Climate change and sustainable operations in banks

Abstract

In Pakistan, increased climate adversities hamper employees’ work outcomes. Grounded in three foundational theories-stakeholder theory, Resource-Based View, and Dynamic Capability Theory–this study aims to examine the relationship between Climate Change and employees’ daily sustainable operations in Pakistani banks in climate-vulnerable regions. Employees’ perceived financial risk, attitude towards corporate regulatory compliance, and green self-efficacy are examined as mediators. A sample of 332 male and female bankers working in climate-vulnerable regions was targeted. A self-reported questionnaire with multiple items was used to record responses. PLS-SEM was used to test the hypotheses. The results show a significant negative relationship between Climate Change and employees’ daily sustainable operations. Similarly, Climate Change has a negative and significant relationship with employees’ perceived financial risk, attitude towards corporate regulatory compliance, and green self-efficacy. However, these three constructs were positively related to employees’ daily Sustainable Banking practices. Moreover, a negative partial mediation was found, showing that the mediators significantly weaken the relationship between Climate Change and Sustainable Banking operations. The findings of this study can offer guidance for banks to strengthen adaptive capabilities, such as risk awareness, regulatory compliance, and green self-efficacy, to mitigate the harms of Climate Change on employees’ work outcomes. The contributions of the study include integrating the resource-based view, dynamic capabilities, and stakeholder theory as theoretical frameworks to examine these relationships in an underexplored area linking Climate Change to daily Sustainable Banking operations.