Analyzing the Impact of Green Finance Development on the Transformation of Commercial Banks from an ESG Perspective

Abstract

As a major global economy, China actively participates in international environmental protection and climate change cooperation, having signed the Paris Agreement and committed to reducing carbon emissions. Additionally, China promotes green investment and financing domestically and internationally to fulfill its environmental commitments. Within this international context, the financial industry is increasingly transitioning towards green finance, significantly impacting the operational models and strategic decisions of commercial banks. This paper employs a literature review methodology to analyze the impact of green finance on the transformation performance of commercial banks in China from an Environmental, Social, and Governance (ESG) perspective. It examines the correlation between ESG standards and the transformation of commercial banks, discusses relevant policies for the transformation of Chinese commercial banks, identifies existing deficiencies, and explores future research directions and development prospects for green finance. The paper concludes that green finance positively affects the operational performance of commercial banks. Firstly, it channels social capital towards green and low-carbon projects while restricting investments in high-pollution and high-emission sectors, thereby promoting industrial upgrades. Secondly, green finance emphasizes environmental protection, social responsibility, and good governance, fostering economic development and addressing resource scarcity, which contributes to achieving carbon peaking and carbon neutrality. Thirdly, within the ESG framework, green finance offers investors more strategic options, enriches the product portfolio of banks, and expands economic growth points. Finally, it provides a reference for the government to formulate and improve green finance policies, encourages banks to broaden their business scope, and promotes policy implementation.