Management of Environmental and Social Risks and Topics in the Banking Sector - An Empirical Investigation

53 Pages Posted: 9 Jul 2019 Last revised: 30 Apr 2020

See all articles by Katrin Hummel

Katrin Hummel

WU Vienna University of Economics and Business

Ute Laun

Lucerne University of Applied Sciences and Arts - Business

Annette Krauss

University of Zurich - Department of Banking and Finance / CSP

Date Written: April 30, 2020

Abstract

This paper investigates how environmental and social (E&S) risks and topics (i. e. E&S issues that are important in terms of adaptation to a changing business environment) are integrated in the banking sector. Despite banks’ key role in steering financial flows towards sustainable development, little is currently known as to whether and how banks integrate E&S aspects into their management control systems and whether this integration translates into E&S performance. Building on prior studies in the environmental management control literature, we design a conceptual model in which we link contextual factors, a proactive strategy approach, E&S management controls, and E&S performance. Following common practice in the banking sector, we differentiate between two paths of E&S management controls: risk management (value protection) and topic management (value creation). Based on survey data for a small sample of 50 European banks, we find evidence that contextual factors, reflected in the perceived power and legitimacy of clients, voluntary standard setters and NGOs, are positively related to a proactive strategy approach. This proactive strategy translates into both topic and risk management. Yet, in the next step, only topic management is positively related to the E&S performance of a bank, but not risk management.

Keywords: social and environmental accounting (SEA), environmental management control system (EMCS), questionnaire survey, environmental performance, proactive strategy, value creation

Suggested Citation

Hummel, Katrin and Laun, Ute and Krauss, Annette, Management of Environmental and Social Risks and Topics in the Banking Sector - An Empirical Investigation (April 30, 2020). British Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3415580 or http://dx.doi.org/10.2139/ssrn.3415580

Katrin Hummel (Contact Author)

WU Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Ute Laun

Lucerne University of Applied Sciences and Arts - Business ( email )

Insitute of Financial Services Zug IFZ
Suurstoffi 1
Rotkreuz, 6343
Switzerland

Annette Krauss

University of Zurich - Department of Banking and Finance / CSP ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

HOME PAGE: http://www.bf.uzh.ch

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
344
Abstract Views
1,674
Rank
165,026
PlumX Metrics