Same same but different: How and why banks approach sustainability

Abstract

Given their intermediary role and resulting influence on other industries, banks are pivotal in achieving the sustainable development goals (SDGs), for which they approach ecological and social challenges in numerous ways. This study aims at creating a typology of the sustainability strategies that banks implement. To this end, 26 in-depth interviews were conducted within the German banking industry to detect patterns in the sustainable practices of these financial institutions. The strategy types identified are narrow, peripheral, balanced, and integrative, which are similar in structure but substantially different with respect to the kind of practices. Specifically, three main features distinguish these strategies. First, banks focus on either their core businesses or the peripheries of their business. Second, banks can concentrate on social or environmental issues. Third, within the peripheries of their businesses, banks can support external sustainability projects in terms of finances or content. It is also found that the choice of strategy is driven by varying combinations of business, social, and environmental motives. I thus explore the ways by which financial institutions contribute to the realization of the SDGs. The typology established in this work improves understanding with regards to the implementation of sustainability strategies and serves as inspiration to sustainability managers of banks. It also adds to sustainability research in the service context, which, unlike the manufacturing industry, is a widely under-researched setting.