The role of leadership and organizational culture in sustainable investment decision-making

The growing regulatory emphasis on sustainable finance has not translated uniformly into substantive changes in investments decision-making across financial institutions. This study investigates why similar regulatory pressures lead to different sustainability outcomes. It does so by examining the role of leadership styles and organizational culture as internal drivers shaping interest in the Sustainable Development Goals (SDGs), knowledge of sustainable finance, and by incorporating Environmental, Social and Governance (ESG) criteria into investment decision-making. Using a qualitative approach based on Fuzzy Cognitive Maps (FCM) and expert input from senior professionals in the financial sector, the study models the casual relationships between leadership and organizational culture in sustainable investment decisions in a highly regulated context. The main results highlight that authoritarian leadership facilitates initial compliance with regulatory requirements, while transformational leadership and adhocracy cultures promote a deeper and more strategic integration of sustainability. Furthermore, variables such as commitment, training, and reputation emerge as key mediators in the adoption of sustainable practices. The study contributes to the literature by demonstrating that sustainable finance regulation alone is insufficient to ensure meaningful sustainability integration unless it is internalized through specific leadership and cultural configurations. These findings offer relevant insights for financial institutions and policymakers seeking to promote credible, effective, and strategically embedded sustainable investment practices.