Abstract
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.