Doing Good While Doing Well? <scp>ESG</scp> Management as an Obstacle to Impact‐Oriented Sustainable Finance in Large Spanish Banks

ABSTRACT Addressing environmental and social sustainability challenges demands significant private financing. In response, financial institutions globally—including major Spanish banks—have increasingly adopted sustainable finance (SF). However, persistent greenwashing concerns question whether these practices meaningfully advance sustainability objectives. This thematic analysis identifies institutional obstacles preventing Spanish banks from translating SF commitments into tangible outcomes. It investigates both implementation practices and the influence of inter‐organizational relationships. The findings reveal successful SF institutionalization at the organizational level, yet constrained within ESG management frameworks. This approach emphasizes financial materiality while neglecting impact materiality, creating barriers to genuine impact‐oriented SF that requires double‐materiality integration. Ultimately, this ESG‐focused institutionalization enables financial institutions to “do well” (financially) while presuming they “do good”—despite inadequate impact accountability. Consequently, current SF commitments and practices may fail to drive substantial sustainability progress.