Influence of Environmental Corporate Social Responsibility on the Performance of Commercial Banks in Nairobi County, Kenya

Abstract

Commercial banks in Nairobi County are pivotal to Kenya’s economic growth, facilitating credit provision, deposit mobilization, and national development. However, they face challenges such as intense competition from fintech companies, rising regulatory compliance costs, and operational inefficiencies, which threaten profitability, customer retention, and market share. Globally, environmental Corporate Social Responsibility (CSR) initiatives, such as tree planting, recycling, and clean energy promotion, have been recognized as strategic tools for enhancing organizational performance by improving brand reputation and fostering stakeholder trust. This study investigates the influence of these environmental CSR initiatives on the performance of commercial banks in Nairobi County, focusing on non-financial metrics like customer growth rate, retention rate, and market share. Anchored in the Resource-Based View (RBV) Theory, which posits that unique resources provide a sustainable competitive advantage, the study employed a descriptive research design targeting all 41 commercial banks in Nairobi County. Data were collected from 287 respondents, including senior management, CSR managers, and marketing executives, using structured questionnaires. Descriptive statistics (means, standard deviations, frequencies, and percentages) and inferential statistics (Pearson correlation and multiple linear regression) were used for analysis. Findings revealed a significant positive correlation between environmental CSR and bank performance (r = 0.628, p < 0.001), with environmental CSR contributing a beta coefficient of 0.320 (p < 0.001). Clean energy promotion had the most substantial impact, followed by tree planting and recycling initiatives. The study recommends that banks integrate environmental CSR into core strategies, invest in clean energy, enhance recycling infrastructure, and scale up tree planting to improve performance and achieve sustainable competitive advantage. These findings provide actionable insights for bank leaders and policymakers to enhance competitiveness and sustainability in Kenya’s banking sector.