Good practices in sustainability reporting: Evidence from the Romanian banking sector

Baicu, Claudia Gabriela; Poladian, Simona; Aluculesei, Alina-Cerasela; Curcă, SorinNicolae Article Good practices in sustainability reporting: Evidence from the Romanian banking sector Amfiteatru Economic Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Baicu, Claudia Gabriela; Poladian, Simona; Aluculesei, Alina-Cerasela; Curcă, Sorin-Nicolae (2025) : Good practices in sustainability reporting: Evidence from the Romanian banking sector, Amfiteatru Economic, ISSN 2247-9104, The Bucharest University of Economic Studies, Bucharest, Vol. 27, Iss. 70, pp. 973-993, https://doi.org/10.24818/EA/2025/70/973 This Version is available at: https://hdl.handle.net/10419/328031 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Sustainability Reporting: Catalyst For Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 973 GOOD PRACTICES IN SUSTAINABILITY REPORTING. EVIDENCE FROM THE ROMANIAN BANKING SECTOR Claudia Gabriela Baicu1 * , Simona Moagăr-Poladian2, Alina-Cerasela Aluculesei3 and Sorin-Nicolae Curcă4 1)2)3)4) Institute for World Economy, Romanian Academy, Bucharest Please cite this article as: Baicu, C.G., Moagăr-Poladian, S., Aluculesei, A. C. and Curcă, S.N., 2025. Good Practices in Sustainability Reporting. Evidence from the Romanian Banking Sector. Amfiteatru Economic, 27(70), pp. 973-993. DOI: https://doi.org/10.24818/EA/2025/70/973 Article History Received: 30 March 2025 Revised: 2 May 2025 Accepted: 10 June 2025 Abstract This article investigates good practices in sustainability reporting in the Romanian banking sector. Since such a complex endeavour has not been carried out in the financial field in Romania, and the data regarding national reporting is lacking, the methodological approach combines qualitative analysis of secondary data with the results of a survey based on a questionnaire. The documents were investigated using the content analysis method based on predefined keywords and focused on the sustainability reports published by the most important banks and the documents they disseminated in the public space. The obtained results were supplemented by those based on the questionnaire distributed among six managers from the country's banking institutions and interpreted based on thematic analysis. The research findings show that less than half of the banks in Romania, which account for about 80% of the net assets of credit institutions, publish annual sustainability reports following international reporting standards. The information disclosed includes good practices related to carbon footprint mitigation measures, sustainability governance, environmental risk management, and green finance. The results of the investigation reveal that, although green loans have a number of advantages, green finance in Romania faces obstacles, including those related to the additional reporting costs. The article contributes to a better understanding and awareness of the real limitations in sustainability reporting and supports the development of coherent measures to assist banking institutions in improving the way they communicate information to the public. Keywords: sustainability reporting, sustainability, good reporting practices, green finance, Romanian banking sector JEL Classification: G21, G38, F64, Q56 * Corresponding author, Claudia Gabriela Baicu – email: [email protected]. This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2025 The Author(s). AE Good Practices in Sustainability Reporting. Evidence from the Romanian Banking Sector 974 Amfiteatru Economic Introduction Climate change is an increasingly discussed topic in the academic environment, being a constant subject of debate on the agenda of developed countries. A permanent concern is its impact on socioeconomic development. The measures to minimise the effects of climate change and increase sustainability have intensified since 2015, when two documents of international significance were adopted. The first was the 2030 Agenda for Sustainable Development (United Nations, 2015). The Paris Agreement (UNFCCC, 2016) followed, and a few years later, the European Union (EU) adopted the European Green Deal (European Commission, 2019). Regarding the Sustainable Development Goals adopted by the United Nations, it should be noted that they have stimulated the creation of sustainability reporting frameworks (KPMG, 2024). The sustainability reporting refers to "the annual reporting by companies on the environmental, social, and governance (ESG) impacts, risks, and opportunities of their activities" (EFAA, 2023, p. 4). According to the study published by KPMG (2024) on sustainability, the Global Reporting Initiative (GRI) is the most used standard; at the same time, there has been an increase in the adoption of the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD). Although there is an ongoing international effort to standardise sustainability reporting, there are still differences, especially regarding regulation; for example, within the European Union (EU), corporate sustainability reporting standards are governed by Directive 2022/2464 (2022). In this context, over the last decade, there has been a notable development of significant initiatives by international organisations, governments, central banks, and other regulatory authorities aimed at encouraging financial institutions to support the transition to a lowcarbon economy and to integrate social and environmental principles into their activities (Kumar, Prakash and Khan, 2020). One of the most important measures adopted by banks is resorting to green finance, through which banks direct their funds toward projects that protect the environment (Chen et al., 2022). As pointed out by Choudhury et al. (2013), there are two categories of stakeholders that exert pressure on the implementation of sustainable practices in the sector: competitors and corporate consumers on the one hand and stakeholders and top management on the other. In order to track banks' contribution and progress and to further drive compliance in this area, ESG disclosure by banks has become an increasingly used practice, including as a mandatory requirement of regulators in the financial sector in many jurisdictions (Dănilă et al., 2022). Based on these considerations, the main objective of the paper is to investigate sustainability reporting practices in the Romanian banking sector. According to this objective, the study aims to answer the following two research questions: Q1: What are good practices in sustainability reporting in the Romanian banking sector? Q2: What are the trends in green finance in the Romanian banking sector that influence sustainability reporting? Subordinate to this objective are investigated (i) practices regarding carbon footprint reduction, environmental risk management, and sustainable governance, (ii) reporting on green products, (iii) the advantages and challenges of green finance. By answering these questions, the paper contributes to better understanding and awareness of sustainability reporting importance and green finance for both investors and banks customers. In addition, Sustainability Reporting: Catalyst For Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 975 the paper is expected to contribute to the literature in the field of green finance, which combines finance-specific elements with those related to the environment, climate change and sustainable development. Although the importance of green finance for sustainable development is recognised, research focused on green finance and sustainability reporting in the banking sectors of Central and Eastern European countries, including Romania, is underdeveloped. As a result, the findings of this study are relevant both at the national and European levels, with the Green Deal being a priority for the European Commission, which aims to accelerate the transition from a linear economy to a circular economy. Based on these considerations, furthermore, the paper is structured as follows. Section 1 reviews the literature and suggests the research hypotheses. Section 2 explains the methods used to achieve the research objectives. Section 3 is dedicated to presenting the research findings and discussions. The paper ends with some conclusions that also highlight future research directions. 1. Literature review The specialised literature dedicated to the implications of sustainability on the banking system is continuously expanding and addresses the phenomenon from multiple perspectives. However, the number of works that discuss best practices in sustainability reporting by banks and other financial institutions is relatively low (Akomea-Frimpongn et al., 2021). Furthermore, where it is the subject of research, in general, the reporting is analysed descriptively or symbolically, without a critical assessment of the quality and impact of these practices on financial institutions (Rajawat and Mahajan, 2024). The publication of ESG information by banks is often presented as a decisive step towards accountability (Dănilă et al., 2022), but there is little evidence regarding the quality and comparability of these reportings across jurisdictions. Although regulatory authorities have promoted both recommendations and mandatory measures (Apostoaie, 2018; Bose et al., 2017), the literature does not adequately investigate how these are implemented in a national or sectoral context, leaving an area of ambiguity regarding their concrete impact. One explanation is the different way in which such reporting practices are understood in different jurisdictions. For example, Kumar and Prakash (2019), in a study conducted in India, showed that although Indian banks are beginning to integrate sustainability practices, they still pay relatively little attention to environmental aspects, with reports that are predominantly focused on financial inclusion and corporate social responsibility. In this context, this article covers the gap in research on sustainability reporting and green finance in the Romanian banking sector and complements the studies published by Dănilă et al. (2022) and Baicu (2021). Many studies emphasise the importance of banks' information practices and their role in achieving environmental goals (Bose et al., 2017). Banks need to demonstrate transparency to stakeholders in order to disclose the organisation’s performance and environmental risks. Although, in many cases, the quality of reporting is poor (Sebastião, Tavares and Azevedo, 2024), sustainability reporting is seen as a management tool, with empirical studies highlighting that many banks use it to present their strategies and disclose the policies implemented in this sector (Hossain et al., 2016). AE Good Practices in Sustainability Reporting. Evidence from the Romanian Banking Sector 976 Amfiteatru Economic Banks adopt eco-friendly practices to mitigate the risks of climate change (Battiston, Dafermos and Monasterolo, 2021), contributing both directly and indirectly to the reduction of carbon emissions (Ward and Naude, 2018). At the international level, they have adopted various measures, ranging from replacing environmentally impactful practices to focusing on the design of green products and integrating climate considerations into risk analyses (Menon, Sreelakshmi and Shivdas, 2017). Consequently, the impact of banks on the environment can be approached from two different perspectives, namely: (a) from the viewpoint of banks seen as corporations that directly affect the environment through their operations (paper consumption, use of fossil fuels for transportation, etc.); (b) from the perspective of banks that can direct resources towards non-polluting investment projects (Pratap, 2020; Mikliński, 2023). The most commonly used internal banking practices highlighted in the literature include minimising paper and energy consumption, recycling, eco-friendly transportation, and operating in green buildings (Jayabal and Soundarya, 2016). Empirical studies show that in some emerging countries, such as India (Sharma and Choubey, 2022) and Oman (Miah, Rahman and Mamoon, 2021), more than 50% of commercial banks have already integrated internal green practices to reduce their carbon footprint. However, in many cases, such practices have been adopted as a result of the need for digitalisation and cost efficiency, and not due to the direct environmental concerns of managers (Moșteanu, Faccia and Cavaliere, 2020). Considering the aforementioned, the following hypothesis is formulated: H1: Reporting in the Romanian banking sector includes good practices related to reducing carbon footprints, managing environmental risk, and sustainable governance. In accordance with their main function, banks try to combine business objectives with social and environmental responsibility (Kumar, Prakash and Khan, 2020). From this perspective, banks are adapting their products and services to environmental requirements. The new solutions offered by banks include green loans, green certificates of deposit, and green credit cards (Rakić and Mitic, 2012). Considering that the main banking activity is lending, loans for green purchases or green investment projects have the most significant impact on achieving sustainability goals (Mirovic et al., 2023). These include loans for sustainable homes, electric cars, green investment projects (Rakić and Mitic, 2012). Issuing green bonds is another financing tool for the transition to sustainability (Gilchrist, Yu and Zhong, 2021). Based on these considerations, the following hypothesis is presented: H2: The sustainability reporting in the Romanian banking sector includes information regarding the portfolio of green products. Last but not least, there are works that analyse the challenges faced by banks regarding the integration of ecological considerations into their business. These are specific to banks, clients, regulatory authorities, etc. Musyaffi et al. (2023) identify several barriers faced by users of green banking technology, including functional and psychological barriers. Niazi et al. (2023) show that the lack of internal capacity and the absence of appropriate guidelines are the main constraints to the growth of green banking adoption in Pakistan. The increase in the level of awareness and acceptance of green products and services by customers is a key factor in these transformations (Ellahi, Jillani and Zahid, 2021). Furthermore, banks in India avoid imposing environmental conditions when providing financing to corporate clients due to the risk of losing them (Choubey and Sharma, 2021). Sustainability Reporting: Catalyst For Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 977 As a result of the above, the following hypothesis is stated: H3: Green finance in the Romanian banking sector presents advantages and challenges. The analysis of the specialised literature shows that sustainability is a central theme on the agenda of commercial banks, both in terms of measures to reduce their own carbon footprint and, especially, because of the crucial role they play in financing environmentally friendly projects. Subordinated to these two dimensions, banks have started to develop a series of sustainable practices, which are reflected in their ESG reporting. 2. Methodology Green finance is a response of the banking sector to the need to adapt to the new reality imposed by the sustainable economy. In this context, in addition to banks' adaptation to market trends through the types of lending, reporting on sustainable practices has become a reality that can indicate a company's commitment to sustainability. In order to see to what extent the banks operating in Romania have included environmental considerations in their activity and green products in their portfolio, the present research starts with the qualitative analysis of the sustainability reports published by the main banks in the sector. Considering the limitations of qualitative analysis of sustainability reports, which provide only a synthetic overview of green finance, fitting into the pattern of specialised reporting, we completed the research by analysing domain-specific documents (press releases, announcements on the website of banks, etc.) and by applying a questionnaire distributed to representatives of top management in the Romanian banking sector. Considering that the subject addressed is underexplored in the specialised literature in Eastern European countries, and the existing information is predominantly qualitative, the two research methods were deemed appropriate to obtain a comprehensive picture of the reporting on sustainability in the financial sector in Romania. The complex methodological approach, by combining the two qualitative methods, aims to complement the information obtained from the analysis of relevant documents that banks constantly publish with the pertinent opinion of representatives of certain banking institutions. In this way, the complexity and relevance of the results have been enhanced, both for the academic environment and for stakeholders interested in aspects related to sustainability reporting. Furthermore, the originality of the research is highlighted by a detailed analysis of the daily practices in sustainability reporting in a field that is rarely addressed from this perspective and from the position taken by representatives of management from the national banking sector. The design of the research is detailed in Table no. 1. Table no. 1. Research Design Research Question Research objectives Method Q1: What are the good practices in sustainability reporting in the Romanian banking sector? i)Analysis of reporting on carbon footprint reduction practices ii)Analysis of reporting on sustainability governance and environmental risk management Content analysis by theme. The keywords used in the analysis were: green practices, sustainable practices, carbon footprint, sustainability governance, environmental risk management, green finance, green loan, sustainability. AE Good Practices in Sustainability Reporting. Evidence from the Romanian Banking Sector 978 Amfiteatru Economic Research Question Research objectives Method Q2: What are the trends in green finance in the Romanian banking sector that influence sustainability reporting? i)Analysis of reporting on green finance ii)Investigation of the offer of green banking products iii)Identifying barriers to green finance Content analysis by theme. The keywords used in the analysis were: green practices, sustainable practices, green finance, green loan, green bond, green products, green accounts/deposits, sustainability. Questionnaire (self-administered) distributed among the management staff of the Romanian banking system The first research question aimed to investigate the good practices promoted by the seven most important banks operating on the Romanian market. The selection criterion of the banks in the study was the share held in the net assets of the credit institutions, the banks being chosen as representative of the financial activity in Romania. Together, these seven banks hold a share of around 80% of the net assets of all credit institutions, which is relevant for the national banking sector. Consequently, the selected banks were: Banca Transilvania (20.15% in net assets, end-2023), Banca Comercială Română (BCR) (13.44%), CEC Bank (10.41%), BRD Groupe Société Générale (BRD) (10.13%), ING Bank N.V, Amsterdam – Bucharest Branch (hereinafter referred to as ING Bank România) (8.93%), Raiffeisen Bank (8.73%), UniCredit Bank (8.43%) (BNR, 2024). The descriptive analysis of the sustainability reports was carried out using the method of content analysis by theme, investigating the description that each bank included in the study exposes in terms of sustainable practices. For this, aspects such as the presence of green lending instruments, actions aimed at reducing the carbon footprint, and the presentation of concrete examples of their work were included. Taking into account the specifics of this research method and the style of each banking unit to report the activity on environmental protection, the analysis of the reports was made according to the keywords mentioned in Table no. 1 together with their derivatives (plural forms, declinations). The keywords were chosen based on the literature and the definition of sustainability reporting provided by the European Federation of Accountants and Auditors for small and medium-sized enterprises (EFAA, 2023). A total of 14 reports related to the years 2021-2024 were investigated, and the interpretation of the results was performed manually by analysing the content of the phrases containing one or more of the specified keywords. In order to answer the second question, the analysis of sustainable practices in Romanian banks was extended to press releases and information on banks' websites. As the study of secondary data published in the banks' reports and information materials cannot present in detail the situation of green lending in Romania, we extended the analysis by applying a questionnaire to the management level of five banks in the country. The questionnaire was distributed between March and April 2024 among the top-management of ten banks in Romania. Of these, five banks responded positively to the request to participate in the research. One of these banks was represented by two respondents who provided answers separately. Although the sample size included in the study is small, in the context of this study, it is relevant, considering the profile of the respondents. Furthermore, the results obtained from the questionnaires complement those obtained from the content analysis of the documents published by the financial institutions in Romania included in the research. Sustainability Reporting: Catalyst For Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 979 The banks’ representatives were selected using professional connections in the Romanian banking sector of the research team members. The inclusion criterion for respondents was the position held in the bank, targeting respondents with a management position and at least 15 years of experience in the banking field. The questionnaire was applied to respect the anonymity of the respondents, who were informed about the purpose of the research, and their participation was voluntary. In this regard, the banks included in this part of the study were anonymised, further being presented as Bank 1, Bank 2, etc. In order to ensure that the obtained results are comparable and that the questions are relevant, the questionnaire was based on previous scientific approaches at the international level and was adapted from the template used by Sharma and Choubey (2022) and the CNSM (2021), taking into account the specifics of the banking sector in Romania. The questions were asked in Romanian to facilitate a uniform understanding of academic and technical terminology, and the average duration to answer the questionnaire was 45 minutes. The questionnaire consisted of 20 questions. The first part of the questionnaire covers 14 questions regarding: the integration of environmental factors into corporate governance and risk management, green products, carbon footprint mitigation practices, green social responsibility activities, benefits of green loans, determinants of green loans, barriers to green loans development, measures to promote green finance. The second part reflects information on the profile of the participants: seniority in the banking sector, gender, age, education, department in which they work, and job position (Table no. 2). The interpretation of the questionnaire results was carried out taking into account the small number of respondents. Thus, the interpretation was conducted using thematic content analysis, based on the questions we formulated, and focused on identifying aspects related to green finance in Romania. Table no. 2. Respondent's profile Bank Respondent's profile Bank 1 Male, working in the banking system for over 20 years, master's degrees, retail group manager Bank 1 Female, working in the banking system for over 20 years, master's degrees, director, sustainability department Bank 2 Male, working in the banking system for over 20 years, master's degrees, head of sustainability management, strategy department Bank 3 Female, working in the banking system for over 20 years, master's degrees, manager Bank 4 Male, working in the banking system for 15-20 years, PhD studies, director, retail department Bank 5 Female, working in the banking system for 15-20 years, master's degree, senior customer relationship manager, corporate department 3. Results and discussions In Romania, a series of initiatives on sustainable development have been launched, in line with the global and European agenda. Among them is the National Sustainable Development Strategy of Romania 2030 that provides for increased efforts to achieve the transition to a "green" economy (Romania’s Sustainable Development Strategy 2030, 2018). Against this background, in recent years, the Romanian authorities' concerns for promoting sustainable finance and climate risk management in the financial sector have intensified. Also noteworthy are the initiatives of Banca Națională a României (BNR) and AE Good Practices in Sustainability Reporting. Evidence from the Romanian Banking Sector 980 Amfiteatru Economic Asociația Română a Băncilor (ARB) that involve joining international alliances in the field. Thereby, the BNR joined the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) in 2020 (BNR, 2021). In line with this action, the ARB joined the Net-Zero Banking Alliance (NZBA), whose members have expressed their commitment to align portfolios according to the environmental objectives indicated by the Paris Agreement (ARB, 2023). It is also worth mentioning that, in 2020, the stock exchange in Bucharest (Bursa de Valori București, BVB) launched a project in partnership with Sustainalytics on the Romanian capital market, which, through ESG risk ratings established by Sustainalytics, aims to promote sustainable investments (BVB, 2020). Later, in 2022, the BVB, supported by the European Bank for Reconstruction and Development (EBRD), published a guide on non-financial reporting of local issuers according to ESG standards (BVB, 2022). In turn, Autoritatea de Supraveghere Financiară (ASF), the authority in charge of supervising the activity of non-banking financial companies, has initiated some actions related to sustainability (ASF, 2023). 3.1. Good practices in sustainability reporting in the Romanian banking sector The content analysis of the sustainability reports published by the banks included in this study provides a detailed picture of the good practices on environmental reporting in the Romanian banking sector. Thus, among the banks analysed, Raiffeisen Bank, Banca Transilvania Financial Group, and BRD publish reports on sustainable practices, with at least two annual editions of the reporting. The Sustainability Report 2023 published by Raiffeisen Bank represents the bank's fifteenth sustainability report, being prepared according to the GRI 2021 Standards (Raiffeisen Bank, 2024). Banca Transilvania Financial Group has also adhered to the GRI standards, the 2023 report being the fourth sustainability report it has published. It should be noted that the report was audited on certain indicators (Grupul Financiar Banca Transilvania, 2024). At the same time, both reports comply with both the internal regulations on the matter – the BNR Order no. 7/2016, the Order of the Ministry of Public Finance 3456/2018 -, as well as the EU Regulation on Taxonomy (Regulation 852/2020) (Raiffeisen Bank, 2024; Grupul Financiar Banca Transilvania, 2024). Last but not least, the BRD's 2023 sustainability report is the second edition based on GRI standards and according to EU and national legislation (BRD, 2024a). In the case of other analysed banks, the activities in Romania in the field of sustainability are included in the reports prepared at the group level, which cover the actions taken at the international level. This is the case, for example, of the UniCredit group, which presents the progress in the field both in the annual report (UniCredit, 2024a) and in a number of specific reports, such as those on TCFD initiatives (UniCredit, 2023), and green bonds (UniCredit, 2024b). Similarly, the Erste Group, of which BCR is a part, published the 2024 Climate Report, which includes references to the BCR's launch of the Sustainability Academy (Erste Group, 2024). 3.1.1. Reporting on practices to reduce the carbon footprint The analysis of the sustainability reports shows that some of the first specific actions to reduce the carbon footprint taken by banks aimed at limiting the consumption of resources and reducing the negative impact on the environment as a result of the activities they carry out. In this context, measures were taken to increase sustainability in the operation of bank Sustainability Reporting: Catalyst For Organisational and Professional Change AE Vol. 27 • No. 70 • August 2025 987 financial sector in Eastern Europe, highlighting the particularities of Romania, a country of interest, considering its socioeconomic past. Last but not least, it may serve as a starting point regarding the policies and measures likely to improve green finance in the Romanian banking sector. The paper highlights the most important aspects regarding sustainability reporting in the financial sector and addresses a mixed methodology to provide a view as complex as possible of subject matter. However, the research has several limitations. This study only reflects the environmental dimension of the non-financial reporting of the most important banks in Romania. Therefore, the social component of non-financial reporting could be analysed in future research. Another limitation of the study is the restriction of the investigation to the financial field represented only by banking institutions in Romania. For a broader picture of the analysed phenomenon, the investigation could be extended to other institutions, including non-banking financial institutions in Romania. The limited number of respondents and the lack of comparability with other countries are also some limitations of this study. Taking into account the results obtained and the increased interest in the analysis of sustainability reporting at the international level, a useful step for future research is the inclusion of civil society representatives in consultations on the topic of green finance. In this way, the reporting from banking institutions and, implicitly, their offerings for clients regarding green products would be aligned with customer expectations, having a greater impact and utility than at present. Future research directions could also include investigating the perception of banking clients, both individuals and legal entities, and their level of awareness regarding the importance of green finance and sustainability reporting. 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