Stakeholder Engagement: An Evaluation of European Banks

Abstract

This work introduces a model for evaluating the quality of stakeholder engagement (SE) in the banking sector by applying content analysis to SE disclosure. Through this model, an SE score is calculated based on a combination of qualitative and quantitative variables by international standards and relevant literature. The results show that European banks do not have highquality SE processes, especially in comparison to non-financial companies traditionally regarded as corporate social responsibility sensitive. The main findings of the paper have both theoretical and empirical implications. Regarding theory, this study contributes to the so far scant literature on SE in the banking sector. From the management perspective, the results highlight areas that can be strengthened to improve SE processes in banks.

Sustainable development and corporate governance in the financial system: Are environmentally friendly banks less risky?

“…However, banks are financial intermediaries that not only provide money but also affect how money is invested by borrowers. Furthermore, banks' sensitivity to the environment helps to improve both their reputations and customer loyalty (Branco & Rodrigues, 2006;De Castro et al, 2006;Deng & Xu, 2017;Kim, 2017;Melo & Garrido-Morgado, 2012 (Freeman, 1984), banks with the strongest reputation will more easily gain the trust of their customers (Venturelli et al, 2018). Their financing modes may drive economic activities in a way that accounts for environmental issues (Scholtens, 2009).…”

“…The managerial approach can be reactive (Delmas & Montes-Sancho, 2010;Kassinis & Vafeas, 2006) if firms act to avoid sanctions, and it can be proactive if companies consciously integrate environmental themes into their strategies (Liu, Miletkov, Wei, & Yang, 2015;Porter & van der Linde, 1995;Yang, Wang, Zhou, & Jiang, 2018). This narrow view helps to explain the scant analyses of banking relative to other industries (Venturelli et al, 2018). The frequent justification for this marginal status is that the banking industry is not a polluting sector (Esteban-Sanchez et al, 2017;Matute-Vallejo et al, 2011;Thompson & Cowton, 2004).…”

“…The frequent justification for this marginal status is that the banking industry is not a polluting sector (Esteban-Sanchez et al, 2017;Matute-Vallejo et al, 2011;Thompson & Cowton, 2004). This narrow view helps to explain the scant analyses of banking relative to other industries (Venturelli et al, 2018). However, awareness of environmental issues is increasing, even among financial operators.…”

“…Third, by implementing environmentally friendly actions, banks may improve both their reputation and the loyalty of their customers (Aramburu & Pescador, 2017;Gatzert, 2015;Ruiz, García, & Revilla, 2016), which in turn should translate into lower bank funding costs and higher funding stability (e.g., Bassen, Meyer, & Schlange, 2006;El Ghoul, Guedhami, Kwok, & Mishra, 2011). Furthermore, a greater sensitivity to environmental issues prevents the creation of a negative reputation of being connected with debtors that cause environmental damage (Weber, 2012) and can mitigate the reputational loss that the recent financial crisis has caused the banking system as a whole (Venturelli, Cosma, & Leopizzi, 2018).…”

How to achieve sustainability?—Employee's point of view on company's culture and CSR practice

“…Bearing in mind the importance of stakeholders' engagement, the employee's involvement in CSR practices seems to be crucial for their successful implementation (Venturelli, Cosma, & Leopizzi, 2018). The people are the company.…”