Exploring the necessity and challenges of measuring ESG risk by the Iranian banking system using Grounded Theory
Subject Areas : International Journal of Finance, Accounting and Economics Studies
Mahdiyar Moradi
1
,
Behrouz Khodarahmi
2
*
,
Hosein jahangirnia
3
,
Seyed Kazem Chavoshi
4
1 - Department of Accounting, Qo.C, Islamic Azad University, Qom, Iran
2 - Assistant Professor of Accounting Department, Tarbiat Modares University, Tehran, Iran
3 - Department of Accounting, Qo.C, Islamic Azad University, Qom, Iran
4 - Department of Insurance, Banking and Customs Management, Kharazmi University, Tehran, Iran
Keywords: ESG risks, Sustainability Disclosure, Quantification, Banking System,
Abstract :
This article examines the necessities, challenges, and solutions for measuring ESG (Environmental, Social, and Governance) risk within Iran's banking system. This research employed library studies and Grounded Theory, supplemented by interviews with 35 banking experts aged between 30 and 60 years to collect primary data and extract key propositions for forming a core dataset. Each interview lasted approximately 30 minutes. Through screening the textual transcripts of the interviews, relevant and significant statements were retained to form the main database, and indicators were categorized using open, axial, and selective coding. In managing ESG risk measurement challenges, factors such as ESG in banks, education and awareness-raising, measuring ESG risks in investments, national policymaking and strategies, applying data analytics and artificial intelligence to clarify necessities, data standardization, use of modern technologies, development of advanced analytical models for simulating ESG risks, and training and awareness in banks are effective. The benefits of measuring ESG risks for banks include increased transparency and trust, long-term risk measurement and reduction of financial crises, adaptability to market changes, enhanced social responsibility, and attraction of new customers. The findings of this study can facilitate the foundation for sustainability risk assessment for banks and credit institutions.
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