Organizational Structures and the Location of Sustainability

This chapter explores how banks’ internal organizational structure shapes the integration and effectiveness of sustainability practices. Drawing on comparative data from four Icelandic banks and grounded in institutional theory, the analysis examines the positioning of sustainability within the organizational hierarchy, the impact of reporting lines on influence, and the structural models that support or hinder cross-functional collaboration. The chapter emphasizes the importance of formal reporting relationships, coordination mechanisms, and leadership commitment in determining whether sustainability is merely symbolic or genuinely strategic. Case examples reveal diverse structural arrangements, including centralized, decentralized, and hybrid models with distinct advantages and limitations. The movement of sustainability functions often shifts from communications to risk or strategy, reflecting changes in institutional logics, regulatory pressures, and evolving competencies. Furthermore, the chapter examines how structural inertia, informal brokers, and cultural misalignment can hinder the effectiveness of even well-intentioned reforms. The findings emphasize that structure is not static, but a dynamic element that must evolve with sustainability ambitions, organizational learning, and stakeholder expectations. Effective structural positioning is a crucial foundation for transforming sustainability from an aspirational goal into a tangible reality. The chapter concludes with practical implications for financial institutions seeking to align ESG priorities with organizational architecture.