Designing a model of environmental, social, and governance reporting: Evidence from Iraqi banks

Abstract

This study aims to design a conceptual model of Environmental, Social, and Governance (ESG) reporting with-in the Iraqi banking sector. It seeks to address the significant gap in understanding the drivers, strategies, and outcomes of sustainability reporting in a post-conflict economy heavily reliant on natural resources. Employing a qualitative research design based on Strauss and Corbin's grounded theory, data were collected through in-depth interviews with 28 experts, including bank executives and academic specialists in Iraqi banking and environmental affairs in 2024. A purposeful and snowball sampling technique was used until theoretical saturation was achieved. The data analysis followed a systematic three-stage coding process: open, axial, and selective coding, to develop a comprehensive model. The study resulted in a multi-faceted model for ESG reporting in Iraqi banks. The core phenomenon is the development of ESG reporting, driven by causal conditions such as environmental requirements, international pressures, and political characteristics. Contextual conditions (e.g., the country's accounting environment, financial incentives) and intervening conditions (e.g., corporate governance, bank structure, managerial behavior) influence the strategies adopted. Key strategies include identifying a responsible entity for sustainability, developing national standards, establishing internal committees, and providing targeted training. The implementation of these strategies leads to significant outcomes, including enhanced social trust, improved employee quality of life, environmental preservation, capital market growth, and improved financial reporting quality. The findings demonstrate that advancing ESG reporting in the Iraqi banking industry requires a holistic approach that considers a complex interplay of external pressures and internal organizational factors. The Central Bank of Iraq and the government are pivotal in facilitating this process through guideline formulation, oversight, and financial incentives. This research provides an actionable framework for Iraqi bank managers and policymakers to systematically enhance transparency and accountability. The identified model can guide the development of localized ESG standards, inform regulatory decisions, and help banks attract international investment by demonstrating a commitment to sustainable practices. The study's insights are also transferable to other resource-dependent economies with similar regulatory and post-conflict challenges.