Konstantina Ragazou, George Sklavos, Γεωργία Ζουρνατζίδου, Nikolaos Sariannidis
This research presents a hybrid multi-criteria decision-making approach to assess the correlation between financial performance and environmental, social, and governance (ESG) disclosures within the European banking industry. The analysis employs three complementary methodologies—Criteria Importance Through Inter-criteria Correlation (CRITIC), Multi-Attributive Ideal-Real Comparative Analysis (MAIRCA), and Complex Proportional Assessment (COPRAS)—to rank 365 publicly listed financial institutions based on seven ESG and financial indicators sourced from Refinitiv Eikon. This combination offers a clear, reproducible strategy for evaluating institutional closeness to an optimal ESG-financial balance, rectifying the limitations of singular methodologies that may favor either financial efficiency or disclosure depth. The findings indicate significant asymmetry. Certain institutions attain alignment between sustainability and profitability, whilst others have high ESG ratings along with poor financial fundamentals, indicating a disconnect between ESG and financial performance. This mismatch may indicate delayed returns on sustainability investments (ESG latency) or symbolic disclosure, whereby pledges are just reputational. Sensitivity research validates the stability of rankings across varying financial and ESG situations, while cluster analysis delineates categories of resilient leaders, transitional performers, and laggards across Europe. These results further discussions on ESG materiality by illustrating that credibility and consistency are vital for sustainability to provide long-term benefit. The research underscores the impact of regulatory frameworks on institutional positioning. Limitations include dependence on a single fiscal year, yielding a snapshot instead of a trajectory, and the use of simplified clustering for enhanced interpretability. The methodology enhances sustainable finance theory and practice by providing a reproducible, policy-relevant assessment of ESG-financial congruence.