Phenomenological Insights into Strategic Leadership and Climate Risk Governance in Kenya’s Banking Sector: Qualitative Approach

Abstract

Climate change poses systemic risks to financial institutions. It is therefore necessary for it to become part of corporate governance processes that consider and incorporate climate concerns into enterprise risk management. Yet amid growing global concern over climate‐risk governance, there is no substantial body of empirical phenomenological research on how corporate boards in developing economies perceive, make sense of, interpret, manage, and operationalise these risks within their overall institutional risk frameworks. This study, which focused on phenomenological insights into strategic leadership and climate risk governance in Kenya’s banking sector, attempted to address this gap. The study used a qualitative interpretive approach. The results were derived from a thorough interpretive phenomenological analysis, which was narrowed to focus on identified themes pertaining to board perceptions on climate risk, governance frameworks, and strategic leadership practices. The results suggest that climate risk governance is progressively being integrated into banking institutions’ enterprise risk management frameworks, board oversight structures, risk assessment models, and disclosure processes. Additionally, the Central Bank of Kenya's regulatory guidance on climate change governance by corporate boards has attracted significant attention. However, there are still barriers to effective climate change management within banking institutions, including insufficient availability of climate data, limited technical capabilities, and frequent regulatory changes. The findings underscore the importance of perceived strategic leadership of corporate boards on climate change risk management in accelerating climate risk governance in Kenya’s banking institutions. Easier access to data, human capacity strengthening and stronger enforcement are recommended.