ESG Integration in Banking Strategy and Reporting: Evidence from the Slovak Banking Sector

Abstract

The integration of Environmental, Social and Governance factors into the banking sector has become an increasingly important topic as regulatory requirements expand, investor expectations evolve and sustainability risks become more financially material. This paper explores how ESG considerations are reflected in strategic decision making, risk management and credit evaluation within banks, with a particular focus on the Slovak banking sector operating under the European regulatory environment. The study is based on qualitative research using structured interviews with ESG specialists and professionals from banking institutions in Slovakia. The aim is to better understand how formal ESG requirements, especially those linked to the Corporate Sustainability Reporting Directive, are translated into everyday banking practice. The analysis focuses on identifying the key motivations behind ESG adoption, the main challenges institutions face during implementation and the extent to which ESG factors are actually embedded in core business processes. The results show that ESG is gradually moving beyond a purely regulatory obligation and is increasingly perceived as a relevant part of long term strategy. Banks recognize its importance for managing emerging risks, strengthening their reputation and responding to stakeholder pressure. At the same time, the practical implementation of ESG remains uneven. A lack of consistent data, limited internal expertise and the absence of unified methodologies make it difficult to fully integrate ESG into decision making. Reporting activities are often seen as complex and resource demanding, even though they contribute to greater transparency. The findings also indicate that ESG factors are beginning to influence credit assessment, particularly in relation to green financing and the evaluation of sector specific risks. However, their use is not yet systematic, which points to a gap between regulatory expectations and actual practice. The paper contributes empirical insight from a less frequently studied regional context and highlights the need for stronger internal capabilities, better data management and a more strategic approach to ESG integration in banking.