While global attention on sustainability may have waned, it remains a key concern for financial institutions around the world. Even as sustainability regulations are put on hold or delayed in many regions, leading institutions continue working to manage sustainability risks and address business opportunities. To keep pace, they must establish operating models that allow them to meet sustainability commitments as these evolve, while adapting to changing stakeholder expectations.
To assess how Africa's financial institutions are responding, we examined the sustainability operating models of seven institutions with over US$500 billion in combined assets and operations across most of the continent and surveyed their leaders. The institutions in our sample are at the forefront of sustainability practice in Africa and are likely ahead of most peers.
Across the cohort, institutions aim to advance their sustainability commitments by building capacity, refining incentives, and improving governance. However, progress is often hampered by people and skill shortages and operating-model flaws that misalign targets, blur responsibilities, and neglect key functions.
Key survey findings on operating models for sustainability in Africa
Our analysis surfaced a few themes that highlight how institutions are structuring and operationalizing their sustainability ambitions.
- African financial institutions in the survey use different models to embed sustainability into their organizations, informed by their overall strategy. Hybrid models that combine a central function with business-unit responsibility appear to offer the best balance, but business-unit team effectiveness varies widely.
- Institutions have been looking to move sustainability from specialist silos to frontline teams and increase dedicated headcount, as many staff with sustainability duties also carry multiple non-sustainability responsibilities.
- Incentives are increasingly used by institutions to drive sustainability ownership and performance. Most now link sustainability to executive pay through board directives, but staff-level incentives continue to vary.
Sustainability activities are mostly hybrid in African financial institutions
Most African financial institutions use a hybrid sustainability operating model that splits decision-making and resources between a centralized leadership team and distributed business units. A smaller group has taken a centralized approach but overall moving towards hybrid models. None of the institutions in our survey has adopted a fully decentralized model.
Many of the hurdles in delivering sustainability stem from the operating model. The models determine where decisions are made, how resources are deployed, and how accountability is enforced — setting the pace and quality of execution.
A more centralized operating model provides tighter control and clear oversight of sustainability initiatives, enabling group-level decision-making and concentrating specialist expertise in a lean central team. But because that central team must support the full organization, the model can stretch resources, set unachievable targets, limit cross-business collaboration, blur responsibilities, and foster a culture of dependence on the center.
By contrast, hybrid models more closely align sustainability with both organizational strategy and day-to-day business operations, combining a robust central function with empowered business units.
We also found significant divergence in the maturity and capabilities of the business-unit teams. Institutions struggle to embed sustainability in their business cultures and workforce behaviors because coordinating sustainability teams and monitoring accountability and impact are complex.
How governance and incentives help embed sustainability
Sustainability is a strategic priority at most African financial institutions. Among the large institutions we reviewed, the most common reporting line for sustainability leaders was to the chief strategy executive. Some report to the chief risk officer, and a small minority report to the chief executive officer.
Regulatory requirements, particularly in South Africa, have prompted institutions to embed sustainability more deeply across their governance structures. Most of the institutions we analyzed have a board-level sustainability committee providing strategic oversight. At the management level, executive committees with responsibility for sustainability are also almost universal. A majority of institutions also have dedicated sustainability working groups or forums that feed into these management committees, supporting coordination and escalation.
Executive and management committees generally promote sustainability effectively. Executive committee members often champion institutions’ sustainability credentials to investors, analysts, and business partners. However, limited experience, poor integration with other sustainability functions, and overlapping mandates can dilute focus and slow decision-making, reducing effectiveness.
All surveyed institutions reported having clear organizational targets for sustainability, and most are moving to extend both targets and incentives deeper into their organizations. Almost all have linked sustainability to executive compensation in some form, with one institution also tying it to board compensation. Institutions are cascading sustainability key performance indicators (KPIs) across their business operations, and a few have introduced sustainability metrics across business units, signaling clearer accountability and line-of-business ownership.
Sustainability skills and resource shortages challenge progress
Our survey shows stark differences in how skills and resources are distributed through institutions: A few have well-staffed sustainability teams that ensure accountability and measurable outcomes, while most struggle to secure talent and operate under-resourced teams with limited accountability and influence.
Where sustainability capabilities are strong and aligned with business strategy and processes, institutions are making better progress toward their goals and strengthening risk management. Conversely, many are falling short of their sustainability objectives because resources are stretched and misallocated. Staff with sustainability responsibilities often juggle multiple functions, and coordination between sustainability units frequently breaks down. One institution we interviewed noted that it had mapped dozens of employees working on sustainability, most of whom were handling those responsibilities “side of desk.”
All surveyed institutions face a scarcity of sustainability skills. Most are using tiered training programs to build in-depth skills and close capability gaps. Some are augmenting this with secondment programs, sponsored master’s degrees, or specialist training from external service providers.
A second recurring theme is the need to push sustainability out of specialist silos and into client-facing, frontline roles. As sustainability increasingly affects clients, products, and business strategies, discrete specialist silos can no longer meet broader, more dynamic demands. To move sustainability capabilities closer to their clients, financial institutions use varied training to upskill frontline staff and risk practitioners, recognizing that sustainability competence among client-facing staff is essential to identify risks and respond to opportunities.
Financial institution’s sustainability priorities for the next two years
Over the next one to two years, continued commitment to sustainability will drive a set of core initiatives across financial institutions; with priorities including:
- Consolidating and progressively developing sustainability resources
- Leveraging technology and data to better serve the sustainability needs of clients
- Preparing for expanding regulatory and investor disclosure requirements
- Elevating the importance of nature and biodiversity alongside climate in initiatives, workforce awareness, and operating models
- Measuring and rationalizing societal impact
Recommendations for improving sustainability operating models
In today’s evolving environment, African financial institutions can boost the effectiveness of their sustainability operating models by adopting several key measures.
First, they should blend formal in-house training with role rotations, external education, and embedded learning to build sustainability capabilities among frontline staff and preserve competitiveness.
Second, enhancing the integration of sustainability metrics and data analytics will prepare institutions for more comprehensive regulatory and investor disclosures, particularly as attention grows on biodiversity and ecology.
Third, accountability should cascade to country-level and business-level executives, with sustainability key performance indicators fully embedded into strategy and performance reviews.
Finally, linking these sustainability KPIs to incentives will better align business leaders’ focus with sustainability goals.
Institutions that successfully align skills, resources, and incentives in their operating models will lead Africa’s financial services sector toward innovation and sustainable growth.