Transforming experience into action: the role of organisational learning on biodiversity engagement in banks

This paper offers a novel dynamic learning-based perspective to explain why some banks engage with biodiversity. Drawing on the Organisational Learning Theory and Dynamic Capabilities Theory, we suggest that repetitive use over time of sustainable governance tools fosters long-term internal capabilities that enhance responses to complex environmental challenges. Using a fixed-effects panel regression on 3614 bank-year observations from 671 banks operating in 66 countries from 2016 to 2023, we find that sustainability experience - measured as the number of years a bank has adopted ESG-linked compensation or sustainability committees - is positively associated with biodiversity engagement in the banking industry. The effect emerges only after an 8-year threshold, suggesting a cumulative learning process. Robustness checks, including alternative dependent variables, a two-stage least squares model, propensity score matching and entropy balance, support the validity of the results. We also show that this relationship is stronger and emerges earlier in megadiverse countries, where ecological pressures are more salient. Overall, our results call for a shift in evaluating environmental sustainability: managers should embed it into decision-making routines as part of a long-term learning journey, supported by ongoing leadership commitment.