"Outsourcing strategies in Cooperative Banking: Balancing Governance, ESG Integration and Compliance"

Although universally appreciated for its strategic and operational advantages, outsourcing presents implementation challenges, the extent of which depends on the specific characteristics of the adopting entity, such as size, sector and organizational model. Having noted this, study addresses a critical gap in understanding the benefits, opportunities, risks and threats associated with Environmental, Social and Governance (ESG) outsourcing in banks and provides a comprehensive analysis of its impact on governance, compliance and operational performance. With the aim of examining both theoretical insights and operational practices, interviews were conducted with members of management body and members of various internal control and strategic functions of 19 Italian popular co-operative banks. The findings indicate that the primary motivation for outsourcing is to enhance operational efficiency and ensure regulatory compliance. The study underscores the significance of robust internal controls and a strategic approach to ESG integration, thereby facilitating a more profound comprehension of the dynamics underlying outsourcing and offering practical insights for aligning operational practices with their objectives.