Banks have enormous potential to support the achievement of sustainable development goals (SDGs) in accordance with their function as financial intermediaries through sustainable lending. However, the average national financing growth for the sustainable business activity category over the past four years is still 12%. The aim of this research is to identify the conditions of sustainable lending at state-owned conventional banks and analyze the influence of the value chain, economic performance, and ESG performance on sustainable lending. The research was conducted at state-owned commercial banks in Indonesia. The research utilized structural equation modeling (SEM). The SEM results of this study describe value chain, ESG performance (environmental, social, and governance), and economic performance and have direct and positive influences on sustainable lending, of which ESG performance has the biggest influence. As per each individual aspect, social orientation makes the biggest contribution toward sustainable lending.

Currently, banks are facing challenges in fulfilling the interests of stakeholders, not only from an economic point of view, but also in terms of environmental, social, and governance (ESG) aspects. This is due to the increasing concern for sustainability issues, including lending activities. Lending activities constitute the largest portion of bank assets and are the largest contributor to bank revenues. Thus, banks need certain business models and strategies to encourage sustainable lending growth; otherwise, it will be difficult for banks to fulfill stakeholder’s interests and support sustainable development goals. This study aimed to build a sustainable business model and select sustainable lending strategies in state-owned banks in Indonesia using a value chain approach. The development of a sustainable business model utilizing a triple-layer business model canvas (TLBMC) is based on the results of previous research and sustainability report data of the three state-owned banks. The formulation of strategy selection as the key driver of sustainable lending utilized the analytical hierarchy process (AHP) based on expert respondent data collected through questionnaires. This research showed that the lending distribution business model at state-owned banks in Indonesia, which was built using the TLBMC framework, can realize sustainability goals in the form of a sustainable lending business model. Furthermore, this sustainable business model can be used as a basis for selecting sustainable strategies. In addition, the AHP results yielded alternative strategies in the form of the market development and penetration of green loans and micro, small, and medium enterprises (MSMEs) as the key drivers of sustainable lending growth.

Banks have enormous potential in supporting the achievement of sustainable development goals (SDGs) in accordance with their function as financial intermediaries through sustainable lending. However, the average national financing growth for the sustainable business activity category over the past four years is still 12%. The aim of this research is to identify the conditions of sustainable lending at state-owned conventional banks and analyze the influence of the value chain, economic performance and ESG performance on sustainable lending. The research was conducted at state-owned commercial banks in Indonesia. The research utilized a Structural Equation Modeling (SEM). The SEM results of this study describe value chain, ESG performance (environmental, social and governance) and economic performance have direct and positive influences on sustainable lending, of which ESG performance has the biggest influence. As per individual aspect, social orientation gives the biggest contribution toward sustainable lending.

Currently, banks are facing challenges in fulfilling the interests of stakeholders, not only from the economic point of view but also from the environmental, social, and governance (ESG) aspects. This is due to the increasing concern for sustainability issues, including in lending activities. Lending activities constitute the largest portion of bank assets and are the largest contributor to bank revenues. Thus, banks need certain business models and strategies to encourage sustainable lending growth. This study aimed to build a sustainable business model and selection of sustainable lending strategies in state-owned banks in In-donesia using a value chain approach. The development of a sustainable business model utilized triple layer business model canvas (TLBMC) is based on the results of previous re-search and sustainability reports data of the three state-owned banks. Formulation of strat-egy selection as key drivers to drive sustainable lending utilized analytical hierarchy pro-cess (AHP) based on expert respondent data collected through questionnaires. This re-search showed that the lending distribution business model at state-owned banks in Indonesia, which was built using the TLBMC framework, can realize sustainability goals in the form of a sustainable lending business model. Furthermore, this sustainable business model can be used as a basis for selecting sustainable strategies. In addition, the AHP results obtained alternative strategies in the form of green loan and micro, small and medium enterprises (MSME) market development and penetration as the key drivers of sustainable lending growth.