In recent times, environmental, social, and governance (ESG) practices have become a central focus in corporate strategy and performance evaluation. Nonetheless, the relationship between ESG performance and bank performance remains complex and ambiguous. Thus, this conceptual paper aims to explore the relations between ESG performance and bank performance and further discuss the role of board activity in shaping the ESG performance and bank performance relationship. Grounded on stakeholder theory and agency theory, this study argues that effective governance oversight can alleviate agency problems and ensure that ESG activities align with shareholder interests, thereby enhancing financial and non-financial outcomes. This study develops a conceptual framework that explains how board activity moderates the ESG-bank performance nexus. This study contributes to board governance and ESG literature by offering a nuanced understand of governance mechanism such as board activity can catalyst the relationship between ESG-bank performance. Further, this study provides implications for policymakers and practitioners seeking to enhance corporate sustainability through governance structure.
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