Article
Sustainability-Driven Performance Evaluation: Extending the Balanced Scorecard with ESG — A Regression Analysis of Indian Private Sector Banks
This study employed the Balanced Scorecard (BSC) framework developed by Kaplan and Norton (1992) to evaluate the performance of three leading private sector banks in India, namely Axis Bank, ICICI Bank, and HDFC Bank, by incorporating an extended Balanced Scorecard comprising the Financial, Customer, Internal Business Process, Learning and Growth, and Environmental, Social and Governance (ESG) perspectives. The performance of the selected banks was examined for the period 2016–2025, while profitability was measured using Return on Assets (RoA) and Return on Equity (RoE). Further, the study investigated the relationship between profitability and the selected BSC variables through Pearson's correlation and multiple regression analysis. The results indicated noticeable variations in the performance of the selected banks across different dimensions of the Balanced Scorecard. Correlation analysis revealed that GII, TANB, DER, GCE, and PCENP exhibited statistically significant relationships with RoA, whereas DER, GII, CR, TANB, ITAR, GCE, and PCENP showed significant relationships with RoE. The multiple regression results demonstrated that DER, GCE, and PCENP significantly influenced RoA, while DER, GII, ITAR, GCE, and PCENP significantly affected RoE. The regression models explained 71.1 per cent of the variation in RoA and 83.9 per cent of the variation in RoE. The findings suggest that the profitability of private sector banks is determined not only by financial indicators but also by customer, operational, learning, and ESG-related factors. Hence, the adoption of an extended Balanced Scorecard framework provides a comprehensive approach for assessing the strategic and financial performance of private sector banks and identifying the key determinants of profitability.