Sustainability in Bank and Corporate Business Models

ESG risk and sustainability are gaining increased importance, especially in light of COVID-19. Finance continues to be a driver for sustainability, and recent regulations have forced banks and companies to transform their business models toward sustainability. The sustainable business models of banks and companies have so far been discussed separately, but this book looks to combine them by answering the following questions: Do banks impact corporate sustainability? How do banks impact company business models? How do banks and companies create sustainable value? How do banks impact company ESG risk?

As the impact of sustainable development on the world’s future is better understood, each industry is encouraged to find a solution for sustainability in its own field. We want to show why the sustainability approach is important for building business models. We will seek answers that banks will gain by including a sustainability factor in their business models. We will not only analyze how to effectively build business models in banks, or we’ll analyze the approach to redefining them based on risk factors. We want to show how banks should approach the construction of their business models taking into account their internal specificity, creating original values, the factor of social responsibility, but also ESG risk factors. We also want to consider how to approach business model design so that they are effective both in the face of the economic crisis and the experience of the COVID-19 pandemic. The end result of this chapter will be to answer the question of the differences in designing business model canvases and how to approach sustainable business models.

The chapter aims to address the restrictions that banking regulations on risk would affect the ability for the integration of banking ESG to meld better with corporate ESG goals. The chapter is going to discuss and put a special stress on: Directives of the European Parliament linked to sustainable finance (among others 2019/2088, 2016/1011, 2019/2089, 2017/828, 2014/95/UE), The Equator Principles, United Nations Environment Programme Finance Initiative, Collevecchio Declaration, European Union Action plan for sustainable finance, EU taxonomy for sustainable activities, and others related to sustainable reporting, PRI, solvency, Basel.

CSR is a strategy implemented by enterprises and supply chains, and its perspectives vary from different point of view of stakeholders. There is no doubt that a CSR strategy is not only benefits, but also costs, risks, and specific barriers that need to be overcome to implement it. The purpose of this chapter is to identify the elements of benefits as well as costs that the above strategy brings to different beneficiaries, as well as to identify development trends and their impact on the creation of added value for organizations and their supply chains. The chapter will define the value that social aspects can bring to organizations, as well as present key drivers in the implementation of CSR in innovative business models.

The main purpose of this study is to present a strategic approach that can contribute to the sustainability of companies at destinations using the sustainable business strategies of banks. Therefore, the chapter presents the motives of banks in the direction of sustainability and indicates the role of banks in changing the current factors of choosing a bank and business based on the sustainability factor. The chapter recognizes the significant role of central banks as financial institutions changing commercial bank policy toward sustainability. In the chapter present directions of changes in the attitudes of central banks in strengthening sustainability, so that the policy of stabilizing the economy and finance has been effective so far. The chapter is organized as follows: the first section describes corporate motives for sustainability, the second section discusses the roles of financial sector in sustainable development, the third section demonstrates the role of central banks in enhancing sustainability and the last section describes green banks policy in company’s sector.

Enterprises are looking for new business strategies, and one of the observed trends is the implementation of aspects of sustainable development and its elements into business management as well as supporting the pursuit of a circular economy. The aim of the considerations is to address and present the main assumptions of circular and sustainable business models, including the indication of critical success factors, barriers, and their drivers. An important part of the chapter is to define and characterize innovations based on sustainable value. The chapter ends with a discussion on the application and development of sustainable business models in economic practice and the indication of recommendations and further directions of development of this trend. Sustainable business models are a challenge, not only for managers of organizations, but also for employees, supply chains, and business financing institutions. By definition, the principles of sustainable development must be implemented in the organization’s strategy. The chapter indicates definitions, areas, and bases supporting the creation of sustainable business models. An important element is also the indication of drivers supporting the implementation of this innovative concept. The assessment tools and archetypes of the functioning and implementation of sustainable business models were also found in the literature. The presented considerations are helpful elements, both in creating and assessing already existing business models based on the principles of sustainable development.

The ESG risk has particular relevance to banks. The ESG risk can influence a bank’s financial performance. Several banks incorporated the ESG factors in the decision-making process and to adapt their business models toward sustainability. The aim of the chapter is to find out what ESG (environmental, social, and corporate governance) factors have been incorporated by banks in the risk assessment process? in this context to discuss sustainable business models archetypes in banking sector and identify challenges and prospects banks face designing their business models toward sustainability and sustainable value creation.

The chapter searches for interdependencies between business models of banks and companies. The goal of the chapter is to identify the impact of banks on sustainable value creation in companies’ business models and diagnose the relationships. The aim of the considerations will be to indicate how business process mapping, using IT tools, can support the bank industry and companies and what impact this has on the creation of new business models. Mapping of processes should show what kind of actions and actions should be taken to prevent and assessment risks. We also want to show what effects the change of approach in this respect can bring from both the banks’ and enterprises’ point of view.