Changing Financial Firms Relative to ESG Issues
The aim of this chapter is to investigate change in financial firms relative to environmental, social and governance issues (ESG). An embryonic ‘behavioural theory of the financial firm’ (BTFF) is outlined to provide a conceptual framework to analyse ESG change issues in financial firms. This is used to explore how financial firms and others can understand processes of: learning, strategic design of the firm, mobilisation of resources, and reporting, relative to growing ESG concerns. It is also used to identify problems and barriers to change (historic, current, potential) in ESG areas and propose a coherent response. Climate change is used as a major ESG issue to discuss change. The chapter illustrates how ‘top teams’, advisory policy bodies, legislators, and regulators can use the BTFF to inform their actions and change proposals. This can support an integrated view of the financial firm and encourage a coherent pursuit of financial and ESG aims throughout the financial firm. Such actions should be adopted to improve firm decision-making, match the needs of stakeholders, improve reporting and hence improve legitimacy of the financial firm (DiMaggio and Powell 1991) with stakeholders (Guthrie and Parker 1990).
KeywordsFinancial firms Change Theory ESG Reporting
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