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.

Main Factors for Understanding High Impacts on CSR Dimensions in the Finance Industry

“…Moreover, other studies show how sustainable strategies in the finance sector contribute in several ways to sustainable development. In these cases, social, environmental and economic dimensions are relevant categories integrated with sustainable goals to advance social justice and social cohesion [26]. Finance firms provide several resources to obtain several impacts following the SDGs.…”

Service Quality and Customer Loyalty in a Post-Crisis Context. Prediction-Oriented Modeling to Enhance the Particular Importance of a Social and Sustainable Approach

“…The recent literature has paid particular attention to this circumstance in relation to the banking sector, due to its influential intermediary role and the impact it has on many other industries. Because of this influential role, the sector is a vital agent for achieving social and sustainable development goals, through an approach tackling diverse forms of ecological and environmental challenges [30,32].…”

“…On the other hand, others authors hold that this responsibility should extend to society as a whole [72]. Based on the stakeholder approach, and looking at its most sustainable aspect, this new social quality dimension can be said to cover the strategic search of environmental integrity, economic prosperity and social justice for both the firm and its main stakeholders [32,73,74]; namely, the customer and society. We, therefore, adopt a conciliatory position in this study by considering both types of initiative: those conceived mainly to benefit customers, and those designed to provide greater benefits for society as a whole [75].…”

“…Third, services are delivered in a setting with physical and environmental features that have a bearing upon the customer's perception of quality (servicescape quality). In this study we added a fourth determining factor of service quality, namely social quality, associated with social and sustainable commitment, which many authors have called for in recent years [5,19,22,[28][29][30][31][32].…”

“…Third, and in line with the previous argument, including social quality as an additional service quality dimension makes some notable contributions. Studies analyzing the link between social and sustainable responsibility initiatives and marketing outcomes are a relatively new area of academic inquiry, particularly from the marketing perspective [19,22,[28][29][30][31][32][34][35][36][37][38], and several gaps have emerged in this recent field of research: (1) although socially and sustainable responsible initiatives have been widely adopted by the global banking community, there has been no research on the impact of social quality measures in determining customers' relational behaviors during the service experience [2,18,19,21,28,32,35]; (2) existing empirical research on consumers' responses to social and sustainable initiatives largely focuses on sectors associated with consumer goods, whereas studies in service sectors, such as banking, are scarce and limited [18,21,31,32,[34][35][36][37][38]. Thus, in view of the growing social, sustainable and ethical initiatives by banks in response to negative public opinion about the sector, the way to build solid and sustainable competitive advantages over the client by financial entities in this social context, compared to the other traditional dimensions of service quality, is a major question from both the academic and the managerial perspectives [19,28,29,32].…”