German Banks' Operationalisation of Sustainability-Decision-Making Frameworks in German Banks' Corporate Client Departments

Duderstadt, Henning (2021) German Banks' Operationalisation of Sustainability-Decision-Making Frameworks in German Banks' Corporate Client Departments. DBA thesis, University of Worcester.

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Abstract

Society's interest in sustainability is growing rapidly, and the accompanying demands are placed on companies. At the latest since the financial crisis at the end of the 2000s, banks have also moved the issue of sustainability into their strategic focus. This strategic implementation is highly significant, as banks and the financial markets are an important hub for the success of global sustainable development. The allocation of capital and liquidity has a decisive driver function for corporate sustainability and
sustainable investments and projects. Therefore, the impact of a sustainable orientation of the financial sector in terms of economy, ecology, and social issues goes far beyond its own internal sphere of influence. This thesis presents a deep insight into the operational implementation situation of German and savings banks' sustainability strategies. Due to its high indirect steering effect through the financing flows in potentially sustainable companies and their investments, the research focuses on the corporate lending sector of banks. Thus, this thesis closes a gap in this still young research field and shows a new perspective beyond the strategic decision-making level or reporting-oriented studies of previous research. The research was carried out as a case study in 2019 on various banks of all three banking groups. It consists of 6 expert interviews and a content analysis of 130 non-financial reports for data triangulation. This approach intends to illustrate the impact of corporate rules and culture on operational decision-makers and whether potential framing concepts, as well as heuristics and and this thesis shows discrepancies still exist between communicated strategy and operational implementation. Furthermore, differences and similarities between the banking groups and potential direct and indirect influences from the entrepreneurial framework of the management, target systems and corporate culture are revealed. The results indicate that the existing operational objectives decisively determine the extent to which sustainability aspects are reflected in practice. As a result, the approach to financing decisions in all banking groups is exclusively based on economic aspects in business practice. Regarding corporate culture, the regional institutions refer to their historical brand core as a sustainability-oriented corporate value, even if the research indicates that these corporate values have
no influence on sustainability orientation in lending practice. Overall, the data collection shows that the high importance of the indirect impact power of financial institutions through capital allocation is recognised by the majority of institutions, but this only leads to actual implementation in a minority of the banks studied. The results can help banks question measures taken, re-evaluate the importance of various frameworks and thus to improve the implementation quality of existing strategies further.

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