2025, Vol. 6, Special Issue 3

Green banking has gained prominence as a strategic approach to align financial sector operations with environmental sustainability goals, particularly in developing economies facing the dual challenges of economic development and environmental degradation. This research paper examines the role of green banking in promoting environmental sustainability by analyzing its impact on banking operations, investment patterns, and regulatory frameworks. Green banking refers to the adoption of sustainable practices by financial institutions, including offering green loans, financing environmentally friendly projects, promoting paperless banking, and encouraging customers to adopt eco-conscious behaviors. In developing countries, where environmental awareness and regulatory enforcement may still be evolving, green banking provides an opportunity for banks to lead the transition toward sustainable development.

The study employs both qualitative and quantitative methods, including a review of existing green banking models, case studies from select developing countries, and analysis of sustainability indicators. It investigates how green banking contributes to reducing carbon footprints, improving energy and resource efficiency, and enhancing environmental governance through responsible financing. The findings reveal that while green banking is still in its early stages in many developing economies, its potential to influence positive environmental outcomes is substantial. Financial institutions can act as catalysts for change by aligning their products and services with the principles of sustainability.

The paper concludes by suggesting policy recommendations and strategic measures to promote the adoption of green banking practices, such as regulatory incentives, public awareness campaigns, and capacity-building initiatives. Strengthening green banking can ultimately help developing nations strike a better balance between economic growth and ecological preservation.