2026 · Discover Sustainability
Artificial Intelligence and ESG Performance in the German Banking Sector through Green Finance
Mariam Sohail, Shahsuzan Zakaria, Faisal Sheraz, Amena Sibghatullah
Abstract
This study explores how artificial intelligence (AI) improves Environmental, Social, and Governance (ESG) performance in the German banking sector while examining the mediating role of green finance. Using survey data from 200 banking professionals and Partial Least Squares Structural Equation Modeling (PLS-SEM), the research finds that AI adoption significantly enhances ESG performance by improving data-driven decision-making, risk management, governance transparency, and sustainability reporting. Green finance also contributes positively to ESG outcomes and partially mediates the relationship between AI and ESG performance. The findings suggest that combining AI technologies with sustainable financial practices enables banks to strengthen environmental responsibility, regulatory compliance, and long-term business resilience. The study provides practical recommendations for financial institutions, policymakers, and researchers seeking to accelerate sustainable banking through AI-driven innovation and green finance.
What This Means for Your Business
This research shows that artificial intelligence (AI) can help banks improve their ESG performance by making sustainability reporting, risk assessment, and governance more efficient. Green finance further supports these improvements by encouraging environmentally responsible investments and financing practices. For banks, financial institutions, and business leaders, the study highlights that combining AI with green finance creates stronger sustainability outcomes, improves regulatory compliance, and supports long-term competitive growth. These findings offer practical guidance for organizations aiming to achieve ESG goals through digital innovation and sustainable finance strategies.
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