial products that encourage investments in renewable energy. It measures carbon footprint, promotes sustainable practices, and advocates climate action.
Luminor Bank (sustainability report): SDG8, SDG13, SDG16	Economic: It supports economic growth by funding SMEs in the Baltic States and collaborating with the European Investment Bank and government agencies to provide affordable financing.
	Social: It emphasises corporate governance and ethical practices, enforcing a code of conduct, ensuring legal compliance, combating financial crime, protecting customer data, and promoting transparency.
	Environmental: It aims for climate neutrality by 2050, sets emission reduction targets, enhances sustainable finance for renewable energy and green projects, and assists clients in transitioning to low-carbon models.
Coop Pank (sustainability report): SDG8, SDG11, SDG12, SDG13, SDG16	Economic: It supports accessible banking services through retail partnerships for cash transactions in rural Estonia. It practices responsible lending by excluding specific industries while promoting green leasing for eco-friendly vehicles and energy-efficient properties.
	Social: It emphasises strong ethics and corporate governance, promotes transparency, upholds human rights and anti-discrimination policies, and provides guidelines for reporting misconduct.
	Environmental: It enhances community sustainability through essential financial services. It finances renewable energy projects, reduces its carbon footprint, and follows green office principles using recognised standards for greenhouse gas measurement.
Citadele Banka (sustainability report): SDG3, SDG7, SDG8, SDG9, SDG13	Economic: It supports sustainable growth by financing individuals, SMEs, and corporations. It modernises the banking sector through digitalisation and innovation.
	Social: It enhances employee well-being by offering health insurance, wellness programs, and mental health resources.
	Environmental: It finances green projects like renewable energy to promote sustainable practices. It also reduces its carbon footprint and aims for a carbon-neutral portfolio by 2050, already achieving carbon neutrality in office operations.
Rietumu Banka (sustainability report): SDG3, SDG7, SDG8, SDG11, SDG13, SDG16	Economic: It promotes economic growth through employee development and fair remuneration. It invests in renewable energy projects to enhance energy independence.
	Social: It promotes health and well-being with wellness programs and mental health support. It ensures strong corporate governance, implements anti-corruption measures, and prioritises data security.
	Environmental: It finances solar projects and has installed them and charging stations for electric vehicles in its office building. It enhances sustainable communities through nature-based solutions and community initiatives. Additionally, it aims to minimise environmental impact and educate employees on climate change mitigation.
BluOr Bank (other—information disclosure report): SDG7, SDG8, SDG9, SDG10, SDG11, SDG12, SDG13, SDG14, SDG15	Economic: It implements sustainable remuneration to attract specialists and promote sound risk management. It aligns project financing with sustainability principles and encourages responsible consumption in investment decisions.
	Social: It ensures that financed projects adhere to sustainability principles, evaluate ESG risks, and promote transparency.
	Environmental: It assesses clean energy considerations in its portfolios and conducts environmental risk assessments as part of its sustainability strategy. It also evaluates environmental impacts on marine and terrestrial ecosystems before financing.
Revolut Bank (other—website): Not available	Economic: N/A.
	Social: It offers flexible working options, including remote work, contributing to employee well-being.
	Environmental: It uses 100% renewable energy in the London and Vilnius offices. Additionally, it measures and reduces its carbon footprint to decrease overall emissions. The bank partners with Watershed to monitor real-time Scope 1, 2, and 3 emissions.
Šiaulių Bankas (CSR report): SDG3, SDG4, SDG5, SDG7, SDG8, SDG9, SDG11, SDG12, SDG13	Economic: It supports growth and job creation by financing SMEs and modernising infrastructure. It funds modernisation projects and invests in digitalisation. Additionally, it encourages SD among clients.
	Social: It promotes employee health and safety and provides mental health resources. It invests in employee development and offers internships. The bank also ensures equal pay and fosters a non-discriminatory environment.
	Environmental: It finances renewable energy projects and works to reduce its energy consumption. It contributes to urban revitalisation by modernising multi-apartment buildings. The bank aims for climate neutrality, measures its carbon footprint, and offers green financing while participating in sustainability initiatives.
OP Corporate Bank (sustainability report): SDG4, SDG5, SDG7, SDG8, SDG10, SDG12, SDG13, SDG14, SDG15, SDG16	Economic: It supports sustainable growth by promoting responsible business practices and advancing financial inclusion while avoiding unsustainable industries. It advocates for responsible consumption and production through green leasing and sustainable supply chain financing.
	Social: It enhances quality education by offering financial literacy programs for youth. It promotes gender equality by advocating for equal opportunities and addressing the gender pay gap. Additionally, it focuses on improving financial inclusion in underserved areas.
	Environmental: It finances renewable energy projects and targets carbon neutrality. It has developed a biodiversity roadmap and manages significant forest land, ensuring sustainable forest management practices.
Swedbank (sustainability report): SDG4, SDG5, SDG8, SDG12, SDG13, SDG16	Economic: It aims to empower one million people for better financial well-being by 2030 and plans to issue a EUR 500 million social bond for social lending. It also promotes sustainable procurement to minimise environmental and social impacts.
	Social: It supports quality education by providing internships and teaching personal finance to 128,000 young people in Sweden and 280,000 in the Baltic countries. It promotes gender equality and diversity and maintains strong corporate governance.
	Environmental: It targets net-zero emissions by 2050 and aligns with global climate goals. It aids customers in transitioning to a low-carbon economy through sustainable financing and provides climate-related risk transparency through scenario analysis.
SEB (sustainability report): SDG6, SDG8, SDG9, SDG13, SDG14, SDG15	Economic: It supports sustainable investment for economic growth, assists SMEs with financial services, funds infrastructure projects, and promotes innovation in sustainable industries.
	Social: N/A.
	Environmental: It invests in clean water and sanitation, financing infrastructure and technologies. It aids clients in transitioning to a low-carbon economy and adheres to initiatives focused on responsible banking. Additionally, it engages in responsible funding to protect marine and terrestrial ecosystems.

) and Appendix E (

Table A5. Leadership involvement and stakeholder engagement reflected in sustainability-related reports of Baltic Banks, 2023.

Bank (Head Office Country)	Reflection of Leadership and Stakeholder Engagement
LHV Pank (Estonia)	The Group CEO ensures ESG oversight, with subsidiary heads managing day-to-day ESG matters. Senior management actively participates in initiatives like UNEP FI and Rohetiiger, fostering collaboration with academic, public, and private stakeholders. By engaging stakeholders through surveys, meetings, and feedback mechanisms, LHV integrates external input into its ESG strategy.
Luminor Bank (Estonia)	The council sets the strategic direction, while the board ensures implementation and accountability through management frameworks. ESG and SD objectives are integrated into employee remuneration. In 2023, the bank received the best ESG rating in the Baltic region for the second consecutive year. Stakeholder engagement is central, as evidenced by ESG materiality assessments and rigorous supplier due diligence processes. Stakeholder communication is conducted through NPS surveys, the Raise Your Concern channel, and regular customer satisfaction surveys.
Coop Pank (Estonia)	In 2022, the bank appointed a full-time sustainability officer and created an ESG roadmap to enhance its SD initiatives. Participation in global initiatives like UNEP FI and conducting gap analyses for CSRD compliance underline the bank’s approach to this matter. The bank communicates its SD initiatives, detailing their alignment with the Paris Agreement and actions such as green office principles and renewable energy financing.
Citadele Banka (Latvia)	The Supervisory Board is responsible for setting and implementing the sustainability strategy, while the Risk Committee monitors risks, including those related to climate change. The Management Board and CEO implement the ESG strategy and report to the Supervisory Board. Stakeholder engagement is robust and includes various channels like surveys, meetings, feedback mechanisms, and participation in banking sector events. Material issues are communicated in sustainability reports.
Rietumu Banka (Latvia)	The Supervisory Council develops and monitors the sustainability strategy, while the Management Board ensures its integration into internal processes and oversees execution. The ESG Working Group manages SD targets, and line managers engage employees in these efforts. A Sustainability Committee is planned for 2024 to enhance the integration of SD and ESG principles into the bank’s operations. The bank also connects employee compensation to SD targets. It provides sustainability training and engages various stakeholders through green loan issuing.
BluOr Bank (Latvia)	BlueOr Bank does not provide dedicated sustainability-related reporting. The Supervisory Council oversees the sustainability strategy, while the Management Board manages SD initiatives and reports on ESG risk and sustainability progress to the Supervisory Board and Risk Committee.
Revolut Bank (United Kingdom)	Revolut Bank does not provide dedicated sustainability-related reporting. The website’s information emphasises reducing its carbon footprint through transparent methodologies.
Šiaulių Bankas (Lithuania)	The Management Board oversees ESG integration, while the Supervisory Board monitors progress. The Sustainability Group, led by the Chief Sustainability Officer, advises on ESG strategy. They prioritise sustainable finance by revising lending conditions, developing green products, and offering favourable loans for electric vehicles and renovations. Management actively engages stakeholders through mystery-shopper surveys, NPS surveys, and the Synopticom platform for automated feedback.
OP Corporate Bank (Finland)	The Board of Directors oversees SD matters and receives quarterly ESG reports. The Supervisory Council reviews and approves SD targets, while the ESG Committee tracks progress. When developing its SD program, it seeks stakeholder feedback, including owner-customers, employees, and experts, through customer studies, discussions, surveys, and external assessments. This commitment to open dialogue is reflected in the establishment of a new ESG forum in 2023 to encourage ongoing communication with stakeholders and identify areas for improvement. OP has a dedicated ESG and Corporate Responsibility function, reporting to the Executive Management Team.
Swedbank (Sweden)	The Board and CEO drive SD through policies and regular training. The Group Executive Committee maintains consistency and transparency on essential matters, supported by the Sustainability Committee, which supports and advises to ensure effective management and oversight of the group’s SD perspective. Stakeholder engagement is central, with materiality assessments involving different groups and communication channels like questionnaires, interviews, and workshops. Swedbank utilises case studies and data-driven metrics to showcase progress and track key performance indicators, allowing stakeholders to assess the bank’s SD performance.
SEB (Sweden)	The Board of Directors sets the SD agenda, approves the strategy, and endorses key policies. The Risk and Capital Committee ensures awareness of sustainable financing risks. The CEO implements the sustainability strategy and oversees governance, while the Group Executive Sustainability Committee manages the strategy’s execution. The Sustainability Business Risk Committees evaluate new customers and transactions for SD alignment. SEB engages with its stakeholders through various channels, including digital platforms, physical meetings, and surveys.

).

Commonly aligned SDGs include economic growth and innovation, climate and environment, and governance. Notably, fewer banks prioritised social goals, such as poverty reduction or gender equality. In this context, we argue that Baltic banks concentrate on areas that align with regulatory priorities and economic growth, potentially at the expense of a more balanced strategic intent across all SD dimensions. This indicates a discrepancy with the UN 2030 Agenda. We argue that one reason for this imbalance could be the influence of parent companies of large international banks, where the strategic agenda is broadly established, aligning local reporting with the group’s focus areas. Furthermore, such an imbalance illustrates the underexplored social dimension of Baltic banking sustainability.

We also observed that 36.4% of the reviewed banks did not issue a dedicated sustainability report. Specifically, 18.2% included relevant information in an ESG or CSR report, 9.1% in an information disclosure report, and 9.1% provided only limited information on their website. However, our analysis in Appendix F (Table A6) indicates no statistically significant correlation between having a dedicated sustainability report and total assets, size, global or local coverage, the number of SDGs a bank strategically aligns with, or national culture dimensions. This finding suggests that producing a standalone sustainability report does not necessarily mean a bank is integrating SDGs more substantively, nor is it solely the large or small banks that issue such reports.

By strategically prioritising economic and environmental goals over social ones, banks may overlook opportunities for social SD in their business management concepts. We argue that the observed sustainability paradox can be further explained through cultural and institutional factors of the Baltic countries, viewed through the theoretical frameworks discussed earlier. From the stakeholder theory perspective, organisations typically respond to explicit societal demands and expectations. However, in the Baltic context, the societal demand for banks to strategically focus on social SD dimensions appears limited. Hence, we suggest reviewing this limited demand in light of national cultural traits described by Hofstede’s cultural dimensions in

Table 8. Hofstede’s cultural dimensions in the Baltic countries.

Cultural Dimension	Lithuania	Latvia	Estonia	Sweden
Power distance	40	44	42	31
Individualism	62	70	55	87
Motivation towards achievement and success	30	9	19	5
Uncertainty avoidance	60	63	65	29
Long-term orientation	71	69	49	52
Indulgence	16	13	16	78

Source: Prepared by the authors and adapted from The Culture Factor Group.

.

A notable similarity among the Baltic countries is their low level of indulgence, reflecting a tendency towards cynicism and pessimism. They also exhibit high individualism scores, indicating a social framework in which life progress does not depend on an individual’s social connections. However, there is a low tendency towards achievement and success, as indicated by lower motivation scores. Consequently, the populations in these countries are averse to raising issues, preferring to solve problems themselves, and tend to take constructive criticism personally. Furthermore, these countries exhibit high uncertainty avoidance, indicating a preference for orthodox behaviour and ideas, as well as a resistance to innovation.

Therefore, we argue that high individualism and uncertainty avoidance, low motivation towards achievement and success in cultural dimensions (this and a further review of Hofstede’s cultural dimensions are based on the interpretation provided by The Culture Factor Group for the scores of Latvia, Estonia, and Lithuania (https://www.theculturefactor.com/country-comparison-tool?countries=estonia%2Clatvia%2Clithuania (accessed on 28 January 2024))), and the influence of Soviet legacies may be some of the root causes of the sustainability paradox and the lack of demand for social SD in Baltic countries. In this context, Appendix F (Table A6) shows that total assets of banks statistically significantly correlate with lower power distance (ρ = −0.710, p = 0.014), uncertainty avoidance (ρ = −0.692, p = 0.018), and higher indulgence scores (ρ = 0.739, p = 0.009). Furthermore, global banks statistically significantly experience higher individualism (ρ = 0.867, p = 0.001) and lower long-term orientation (ρ = 0.610, p = 0.046). Notably, power distance, individualism, uncertainty avoidance, and indulgence scores indicate a statistically significant correlation in the opposite direction between global and local banks.

Despite these differences, all banks that disclose sustainability-related information utilise their reports as communication tools, affirming that sustainability reports (or their equivalents) are essential for stakeholder communication. Our findings reinforce that these disclosures reflect organisational identity towards SD in line with previous research [90,91]. However, for Baltic banks, sustainability-related reports often demonstrate alignment with parent company values, adherence to regulatory requirements, and responsiveness to stakeholder expectations, such as transparency and corporate governance. Larger banks address various stakeholder concerns and provide a more comprehensive SO. In contrast, smaller banks often offer more limited disclosures, focusing mainly on compliance, which may not fully convey their identity or commitments.

The 2024 Baltic CFO Survey reveals that 83% of financial managers are still in the early stages of gathering and managing ESG and sustainability data, while 15% have no plans to take action. Just 2% have fully implemented such a process. Furthermore, it indicates that companies plan to prioritise improvements in sustainability and ESG reporting (18%), strengthen the alignment with strategic objectives (17%), and enhance employees’ IT skills (16%) in 2025. We argue that to enhance this, banks should diversify their SOs and improve strategic alignment with all SD dimensions through leadership commitment to sustainability-related transformations, establishing dedicated governance and roles and adopting comprehensive sustainability strategies.

6. Discussion

We analysed the sustainability-related reports of the largest Baltic banks, Hofstede’s cultural dimensions, and the academic literature on SD and SO in the banking sector. Bibliometric analysis, financial performance evaluation, correlation analysis, and narrative content analysis of sustainability-related reports revealed the different approaches banks employ to reflect leadership, stakeholder engagement, and strategic alignment with the SDGs. Furthermore, we identified a sustainability paradox whereby banks align strategically with the economic and environmental dimensions of SD, often neglecting social development.

The bibliometric analysis spans from 1992 to 2023, encompassing the adoption of the SDGs, a period marked by increasing emphasis on SD and SO, as well as global disruptions such as the COVID-19 pandemic, interest rate hikes, and geopolitical tensions. The results of the bibliometric analysis indicate a growing academic interest in SD within the field of banking research. The annual growth rate of scientific output has increased steadily, averaging 15.3%. There has been a rise in research output following major global events, such as the Paris Agreement, with an average annual growth rate of 25.4%. Nevertheless, SO research in banking remains considerably underexplored, with no studies focusing on or originating from the Baltic countries. Only 50 articles explicitly address SO, compared to 1763 articles on broader SD research, with an annual growth rate of 14.8%. Notably, 46% of these 50 articles were published within the last three years, and 78% were released after the Paris Climate Agreement was signed. However, despite their limited number, these SO-related articles have a slightly higher average citation rate per article (20.4) than broader SD and banking research articles (17.7).

In contrast, our banking sector analysis explicitly focuses on the year 2023. The narrative content analysis includes sustainability-related reports from banks in Estonia, Latvia, and Lithuania, which collectively represent at least 90% of the market share in each country. The results underscore the role of external pressures in driving Baltic banks toward SD. Regulatory frameworks such as the CSRD, ESRS, and the EU Green Taxonomy incentivise banks to start aligning their governance structures with sustainability goals and often push borrowers to adopt environmentally and socially responsible practices, resulting in cascading regulatory effects on financial networks and their stakeholders [42] (European Sustainability Reporting Standards (https://eur-lex.europa.eu/eli/reg_del/2023/2772/oj (accessed on 14 December 2024)); Corporate Sustainability Reporting Directive (http://data.europa.eu/eli/dir/2022/2464/oj (accessed on 14 December 2024))). However, our findings reveal no statistically significant association between the type of sustainability disclosure and assets, size, global-versus-local status, breadth of SDG alignment, or national culture scores. Hence, we argue that publishing a dedicated sustainability report does not necessarily signal deeper integration of the SDGs.

While banks, as highly regulated entities [92,93], may primarily emphasise regulatory drivers, these requirements often become embedded as industry norms and best practices over time [82]. Our analysis indicates that smaller banks demonstrate statistically significant broader engagement with the SDGs. However, larger banks often lead in market share and resources and are subject to greater stakeholder scrutiny, resulting in a more targeted focus on the SDGs. In contrast, given their below-average profitability in most cases, we observe that smaller banks seek stakeholder support and competitive advantage. Furthermore, the Baltic banks are at various stages of implementing SD, ESRS, and CSRD, as shown in Appendix D (Table A4) and Appendix E (Table A5). Therefore, we argue that smaller banks may tend to align themselves with a broader spectrum of SDGs to identify suitable strategic directions for future development associated with SD.

This is further evidenced in sustainability-related reports, as larger banks demonstrate a more substantial leadership commitment by embedding SD in their governance frameworks, promoting long-term investments in sustainable infrastructure, green financing, and employee-focused initiatives such as sustainability-linked compensation. These processes enhance operational efficiency and establish a link between SD and financial performance [48]. In contrast, smaller banks exhibit a more compliance-driven approach, reflecting short-term regulatory compliance over transformative SD outcomes, as evidenced by fewer sustainability-related innovations, products, and processes. Furthermore, the empirical evidence is mixed across disclosure types: transparent environmental disclosures tend to raise ROA, whereas extensive corporate-governance reporting can reduce it [94]. In this context, financial indicators such as the non-performing loan ratio and the net interest margin can be applied in future research to capture solvency and a bank’s commitment to sustainability-related strategies [95].

Our findings also highlight the essential role of transformational leadership in driving SD transformations in Baltic banks. Transformational leaders inspire strategic alignment with sustainability goals by embedding SD and ESG principles in governance frameworks, fostering knowledge sharing, and promoting a culture of innovation [60]. Such leaders can balance economic performance with their respective companies’ environmental and social considerations, potentially helping to resolve sustainability paradoxes. They can set high-performance standards, create a shared vision, and engage stakeholders through feedback mechanisms, ensuring strategic alignment with the SDGs and promoting transparency [22,96].

Furthermore, stakeholder theory explains how banks collaborate with stakeholders to create value and ensure that their SD processes are aligned with societal and regulatory expectations [97]. In this context, our findings highlight the importance of stakeholder pressure in aligning SD priorities [66]. Larger banks utilise advanced channels for engaging stakeholders, including double materiality assessments, surveys, and structured feedback processes, to align external pressures with their internal operations. By strategically aligning with the SDGs, these initiatives foster innovation in sustainable financial products and improve transparency [68]. In contrast, smaller banks often adopt a more resource-constrained and compliance-oriented approach.

The banks in the Baltic countries strategically align with various SDGs; however, they often prioritise economic and environmental objectives over social aspects. This raises concerns about a sustainability paradox, where banks may seem strategically aligned with the SDGs but neglect social objectives. Existing research indicates that although regulatory and stakeholder pressures encourage alignment with environmental and economic goals, social objectives may be deprioritised in practice due to a predominant focus on financial or market logic, particularly short-term profits [88]. This paradox can be further explained by the regional context, where the Baltic countries face extensive SD challenges, with none of the SDGs fully achieved and the largest part of them falling into “significant” or “major challenges” categories.

We further propose investigating this regional context and sustainability paradox through the national cultural differences by integrating institutional, stakeholder, and transformational leadership theories. In this context, Figure 5 synthesises our proposed pathway from national culture dimensions to observed SO and strategic alignment with SDGs in Baltic banks. Accordingly, the relatively high individualism scores of the Baltic countries suggest a societal emphasis on personal responsibility, self-reliance, and individual accomplishments rather than collective social well-being. In such individualist cultures, the population is less likely to adopt collective solutions [98] from institutions, including banks, for social issues. Additionally, it can foster consumerism, which often prioritises personal consumption over communal resource sharing, potentially leading to environmental and social sustainability issues [99]. This helps to explain why banks in the Baltic region show relatively limited strategic alignment with social SDGs. However, future studies could enhance this by empirically analysing the reasons for the weaker stakeholder or societal demand in these national culture configurations.

The Baltic countries are also characterised by high uncertainty avoidance, suggesting they favour clear regulations and predictable frameworks. The low scores on motivation towards achievement and success may reflect a cultural reluctance to proactively advocate for change, particularly in controversial or less clearly defined areas such as social equity [100]. Such cultural modesty, combined with a preference for high uncertainty avoidance and low indulgence, may limit society’s and organisational leaders’ proactive advocacy in addressing the social dimension of the SDGs. We argue that these findings suggest that such a cultural configuration may inhibit transformational leadership, thereby potentially contributing to passive organisational behaviours that favour compliance with clearly defined sustainability targets.

From an institutional theory perspective, Baltic banks are significantly influenced by the EU regulatory pillars. They naturally gravitate towards the sustainability dimensions explicitly mandated by EU regulatory requirements. Economic and environmental sustainability are more extensively codified and measurable [101], attracting greater strategic attention from banks and their customers. In contrast, social sustainability may often lack specificity and clear metrics [102], increasing uncertainty. Given the Baltic countries’ cultural profile, our findings suggest that banks may be more hesitant to prioritise SD areas that lack clarity or consensus.

In addition to regulatory influences, institutional theory emphasises the importance of normative and cognitive pillars. Nordic banking groups, which tend to follow internationally recognised practices, significantly shape the Baltic banking sector. Notably, the two largest banks in the Baltic region are headquartered in Sweden and largely shape sectoral norms. Sweden’s cultural profile—characterised by high indulgence and low uncertainty avoidance—contrasts with that of the Baltic countries. We therefore argue that these cultural differences may affect how sustainability frameworks are interpreted and operationalised. Hence, while the established practices may be suitable for Sweden, their implementation may not be appropriate for tendencies stemming from Soviet legacies, presenting social sustainability challenges in the Baltic countries.

Our study shows that neither institutional leadership, stakeholder theory, nor transformational leadership alone can fully explain the Baltic banking sector’s SO and social sustainability paradox. Consequently, we propose that each theory contributes to the SO and explains the identified sustainability paradox. Furthermore, by combining them with national culture dimensions, we reveal how their interactions create the paradox and how to address it. We argue that banks can better incorporate social goals into their SD efforts by combining culturally aware transformational leadership with pressure from stakeholders and supportive institutional changes (clear regulations, social legitimacy, changing beliefs, etc.).

However, while comprehensive in scope, the current disclosure requirements under Pillar 3 in the EU suffer from issues of quality and comparability. The problem of greenwashing is particularly concerning, as businesses may misrepresent themselves, for example, as environmentally conscious without substantive changes to their operations [103]. Studies also reveal that insufficient integration of sustainability factors into core banking strategies remains a global challenge beyond the EU [104]. Furthermore, banking associations have criticised the regulations extensively, viewing them as inadequate, unclear, and inconsistent [105].

While the Brundtland Report introduced the first definition of sustainability decades ago, and despite the EU’s advanced regulatory framework, the European Banking Authority’s glossaries contain notable definitional gaps, particularly concerning terms such as sustainability, sustainable development, sustainable finance, and ESG. The absence of these key sustainability definitions, evident in the general glossary (general glossary (https://www.ecb.europa.eu/services/glossary/html/glosss.en.html (accessed on 4 July 2024))), as well as in those related to banking supervision (banking supervision glossary (https://www.bankingsupervision.europa.eu/services/glossary/html/act2s.en.html (accessed on 4 July 2024))) and financial innovation (glossary for financial innovation (https://www.eba.europa.eu/glossary-financial-innovation (accessed on 4 July 2024))), may further strengthen the sustainability paradox and hinder a coherent interpretation and implementation of institutional requirements and supervision of banks.

Furthermore, while global and other systemically important institutions (G-SIIs and O-SIIs) are subject to direct supervision by the European Central Bank, smaller banks are subject to local supervision and locally approved regulatory requirements. However, as seen in our Baltic sample, O-SIIs’ assets in Baltic countries can vary from EUR 42 billion to 0.9 billion (at the group level) alongside the regional context and national cultural traits, which highlight the underlying resource constraints and strategic capacities that influence the integration of SD. We argue that this difference between large and small banks highlights the need for a more diverse regulatory classification across the EU.

Therefore, we recommend developing secondary-level, sector-specific sustainability reporting standards for banks to address sustainability paradoxes, enhance transparency, and improve banking-specific and general SD terminology and banking classification in the face of banking challenges posed by initiatives such as the Omnibus I simplification package, the US decommitment from international cooperation, and global disruptions. Such standards should enhance enforcement mechanisms, Pillar 2 integration, stress testing, and sustainability risk coverage, as well as help operationalise areas such as social sustainability. They should also reduce interpretative flexibility and mitigate the impact of national culture traits, limiting symbolic compliance and motivating proactive engagement in SD.

Although our empirical evidence is from the Baltic countries, we argue that the findings are cautiously transferable to other banking systems, such as the EU and post-Soviet countries. Institutionally, Baltic banks operate within the broader framework of the Basel and the EU Single Supervisory Mechanism (the EU harmonised prudential rules (https://www.eba.europa.eu/single-rulebook (accessed on 16 December 2024))), which enforces uniform prudential requirements where similar challenges and paradoxes regarding sustainability can arise. The stakeholder context also supports the external relevance: Baltic societies have faced significant uncertainties, such as the post-Soviet transition, EU accession, the COVID-19 pandemic, and recent geopolitical and macroeconomic shocks, and strongly prefer democracy and EU membership over alternative governance models [106].

Furthermore, high foreign and global bank market shares [107], part of a broader pattern observed across Central and Eastern Europe [108], and advancing digitalisation [109,110,111] in the Baltic countries mirror conditions in neighbouring economies, suggesting similar channels through which banking management can enable or constrain SO and SDG-aligned financing. Culturally, we argue that countries with relatively high individualism, substantial uncertainty avoidance, and modest achievement orientation, or those that retain latent hierarchical legacies, may face analogous social sustainability paradoxes. However, national differences in SD speed and managerial and stakeholder engagement mean effect sizes may vary, underscoring the need for future comparative studies that explicitly test these characteristics.

7. Conclusions, Limitations, Implications, and Future Research Areas

7.1. Conclusions

In this study, we examine the academic literature and the sustainability orientation (SO) of the Baltic banking sector, providing an integrated perspective through institutional, stakeholder, and transformational leadership theories. The research utilises four data sources: bibliometric data from 1982 to 2023, 2023 financial data, sustainability-related reports, and Hofstede’s national culture dimensions for the Baltic countries.

The bibliometric review shows that research on SO within banking remains relatively limited (only 50 articles published since 2010) but is gradually increasing (14.8% annual growth), particularly after significant events like the global financial crisis and the Paris Agreement. Despite this, the conceptual boundaries of SO are not consistently defined, often skewing towards green concerns. This uneven development in the literature suggests that the banking research field is still maturing, with room for more integrated approaches that account for all three dimensions of SD. Furthermore, events such as the EU’s Omnibus I sustainability simplification package, the US decommitment from international cooperation, and global disruptions may reshape the further development of this research field, particularly given the Paris Agreement’s initial positive impact following its introduction in 2015.

Our findings on sustainability-related reports further indicate that communication regarding management and leadership engagement is reflected differently between larger international and smaller banks. This variation underscores the relevance of transformational leadership in fostering a deeper SO, one that incorporates sustainability into business management concepts rather than treating it as a compliance requirement. Furthermore, our findings confirm that Baltic banks tend to focus on the economic and environmental dimensions of the SDGs, while social dimensions are markedly underrepresented. However, although larger international banks dominate in market share and resources, enabling targeted SDG alignment under regulatory scrutiny, our findings reveal that smaller banks, despite lower profitability, demonstrate broader SDG engagement as they seek legitimacy, stakeholder support, and strategic direction amid varying stages of SD, ESRS, and CSRD implementation.

Although the sustainability paradox has been reviewed in the existing literature [17,112], our focus on the highly regulated, smaller post-Soviet Baltic banking sector, a key element within an economy [113], provides nuanced insight into how institutional, transformational leadership, and stakeholder theories, alongside national culture norms, apply to SD practices. In this context, we argue that this paradox underscores the necessity for transformational leadership in fostering a deeper SO that incorporates all three dimensions of SD into the business management concepts and decision-making rather than treating it as a compliance requirement.

This paradox is illuminated by the regional context, as Baltic countries face extensive SD challenges—with no SDG fully achieved and over 58% categorised as “significant challenges”—in contrast to Sweden’s (the home country for two of the largest banks in Baltic countries) stronger performance, particularly in social domains, highlighting that local cultural and institutional factors shape banks’ strategic priorities and help explain the limited emphasis on social SDGs.

Furthermore, this study highlights the impact of national culture on the identified sustainability paradox. We propose to review this paradox from the perspective of the traits of the Baltic national culture. These countries exhibit high uncertainty avoidance and low indulgence, leading to a preference for regulatory clarity, measurable compliance, and restrained societal norms. Additionally, high individualism and low motivation indicate a reluctance to address issues, as individuals view social responsibility as a personal rather than an institutional obligation. We propose that this mindset can limit societal demand for banks to consider the social dimension of SD in their SOs, reinforcing economic and environmental SDGs.

7.2. Limitations

It is essential to recognise the limitations of our study, as they may affect the generalizability of our research findings. First, the narrative content analysis was based on publicly available disclosures, which are self-reported and can sometimes be promotional. To address this, we focused on factual content, such as the presence of policies, references to strategic SDGs, statements from CEOs, etc. However, future studies could enhance this by including interviews or surveys with bank managers and employees. Second, our research focused on the largest banks in the Baltic countries. Investigating smaller banks, which we excluded due to their limited market share and the limited availability of SD information, could provide a more comprehensive view of the sector’s SD outcomes. Third, the reliance on specific academic databases and the use of inclusion and exclusion criteria may have affected the comprehensiveness of the literature review. We addressed this by examining peer-reviewed articles from Scopus and Web of Science. Fourth, our content analysis focuses on the Baltic countries, which may not fully represent the broader EU and global banking sector. In this context, we argue that all EU banks operate within a unified regulatory framework that aligns with the principles and guidelines set forth by Basel. Furthermore, this approach can also be applied to any other region or country. Fifth, our research does not claim causal generalisability.

7.3. Implications

Theoretical Implications: For academics, our findings contribute to the limited research on Baltic banking, SD, and SO by demonstrating that institutional, stakeholder, and transformation leadership theories offer partial, but not individually sufficient, explanations for how banks engage with SDGs. Combining them and layering in national culture reveals the mechanisms behind the observed social sustainability paradox and low demand for social SD in the Baltic context. We propose that this multidimensional integration opens new theoretical pathways for examining SO. Future research could build on this by using configurational or interactional models to assess how these forces jointly influence SO across sectors or regions.

Practical Implications: For banking practitioners, our findings underscore the need to intentionally develop a more balanced SO that incorporates all three SD dimensions. The findings demonstrate that adopting SD and forming an SO should not be viewed as only regulatory requirements for the banking sector. Instead, they are increasingly being linked to competitive advantage, culture, norms, reputation, and building stakeholder trust. The study also indicates that an imbalance in strategic alignment with SDGs may lead to a sustainability paradox and provides an example from the Baltic countries. We argue that when coupled with structured stakeholder engagement and supported by regulatory, normative, and cognitive pressures, transformational leadership can overcome cultural inertia and align operations with a broader set of SDG commitments.

Policy Implications: For policymakers, our findings highlight the limitations of sustainability disclosures that rely on voluntary or top-down mandates without considering sectoral specificities. To enhance transparency and accountability, we suggest developing sector-specific sustainability reporting standards for banks that focus on operationalising all dimensions of SD and improving enforcement mechanisms. Such standards should reduce interpretative flexibility and mitigate the influence of national cultural traits, ultimately reinforcing consistent compliance across the sector while addressing the challenges posed by recent regulatory changes and global disruptions. Furthermore, these standards should be differentiated according to the varying institutional sizes across different countries, considering the regional context and reflecting the differing resource capacities of large and small banks. It is also crucial to clarify key sustainability definitions across regulatory glossaries to ensure consistent interpretation and supervision.

7.4. Future Research Areas

Future research could extend this framework to quantitative empirical studies, such as longitudinal designs or cross-country comparisons, to strengthen causal inferences. As time progresses and more data become available, a longitudinal study could observe how mandatory reporting in 2025 affects these banks’ SOs and performance in 2024—testing whether compliance requirements truly level the field or if leadership-driven differences persist, especially considering national culture, the EU sustainability simplification package Omnibus I, the US decommitment from international cooperation and global disruptions. Future research may also broaden data sources to include non-English articles and additional countries and regions, examining how differences in market structure, regulatory frameworks, and cultural contexts affect SD processes in the banking sector.