article · South African Journal of Economic and Management Sciences
This study investigates how the South African banking sector views the future of environmental risk considerations. In South Africa, an objective, standardised method for evaluating environmental risks is currently absent because of varied expectations from government departments, reputational concerns, and the risk of greenwashing. Through interviews with representatives from six banks holding eighty percent of the market share, the research outlines a temporal shift in how environmental risks are handled. Approaches have moved from being purely compliance-driven in the past to focusing on internal professionalisation and regulatory alignment in the present. Looking ahead, participants expect industry-wide standardisation, inter-organisational benchmarking, sustained regulatory reform, and the mainstreaming of environmental risk assessments to counter greenwashing and create unified practices across the banking sector.
Banks play a critical role in managing financial exposure to environmental changes. Understanding how major financial institutions perceive and evolve their risk strategies helps regulators and market participants reduce greenwashing. This knowledge promotes standardisation and supports a more transparent, stable approach to handling environmental challenges across the broader financial ecosystem.
The findings inform banks, risk professionals, and financial regulators seeking to develop standardised environmental risk frameworks and benchmarking tools. Although the work provides strategic insight into industry drivers rather than a commercial product, it directly relates to near-market operational needs for regulatory alignment and risk reporting systems within South African commercial banks.
AI-generated from the published abstract. Always read the original work before citing.
Background: Environmental risks, defined as any potentially negative financial impact due to environmental conditions, are considered in several ways within the international banking sector. But, in the South African banking landscape, objective standardisation of environmental risk consideration is lacking due to different expectations by government departments, reputational drivers and the threat of greenwashing. Aim: This study aims to investigate the perceived future of environmental risk considerations in the banking sector of South Africa. Setting: This study was carried out within the South African banking sector, using six different banks representing 80% of the market share. Method: We interviewed representatives from six banks using the Seven Questions Method, then identifying temporal themes and sub-themes framed using Institutional Theory. Results: The results showed an ongoing evolution in environmental risk considerations. Past considerations were compliance-driven, with the present drivers being increased professionalisation within organisations and the need for industry regulatory alignment. The future will include further standardisation in the industry and benchmarking between organisations, expecting continued regulatory reform and mainstreaming of environmental risk consideration. Conclusion: According to the participants, the future should address challenges and prevent greenwashing while standardising the approach to environmental risk consideration throughout the South African banking industry. The participants’ reactions highlighted that Institutional Theory remains important, especially mimetic forces and isomorphism, in the current and potential future consideration of environmental risk. Contribution: This study shares the perception of the South African banking sector regarding environmental risk consideration and identifies the drivers that resulted in the current state, as well as those shaping the future.
This page summarises published work. The authoritative version sits with the publisher.
DOI: 10.4102/sajems.v29i1.6493
Is something wrong with this record? Report it or request removal.
Discussion
Have you built on this work, tried to replicate it, or seen it applied in practice? Share what you know. Verified researchers and MARATTO™ domain experts can open a discussion, and any member can reply. Contributions are reviewed before they appear.
No discussion yet. Open the first thread.
New to MARATTO™? Create a free account.
