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Last year’s CSR RepTrak®, a global ranking of companies based on CSR reputation, was conspicuous for its lack of banks.
Unsurprising to many, perhaps, who may think that banks simply don’t care about CSR. Despite what people may think, however, this is undoubtedly not the case. In 2015, for example, Barclays spent an impressive 1.6% of their operating profit on community investment. Other banks are also doing great work. JPMorgan and Standard Life are Top 10 employers in the UK for social mobility, while others have been busy putting private capital to good use, with UBS raising nearly $500 million from wealthy clients for a cancer research fund.
With many more examples such as these, why is it that the world’s banks aren’t hitting the heights of public opinion?
The financial crisis.
The elephant in the room, of course, when discussing ‘banks’ and ‘responsibility’ is the 2008 financial crisis, which was widely considered the primary fault of irresponsible practices in the financial sector. CSR has a long relationship with financial insecurity. The recession of the 1980s saw a big boost for the concept of CSR, with M&S famously declaring that “the health of the high street depends on the health of the back streets”. This time around, however, companies tightened their belts and CSR budgets felt the squeeze. Not, however, in the financial sector, which largely kept their CSR departments and budgets in check with previous years, even in the face of such economic troubles.
Despite this, trust was broken, and has been at an all time low. A 2012 study showed that only 21% of consumers now trust the financial sector. With minds made up, it can be hard to escape from the doldrums of public opinion, and the financial sector – fairly or unfairly – is often singled out for criticism. Take the recent controversy surrounding the North Dakota Pipeline, for example, where banks have been criticised for funding the project, whereas suppliers and contractors have largely escaped the heat. With no love from the newspapers, either, you’ll more likely hear about a scandal than a success.
Considering this backdrop, it is perhaps no wonder that banks are not high in public regard for good CSR.
What about the banks?
But how do banks really feel about all this? Some, at least, are more concerned with shareholder value and the opinion of investors – themselves becoming increasingly supportive of sustainable business – than where they fall on CSR rankings for public perception. Indeed, rankings are fickle and inconsistent, with differences in methodology meaning that currently no accurate rank can really be drawn up. Also, when it comes to reputation, the style of marketing or overall investment in communicating CSR initiatives can play a big part. While we’re just starting to see more efforts by the banks to publicise their CSR successes, the financial sector has generally been a conservative one, their marketing methodology, rather than being based on making lots of noise, often chooses to simply make information available, and take credit by achieving rather than shouting. Quietly confident that they have accurately aligned their strategies with their core values, they hope results will speak for themselves.
Nevertheless, while investors will seek out this information before making decisions, the general public is much less likely to do so. This goes a long way towards explaining why knowledge of the finance sectors’ achievements in CSR is so lacking.
What can be done?
Although investors may be satisfied, with a big part of banking happening on the high street, it’s hard to see how banks would fail to benefit from a boost in public opinion.
Many people believe that more can be done to improve communication and the reporting of CSR activities in the financial sector. Most banks do make the details of their CSR programmes publically available, but are they making the most of their data? Some studies have actually shown increasing consumer demand for more extensive CSR reporting, so the opportunity to reach consumers may be there, should anyone wish to take it. However, packaging reports for the public is a different ball game, and if the financial sector wants to reach the consumer in the high street, they’ll need a change in strategy for communicating their CSR successes.
Nevertheless, what is the future? Banks have been held squarely responsible for the financial crash of the last decade, and this has lead to an increase not only in accountability, but also to a re-energised philosophy of going back to core values. But much of this was not wholly voluntary. Be it government regulation or public demands to prove a change had been made, it was the stick that whipped them into this. Perhaps now is the time for the financial industry to be lead by the carrot, with the prize of being a major bank that’s considered truly ‘responsible’ by the public, with all the benefits that’s known to bring.
However, the fact that banks have for a long time been doing great work in CSR without aggressive PR campaigns alongside is admirable. With steps up in reporting and transparency, and yes, even a little shouting, the financial industry could really lead the way in making CSR less about spin, and more about core values, well aligned strategies, and results. Now that would go a long way to rebuilding some of that lost trust.