Making sense of the increasing regulations on Environmental, Social, and Governance in the European banking sector
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2025-06-26
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en
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Given their facilitating role in sustainable development, organizations in the European financial sector face increasing pressure to comply with regulations on environmental, social, and governance (ESG). How organizations navigate the complexity and ambiguity around these mandatory ESG regulations remains unclear. Through a single case study, this research explores how a Dutch multinational bank operating in the European financial sector, makes sense of increasingly mandatory ESG regulations regarding their organizational structures and processes. A sensemaking perspective is used to explore how interpretations create shared understanding of ESG regulations (Weick, 1995). Through six semi-structured interviews and document analysis, the findings indicated how changes in this bank’s sustainability governance structure aims to navigate regulatory ambiguity. This bank engages in three sensemaking mechanisms to interpret and embed ESG regulations in the organization: in-depth mapping, harmonizing, and dividing responsibilities among existing roles. This research emphasizes the importance of adapting a sustainability governance structure to enable the sensemaking process. Moreover, a facilitating mechanism highlights how organizational processes enhance learning and improving during the sensemaking process. By identifying this bank’s sensemaking mechanisms on ESG regulations, this research contributes to sensemaking literature and understanding of ESG regulations in the financial sector.
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Faculteit der Managementwetenschappen