This study aims to investigate how corporate governance influences banks’ emission reduction goals (ERG), focusing on the configurational role of FinTech disclosure.
The study examines 20 banks listed on the Pakistan Stock Exchange over 2020–2023 (80 bank-year observations), covering both Islamic and conventional banks. It applies fuzzy-set qualitative comparative analysis (fsQCA) to identify configurations of governance attributes, FinTech disclosure and bank characteristics that are sufficient for ERG.
The results show that no single governance attribute is sufficient to ensure ERG; instead, ERG emerge from specific configurations of governance features, FinTech disclosure and financial characteristics. Smaller boards, higher proportions of independent and female directors and strong Shariah board presence contribute to ERG when combined with high FinTech disclosure and favorable bank-level conditions.
The findings provide actionable guidance for regulators and bank boards. Strengthening governance structures (e.g. independent and diverse boards) and encouraging transparent FinTech disclosure can help integrate environmental objectives into governance and digital strategies, especially in emerging markets.
This study makes three original contributions to the Islamic and conventional banking literature. First, it is, to the best of the authors’ knowledge, the first study to apply fsQCA to the governance–FinTech–sustainability triad in a dual banking system, capturing conjunctural causation, equifinality and causal asymmetry across Islamic and conventional banks – features that are systematically missed by symmetric regression methods. Second, by explicitly modeling Shariah board governance as a core configurational condition alongside conventional board attributes, the study provides novel evidence that Islamic religious–ethical oversight constitutes a distinct and nonsubstitutable governance mechanism for emission reduction commitment, enriching the Shariah governance quality and green Islamic banking literatures. Third, situated in Pakistan’s dual banking system –where the State Bank of Pakistan’s green banking guidelines and Shariah governance framework create overlapping regulatory logics for climate and Islamic governance – the study delivers policy relevant configurational insights for Islamic banking regulators across South Asia and the Gulf Cooperation Council who are navigating the twin imperatives of digital transformation and climate risk governance.
