Objectives:
The paper aims to explore the relationship between banks’ innovative capacity and their sustainability performance, which is referred to in this research as ESG performance.

Material and methods:
The relationship between banks' innovative capacity and ESG performance was analysed using partial least squares path modelling (PLS-PM), where the bank’s innovative capacity is an independent latent variable and the variables contributing to innovative capacity are those observed and measured using a questionnaire. The bank’s ESG performance is a dependent variable measured by the ESG indexes available at Refinitiv Eikon and Sustainalytics databases.

Results:
The paper presents the results of exploratory research on banks’ innovability, defined as the ability to use innovative capacity to gain a competitive advantage through sustainable practices carried out among banks operating in Poland. The analysed constructs were defined based on the in-depth literature review. Bank innovative capacity was defined as the ability to create, adapt, and implement innovations resulting from the bank’s organisational culture, relationships with customers, and organisational characteristics and helping to achieve the bank’s strategic goals. Banks' ESG performance is reflected in banks’ environmental, social, and governance practices measured by SDG indexes. The results proved the correlation between ESG performance and some variables contributing to research constructs such as bank size, market position, centralisation, formalisation, and managing customer knowledge.

Conclusions:
To the best of the Author’s knowledge, this is the first attempt to use the model approach to empirically analyse the relationships between the two constructs—banks’ innovative capacity and ESG performance.