Sustainable Banking: Issues and Challenges

Dear Colleagues,

Banking Services constitute a traditionally pre-eminent sector in the global economy, whether measured by their size, numbers, or influence in world development and other industries. Furthermore, in recent years this industry has received growing attention by practitioners due to the dramatic changes in the competitive environment. In particular, established banks confront strong competitive pressures from new entrants and new customer demands. These trends urge banks to react via sustainability (Bravo et al, 2009; Babic-Hodovic et al, 2011; Pérez & Rodríguez del Bosque, 2013; Walsh et al, 2014; Brammer et al, 2015). Sustainable strategies become a distinctive factor, especially under conditions of increased competition and product standardization (Bhattacharya & Sen, 2004) as is happening in the banking sector (Bravo et al, 2009). In this manner, banks have embraced sustainability as a new competitive arena (Pomering & Dolnicar, 2009).

However, the commitment towards sustainability is not new in the industry. Banking represents one of the most active sectors in sustainability involvement, as early signatories of the Equator Principles, and with a weight of 18% in the Dow Jones Sustainability Global Indexes. Yet, over the past decade banks have strengthened their sustainable actions. Some authors are skeptical of these initiatives, and posit that they are likely prompted by consumer disaffection after the 2008 financial crisis (Pomering & Dolnicar,2009), as sustainable behavior restores or builds bank reputation (Forcadell & Aracil, 2017a; Tran, 2014). Similarly, banks’ sustainable strategies may well be a reaction to the growing influence of non-state stakeholders such as NGOs and highly empowered individuals that pressure the sector to behave according to the Environmental, Social, and Governance (ESG) criteria and the Triple Bottom Line (Elkington, 1998). Nevertheless, this sector is paramount in the funding of sustainable initiatives (Yip & Bocken, 2018), because banks may pressure their clients to comply with specific social or environmental targets. In this respect, finance may well constitute a key sector that contributes to accelerating advancement in the societal grand challenges (Buckley et al, 2017). Moreover, the banking sector may contribute directly and indirectly to the achievement of the UN’s Sustainable Development Goals—the most ambitious global agenda ever to pursue sustainability. In this respect, even though financial inclusion is not a Goal by itself, it may well favor the accomplishment of the major Goals (Klapper et al, 2016), especially in developing countries (Forcadell & Aracil, 2017b; 2019). Finally, financial digitization has become the main transformation lever of the industry, with the potential to reduce the number of those without access to financial services (Costa & Ehrbeck, 2015).

This Special Issue aims to gather a collection of studies delving into the role that sustainability exerts in the banking sector, and vice-versa. We are particularly interested in how sustainability changes—and challenges—the core business in banking. Additionally, we also encourage studies that analyze how banks can contribute to the sustainability of the planet, that is, financial inclusion strategies based on new payment technologies, the impact that digital banking may have in increasing access to financial products and enhance sustainable development. In addition, we welcome studies that approach banks’ sustainable strategies as part of a multi-stakeholder process and partnerships with state and non-state actors. Finally, contributions may well consider multinational banks from different regions, and how the home and host countries influence their sustainability approach.

We welcome empirical and theoretical studies that aim to understand, accelerate, and materialize the interplay between sustainability and finance. We invite you to submit interdisciplinary and novel research on the issues and challenges associated with sustainable banking.

References

Babić-Hodović, V., Mehić, E., & Arslanagić, M. (2011). Influence of banks’ corporate reputation on organizational buyers perceived value. Procedia-Social and Behavioral Sciences, 24, 351-360.

Bhattacharya, C. B., & Sen, S. (2004). Doing better at doing good: When, why, and how consumers respond to corporate social initiatives. California management review, 47(1), 9-24.

Brammer, S., Agarwal, V., Taffler, R., & Brown, M. (2015). Corporate Reputation and Financial Performance: The Interaction between Capability and Character. In European Financial Management Association. 2015 Annual Meeting: The Netherlands.

Bravo, R., Montaner, T., & Pina, J. M. (2009). The role of bank image for customers versus non-customers. International Journal of Bank Marketing, 27(4), 315-334.

Buckley, P. J., Doh, J. P., & Benischke, M. H. (2017). Towards a renaissance in international business research? Big questions, grand challenges, and the future of IB scholarship. Journal of International Business Studies, 48(9), 1045-1064.

Costa, A., & Ehrbeck, T. (2015). A market-building approach to financial inclusion. Innovations: Technology, Governance, Globalization, 10(1-2), 53-59.

Elkington, J. (1998). Partnerships from cannibals with forks: The triple bottom line of 21^st century business. Environmental Quality Management, 8(1), 37-51.

Forcadell, F.J., & Aracil, E. (2017a). European Banks' Reputation for Corporate Social Responsibility. Corporate Social Responsibility and Environmental Management, 24(1), 1-14.

Forcadell, F.J., & Aracil, E. (2017b). Sustainable banking in Latin American developing countries: leading to (mutual) prosperity. Business Ethics: A European Review, 26(4), 382-395.

Forcadell, F. J., & Aracil, E. (2019). Can multinational companies foster institutional change and sustainable development in emerging countries? A case study. Business Strategy & Development (forthcoming).

Klapper, E., El-Zoghbi, M. & Hess, J. (2016). Achieving the Sustainable Development Goals. The role of financial inclusion. United Nations and Consultative Group to Assist the Poor. Washington. USA.

Pérez, A., & Rodríguez del Bosque, I. (2013). How customer support for corporate social responsibility influences the image of companies: Evidence from the banking industry. Corporate Social Responsibility and Environmental Management, 22(3), 155-168.

Pomering, A., & Dolnicar, S. (2009). Assessing the prerequisite of successful CSR implementation: are consumers aware of CSR initiatives?. Journal of Business Ethics, 85(2), 285-301.

Tran, Y. (2014). CSR in the banking sector. A literature review and new research directions. International Journal of Economics, Commerce and Management, 11 (2), 1-22.

Walsh, G., Bartikowski, B., & Beatty, S. E. (2014). Impact of customer‐based corporate reputation on non‐monetary and monetary outcomes: The roles of commitment and service context risk. British Journal of Management, 25(2), 166-185.

Prof. Francisco Javier Forcadell
Dr. Elisa Aracil
Guest Editor

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• sustainability
• corporate social responsibility
• banking
• financial inclusion
• SDG