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[Podcast] The Role of Senior Leaders in Green Banking Behavior at Vietnamese Commercial Banks

27 August, 2024

Keywords: Behavior, Leadership, Green banking, Sustainable development, Attitude

The support of senior leaders and the organization plays an important role, impacting employees’ intention to engage in green banking behavior. This is the finding of a study conducted by the author from University of Economics Ho Chi Minh City (UEH) on the role of senior leaders in green banking behavior at Vietnamese commercial banks, thereby, offering management implications for banking leaders.

Green Banking Strategies

The increasing globalization process in the past two decades has negatively affected the environment, not only causing debate among researchers but also being a concern for authorities at all levels. This concern is aimed at encouraging people to become more environmentally conscious and promoting ‘green behavior’ across sectors, including financial institutions as banks.

The banking industry is generally considered to be environmentally friendly in terms of emissions and pollution. In their operations, the use of energy, paper, and water is often negligible. The environmental impacts of banks are directly related to both banking operations and external activities created by the bank’s customers. Although the impact of external banking activities is significant, it is difficult to estimate.

Researchers have shown that the success of green banking strategies is strongly influenced by the attitudes and the behaviors of employees. Bank employees carry out green banking activities on a daily basis and have a certain impact on the choice of services of customers. In addition, previous studies have indicated that organizational and supervisory support has a significant impact on the behavioral intentions and behaviors of bank employees. Senior management has a great influence on the organization and important decisions. Meanwhile, green banking requires changes in service provision as well as investment in people and capital. Therefore, there must be support and direction from the organization and senior managers to implement green banking strategies.

Factors Affecting Green Banking Strategies

Through the study, the author analyzed the factors affecting green banking behavior and suggested implications for green banking management strategies to help banks increase competitiveness and sustainable development.

Specifically, attitude, subjective norms, organizational support, perceived behavioral control, support from senior leaders, and banking behavioral intentions have a positive impact on banking behavior. The research results also confirmed the mediating role of green banking behavioral intention. Accordingly, behavioral intention has the strongest impact on green banking behavior. Next, subjective norms have the second strongest impact on behavioral intention, organizational support has the third strongest impact, and senior leadership support has the fourth strongest impact on employees’ green banking behavioral intention.

Therefore, green banking intention has a significant impact on employees’ green banking behavior. Banks need to focus on promoting green banking intentions to create long-term green behavioral change. Previously, Vietnamese commercial banks operated in a traditional manner, green banking activities have only recently appeared. To change employee behavior, banks must create a favorable environment for change and ensure that the reasons for change are convincing. The process of changing green banking behavior must limit the number of behaviors, making sure that the plan only includes the behaviors necessary to make a difference. Since green banking is a long-term strategy, banks only focus on a few key changes in the short term.

Organizational support also affects behavioral intentions, which, in turn, affects employees’ green banking behaviors. Therefore, organizations need to establish a roadmap to develop employees into green behaviorists for sustainable development.

According to research results, subjective norms have the greatest influence on employees’ behavioral intentions and green banking behavior. Therefore, in addition to arousing positive motivations and effectively promoting green behavior among employees, banks must take steps to instill the importance of green behavior in their relatives and friends. In particular, banks must promote programs to encourage the use of green products and clean consumption at the local level. Based on this foundation, each individual’s responsibility to protect the environment is gradually enhanced.

In addition, behavioral intentions and green banking behavior are influenced by employees’ attitudes toward green banking. Employees will be more likely to adopt green banking behaviors if they perceive them as necessary. Therefore, employees must evaluate the effectiveness of these behaviors in practice. Banks must educate their employees the benefits of green banking so that they can have a positive attitude towards the practice until it becomes a habit at work.

Perceived behavioral control also affects employees’ behavioral intentions and green banking behavior. Employees with adequate knowledge and understanding of green banking will be more confident in their green banking activities. Therefore, banks must develop a strategy to organize training and seminars to exchange experiences and knowledge on green banking development to improve employees’ capacity. To effectively communicate about green banking activities, banks need to strengthen training for key staff on environmental and social risk management, and build a team of knowledgeable lecturers.

In particular, the support of senior management affects behavioral intentions and green behavior. The result mentioned the important role of senior management. Senior management plays an important role in reinforcing and changing employees’ green behavior. These managers have used systems or processes to reinforce new behaviors. Therefore, bank executives need to focus on developing long-term operating processes.

Culture is also an important factor in ensuring the success of employees in implementing green banking practices. Corporate culture has a significant impact on each employee. This effect is similar to a domino effect, affecting each individual, towards a small group and spreading to the collective, the organization and the broader economy. Therefore, senior management needs to create a green working culture. Employees are always encouraged to speak up, to promote creativity in green banking, and generally to improve the quality of cooperation and teamwork.

Banks should also invest in training and development to improve leadership skills and to transfer knowledge and experience regarding green activities to employees. The bank management process needs to pay attention to the appropriate delegation of authority to all levels. This will create a sense of self-awareness toward green behaviors for employees. Banks need to be able to identify the capabilities of employees and should empower them to do their jobs. In addition, banks should create employee autonomy for green behaviors and continuously implement initiatives that can enhance or, at least, maintain this motivation.

Full access to the research article The Role of Senior Leaders in Green Banking Behaviors at Vietnamese Commercial Banks can be found HERE.

Author: Assoc. Prof. Dr. Nguyen Quoc Anh – University of Economics Ho Chi Minh City.

This article is part of the research series spreading applied knowledge from UEH with the message “Research Contribution For All – Research for the Community”. UEH cordially invites readers to await the next UEH Research Insights issue.

News, photos: The Author, UEH Department of Marketing and Communication