Abstract
The financial services sector plays a crucial role in advancing sustainable development, both through external financing and internal operations. While South African banks have made progress in external ESG disclosures and products, internal ESG integration remains underexplored. This study investigates how major South African banks embed sustainability within their internal governance, operations, and culture.
Using a qualitative approach, the research draws on interviews with 11 ESG professionals across four leading banks. Thematic analysis revealed five core themes: ESG prioritisation, ESG measurement, financial impact, integration influencers, and integration challenges. Findings show that external ESG actions, driven by regulations and stakeholder pressure are prioritized over internal initiatives, which are often seen as secondary unless they support external goals. Internal ESG efforts, though valued for efficiency and reputation, lack strategic emphasis and robust measurement.
Effective internal ESG integration in banks depends on governance, leadership, and culture. While committees help oversee sustainability, genuine progress requires committed leadership and an embedded sustainability culture. Key obstacles include limited resources, siloed departments, and resistance to change. Though the financial benefits are mostly indirect and difficult to quantify, internal ESG efforts support efficiency, risk management, and reputation.
The study proposes actionable recommendations: invest in employee training, standardise ESG metrics, enhance stakeholder engagement, use data analytics for reporting, establish dedicated ESG teams, and promote open communication. By aligning internal practices with external commitments, banks can lead in sustainability integration.
This research contributes to ESG literature by unpacking internal integration dynamics to address previously noted gaps and applying multiple theoretical frameworks, and it offers practical insights for building resilient and sustainable financial institutions.