Banking on Corporate Social Responsibility in Australia: CaseStudy
ES3500 CaseStudy
BankingonCorporate Social Responsibility
inAustralia: CaseStudy
AmandaRayner,BankWest’sHeadofStrategy,hadjustfinishedhermeetingwiththe ManagingDirector,JackSilvertonandwasheadingbacktoheroffice. Ithadbeena longsessionbutitwasimportanttheywerebothclearonhowBankWest’snew CorporateSocialResponsibility(CSR) strategywouldberolledout. JacksawtheCSR
initiativeascentraltoBankWest’songoingdevelopmentofitsexternalbrandandcoreto itsinternalcultureandemployeevalueproposition. JackknewthatCSRwasalsoa priorityforitsparentcompany,theCommonwealthBankofAustralia,oneofAustralia’s bigfourbanks,whichhadacquiredBankWestinDecember2008. Thiswasjustbefore JackhadbecomeManagingDirectorinJanuary2009,havingpreviouslyheldsenior positionsattheCommonwealthBank.
JackandAmandahadagreedthatCSRwasaboutconfiguringBankWest’sprinciples, policies,processes,practicesandprogramstoachievesomesocialgoodbeyond BankWest’sinterests. Itneededtobeanapproachthatcreatedvalueandpositively impactedthefourkeyCSRactivityareasof
• community
• marketplace
• environment
• workplace.
TheyhaddiscussedtheneedfortheBanktohaveadedicatedgovernancestructurein placetosteertheagenda,embedtheagreedapproachintothelinesofbusinessand managerisk,auditing,decision-making,measurementandfunding. Amandahad outlinedhowshesawthestrategywouldmeetcommercial,legalandpublic expectationsandensuretheBankbehavedethically. Jackhadstressedthatfocusing oncommunityinvolvementandbuildingmeaningfulrelationshipswiththerestofsociety wasparamountaswasensuringthatCSRwasintegratedintotheBank’sday-to-day business.
InfinalisingtheBankWestapproachtoCSR,AmandaandJackhadspentquitesome timetalkingaboutBankWest’shistoryandhowthatcurrentlypositionedthe organisation. AmandahadbeenwithBankWestsince1997,twoCEOsprior,soshe wasabletosupplyalotofdetail. AmandahadexplainedthatBankWesthadbeen establishedin1895asagovernment-ownedagriculturalbankwithinWesternAustralia tohelpdevelopthefarmingindustry. In1911therewasanexpansionofactivityasit becameamortgagebank. In1945,theBankbecameafulltradingbankandwas
renamedtheRuralandIndustriesBankofWesternAustralia.In1994theBankchanged itsnametoBankofWesternAustraliaLtdwithatradingnameofBankWestandtookon anewcorporateidentityandliverytoclearlyidentifytheBankwithWesternAustraliaas awhole. In1995,afteralmost100yearsundergovernmentownership,BankWestwas
100%acquiredbytheBankofScotland,a300yearoldmajorUKbank. In1996
BankWestlistedontheAustralianStockExchangeasapubliccompanyandupto50%
ofthesharesweremadeavailableforpeopletopurchase.
In1997anewerainBankWestbeganwiththeappointmentofaManagingDirector, TomBooth,whocamefromtheNationalAustraliaBank,Australia’slargestbank. Tom setaboutdevelopinganewwayofworkingwithintheBankandfocusedondelivering superiorvaluetocustomers,creatinganexcitingandrewardingenvironmentforstaff andincreasingwealthforshareholders. Heintroducedasetofcorevaluescalled
GuidingPrinciplesandpromotedtheseasthewaytodobusiness. Duringhistenurehe oversawarangeofCSRpracticesincludingsponsorshipofcommunityandsporting groups,institutionofemployeeprogramslikeInvestorsinPeople,andtriplebottomline (people,profits,planet)reporting. InMay2003,HBOSplc,formedthrougha2001 mergerofBankofScotlandandtheUKHalifaxBank,acquiredalltheoutstanding
sharesinBankWest.On26August2003theFederalCourtofAustraliaapprovedthe
shareschemeandtradinginBankWestsharesontheAustralianStockExchange ceased,therebysignifyingtheendingofanotherphaseoftheiconicWesternAustralian financialservicesinstitution. TomremainedasBankWest’sManagingDirectoruntilmid
2004atwhichpointanewCEOtookoverthereins.
TheHBOSAustraliaCEO,DougWentworth,tookuphispositioninJuly2004having cometothepositionfromWestpac,oneofAustralia’sbigfourbanks. Hehad responsibilityfortheHBOSAustraliaGroup,whichincludedBankWest,StAndrew’s Insurance,CapitalFinance,andBOSInternational. Dougledthedrivetoreplicatethe HBOSUKparentcompany’strackrecordofofferingcompetitive,value-for-moneyand customer-focusedsolutionsforthebenefitofAustraliancustomers. HBOSUKhadan establishedrecordofCSRwithinitiativessuchas
• Foundationforprovidingdonationstodesignatedcauses
• Staffvolunteeringprogramtosupportcommunitynot-for-profits
• Paperrecycling
• Improvedaccessibilitytoproductsforthedisadvantaged
• Peoplemeasuretoincreasestaffengagement
• Communitysponsorships
• Socialandenvironmentalriskmanagement
MindfulofHBOSUK’scommitmenttoCSR,Dougbegantoincorporatetheseintothe differentHBOSAustraliabusinesseswithvaryingdegreesofsuccess. Engaginghis DivisionalHeadswassometimesachallengeastheywereoftenunconvincedofthe costsversusbenefitsofparticularinitiatives.
HBOSAustralia’sinterestinCSRtookabitofabackseatastheimpactoftheworld creditcrunchresultingfromtheFebruary2007collapseoftheUSsub-primeloanmarket begantospread. InAugust2007HBOSUK’s wholesalelendingstartedtodryup leavingHBOS witha“fundinggap”of£198billioncausedbytheir£456billioninloans
tocustomersand£258billionindepositsfromcustomers.Innormalcircumstances HBOSwouldraisethismoneyinthewholesalemoneymarkets,butthecreditcrunch, wasmakingitincreasinglydifficult. Overthenextfewmonthsfinancialviabilitybecame thekeyfocusforHBOSUKresultingintheirannouncementon31July2008ofaprofit fallof51%. On18September2008TSBLloyds,amajorUKbankingentity,tookover allHBOSoperations,includingHBOSAustralia. On8October2008the CommonwealthBankofAustraliaboughtBankWestfor$2.1billionwiththesale
becomingfinalisedon19December2008. TheHBOSAustraliaCEO,DougWentworth,
remainedwiththeorganisationuntilJackSilvertontookoverasManagingDirectorof
BankWeston6Jan2009.
AsJackandAmandahaddiscussed,havingspentthelasttwoyearsworkingthrough theGlobalFinancialCrisisissuesandthemergingwiththeCommonwealthBank,now wasagoodtimetoemphasiseBankWest’scontributionstoCorporateSocial Responsibility. Itwasalsoawaytocounteractthecurrent‘bankbashing’thatwas happeninginAustralia,whichhadbeeninflamedbythemajorbanksraisingtheirloan interestratesabovetherisessetbytheReserveBank. Amandaknewthatallbank activitieswereunderthemediaspotlightandthatgoodnewsstorieswereimportant.
Onceshereachedheroffice,Amandasetaboutgatheringhermaterialforhernext meetingwiththeHeadsofeachBankWestDivision. Shethoughtabouthowshewould handlethequestionssheknewtheDivisionalHeadswouldraise
• HowwouldcustomersviewBankWest’smorepublicmoveintoCSR?
• WouldcustomersconsidertheBank’sCSRapproachaspartofalong-term businessstrategy,orwouldtheyseeitmerelyasamarketinggimmick?
• WhatwerethebenefitsofaCSRpolicy?
• Howmuchinvestmentdidthisstrategyrequire?
• Wouldadoptingsocio-environmentalstandardsmeanthey’dloseclientsand dealsiftheyoperatedinsectorssuchasasbestos,fishharvestingortimber felling?
• WhatwouldhappeniftheCSRpolicyputfinancialresultsatrisk?
AmandacheckedhernotesonthebenefitsofBankWestbecomingmoreactiveinCSR
andtheriskimpactofchangingnothing
• Benefits
o Improvedsocialimpact
o Positiveenvironmentalimpact
o Improvedstaffsatisfactionandmorale
o Reducedstaffturnover
o Improvedproductivity
o Improvedcustomersatisfaction
o Improvedbrandequity/reputation
o Reducedcosts
o Improvedrevenues
• Riskofchangingnothing
o GrowthwillbearisktoCBA’sstandingandreputation
o Parentalpressuretoact
o Legislativepressure
o Negativepublicity
o Slowergrowth
o Long-termreputationaldamage
o Trailingcompetitors
o Increasedturnover/HRcosts
SatisfiedtherewasacompellingargumentforfocusingonCSR,Amandareviewedthe materialsheandherteamhadspentthelastsixmonthscompiling(seeExhibits)and feltsureshewouldbeabletoprovidetheDivisionalHeadswiththeanswers. Shewas confidentthatshecouldconvincethemthatCSRwouldaidBankWest’ssuccess.
Exhibit1:BankWestCSRCostsandBenefits
AgoodCSRstrategy needstocombinethreekeyelementstobesuccessful
VALUE
SUSTAINABILITY
APPROACH
“…corporationsrecognisethatsustainablebusiness operationandthussustainablefinancialperformancearedependantonbuildingandmaintainingthetrustandrespectofthecommunity,andinthevastmajorityofcases,actaccordingly…”
–InstituteofCharteredAccountants,Australia
Exhibit2:BankWestCSRValue
WecancreatesignificantvaluethroughimprovedCorporateSocialResponsibility
StaffEngagement
CommunityImpact
EnvironmentalImpact
Attract&RetainStaff/ ImproveProductivity/ BoostSatisfaction&Morale
AttractandRetain Customersand Colleagues
LowerEnergy Consumption
&WasteOutput
LowerRecruitmentCosts/HigherRevenuesperFTE/LowerPersonnelCosts
HigherRevenue
Supportfor“BestPeople”
Lower EnergyCosts
Workplace
Community
CREATING
VALUE
Environment
$
Marketplace $
“ForeverydollarinvestedinCSR,wewillmakethreedollarsback!”
PhilHodkinson
CBA
GroupFinance
Director
2
Exhibit3:CSRStrategy
ASustainableCSRStrategyhas threekeycomponents
Investment
Governance
Structure
Measurement
&Reporting
“Asstewardsofshareholderinterests,boardsshouldbe focusedonthe long--term sustainability
ofthefirmratherthanonthemarketnoise”-- Al Gore,NobelPeacePrizeWinner 2007
3
Exhibit4:BankWestCSRCostsandBenefits
Year 2011 2012 2013 2014 2015 TOTAL
Investment $3.0m $5.0m $10.0m $10.0m $10.0m $38.0m
%Revenue 0.14% 0.20% 0.32% 0.26% 0.22% 0.23%
Direct Benefits NIL $4.6m $8.4m $7.0m $8.2m $28.2m
Indirect Benefits NIL $16.7m $17.2m $19.8m $21.7m $75.4m
TOTAL BENEFITS NIL $21.3m $25.6m $26.8m $29.9m $103.6m
Exhibit5:ANZ’sapproachtoCSR
Aspiresto bea Global LeaderinCSR
Community– “EarningCommunityTrust”
• Achieve 60 000 hours of staff
volunteering
• Achieve 15% participation in workplace
giving
• Work with Indigenous organisations and other stakeholders to develop and implement a Reconciliation Action Plan
• Political Donations
Marketplace– “PuttingCustomersFirst”
• To become a role model of how successful corporations work with and behave toward staff
• Develop and implement social management policies for Forestry, Mining and Energy for the Institutional Business
• Stakeholder forums
• Public policy--making process
• Enable 1500 people to participate in “Saver Plus” in 2011
• Responsible Lending
Environment– “ManagingEnvironmentalImpactandSupplyChain”
• Working with suppliers to minimise the environmental consequences of business
operations
• Involved in discussions with clients about their efforts to introduce carbon--reducing
technologies and support those investing in alternative energies
• Improve supply chain reporting
• Integration of a new sustainable procurement policy
• Reviewing water and energy use and controls
• Reviewing waste improvement – recycling
• Reviewing transportation – fuel efficiency, greenhouse gas emissions, air pollution
ratings and alternative fuels
• Reduce environmental footprint by a minimum of 5% per full time staffer over a 2
year period to 12/11
• Engage with internal and external stakeholders to establish environmental
performance targets for 2011--2013
Workplace– “Leading&InspiringPeople”
• Focus on achieving 24% female representation at executive level in 2011
• Employment of 50 indigenous Australians in 2011 as part of ANZ’s Indigenous Employment strategy
• Close the gap on pay differentials between genders at all levels in 2011
• Implementation of “Breakout” encouraging colleagues to build strong,
responsive and trusted relationships with all stakeholders
• Continued development of workplace flexibility
• Zero harm approach on OH&S
• Introduction of Accelerated Development programs for the top 20% of manager level
employees
Exhibit6:CBA’sapproachtoCSR
CBA inCSR
Financialliteracyforlife
Community
• Commonwealth Bank Foundation,
• Sports – Cricket and Netball sponsorships.
• Major sponsor of the Australian of the Year awards
• Legacy Day Badge appeal
• ‘Life Skills’ program through Wesley Mission
• The national appeal partner for the Australian Red Cross
Marketplace
• One of the largest listed companies on the Australian Stock Exchange and is
• included in the Morgan Stanley Capital Global Index
• CommSec reports and updates
• Key focus on financial literacy:
oDollars and Sense website oKnow Your Money website oStudent Banking
oPractical Guides and publications
Environment
• Only Australian financial institution involved in the Federal Government’s Climate Clever
program.
• Offers Generation Global Sustainability Fund by Colonial First State.
• Bright Sparks Schools Program focuses on climate change
• Green Ambassadors program awards young people for being actively involved in
improving their local environment.
• Partnership with the Great Barrier Reef Foundation through their Coral Futures program
and ZooX™Fund.
Workplace
Staff in the community – staff donate to charitable fund Workplace diversity
OHS practices Shareplan for staff
Professional Development for staff
Exhibit7:NAB’sapproachtoCSR
NABinCSR
Backingpeople,notjustbankingthem
Exhibit8:Westpac’sapproachtoCSR
WestpacinCSR
Community
• Major sponsorship of rescue services
• Lifesaving Australia
• Rescue boats, planes and helicopters
• Community involvement report
• Indigenous assistance program
• Key partnerships include Mission Australia, Juvenile Diabetes Research Foundation, Salvation Army, Smith Family
• Employee involvement supported in
community projects
• Capacity building in communities
Marketplace
• Social Banking products and services
including those significant to
• financial inclusion and literacy
• Financial literacy in disadvantaged and
remote communities
• Responsible banking including responsible
lending practices
• Looking after customers from diverse
backgrounds
• Sustainable supply chain management
• Initial signatory to Equator Principles
• Green products such as Landcare Term Deposit Account
• Earth Credit Card
• Signatory to the UN Global Compact on Human Rights
Environment
Workplace
• Career transitioning
• Women in management
• Work life balance
• Training, Learning and Development
practices
• Remuneration
• Part time and job sharing
• Concern reporting and whistleblowing
• Equal opportunity and diversity
• Partnership with Landcare Australia
• Publishes a Stakeholder Impact report each year.
• Reduced their greenhouse emissions by 45% since 1996
• Top honours at Banksia Awards
• Obtained 5--star Australian Greenhouse Building Rating for three properties
• The great paper challenge
Assessment 3: Case Study
The Assessment
This assessment is an essential assessment in BES3500 Off Campus contributing 20% to your total Unit mark. The task is for students demonstrate their understanding of the topic Corporate Social Responsibility (CSR) using a case study.
Case Study Assessment Objectives:
• To examine how CSR initiatives can serve as a vehicle for developing overall business goals
• To judge the value of CSR and determine its place in today’s business operations
Learning Outcomes
• Apply critical thinking, both conceptualization and evaluation, to a range of business scenarios and issues;
• Incorporate personal ethics and social responsibility into business analysis and decision making.
The Task
Your task is to provide a 1200 words analysis on BankWest Corporate Social Responsibility case study provided, Questions to explore are:
1. What is the purpose of business?
2. Should companies become involved in Corporate Social Responsibility? Provide reasons and other working examples.
3. What other Corporate Social Responsibility initiatives could BankWest undertake? Provide a short justification for each initiative.
4. Is Corporate Social Responsibility in banking a viable business strategy or is it just a fad? Adopt a critical approach here-question the whole concept of CSR.
Consider these broad headings:
ENVIRONMENT
• Develop a company-wide environmental policy?
• Conduct a company-wide environmental risk assessment?
WORKPLACE
• Undertake a pay equities investigation to determine if men and women working in the same role at the bank receive the same pay.
MARKETPLACE
• Establish BankWest as an arranger of finance for renewable or ‘green’ energy projects in Australia.
COMMUNITY
• Build the profile of the Foundation by setting up a program where staff can provide approved pro-bono work to support Foundation partners eg IT can help build a website; marketing can help write a marketing plan; legal can read over some contracts…
Is Corporate Social Responsibility in banking a viable business strategy or is it just a fad?
BankWest is preparing to invest $38 million over 5 years into CSR with a direct return of only $28.2 million. This represents a loss to the bottom line. However, the indirect benefits are estimated to generate $103.6 million and it is in this area that the Bank believes it will profit.
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