Westpac - A Case Study in Socially Responsible Banking
An Article from Business Respect, Issue Number 49, dated 9 Feb 2003
By Mallen Baker
The Australian banking sector has had an unmitigated hammering from politicians and public opinion alike for their failings in social responsibility. All the more remarkable, then, that the top scoring company in the recent Reputation Index compiled by the Sydney Morning Herald and The Age should have been a bank. Not so surprising when you look into the detail of how Westpac does business.
Westpac was established in 1817 as the Bank of New South Wales, becoming Westpac on merger with the Commercial Bank of Australia in 1982. It employs over 26,000 people and has global assets of $186bn. Its core business operations are retail banking, financial services, finance and institutional banking.
Its commitment to sustainability has been recognised across the world. According to the Dow Jones Group Sustainability Index, Westpac is the global corporate sustainability leader in the banking sector - no mean feat when you consider some of the competition it has in that area. "The high score is attributed to the superior management of codes of conduct, crime prevention and performance recognition. Westpac addresses environmental and social issues in its strategy at corporate level and capitalizes on its excellent sustainability expertise by embracing business opportunities. Its environmental management system is amongst the best in the industry and operational eco-efficiency has improved from last year."
The company runs an effective stakeholder dialogue program, including annual staff reviews to get feedback on workplace practices and to generate ideas for improvements. Direct customer dialogue has been built into the quality process for the company. They also meet regularly with community and representative groups to get a wider view of issues. Westpac attributes real improvements in how it performs to these dialogues. For example, the development of the company's ATMs for visually impaired people came from dialogue with leading NGOs, as well as government bodies.
The dialogue still has areas where it has further to go before it pays real dividends, however. For example, the company's employee turnover remains at the industry standard rate of 19.5 percent. Real progress in creating a great place to work should be rewarded with higher figures.
The company takes the message of corporate social responsibility to the heart of how it does business, with a major focus within its social reporting of its lending policies in relation to small to medium sized businesses, institutional lending and its services particularly for rural areas. Westpac does not have dealings with third world debt.
Westpac also deals with some of the 'softer' sides, and has an active approach to community investment through employee volunteering. The company supports its staff in volunteering in their own communities, and has achieved a figure of around 60 percent of employees involved in the community. Each year, every employee is entitled to a community volunteering day a paid leave day so that they can participate in community activities. Westpac also matches, dollar for dollar, staff fundraising or contributions to any tax-deductible charity through its Matching Gifts Program. Since 1998, a combined total of $3.8 million has been distributed to more than 340 charities across the country under the staff program.
Westpac has sought to address some of the issues around indigenous peoples and access to financial services. For instance, in Tangentyere in inland Northern Territory, Westpac is working with Centrelink and the Tangentyere Council on an educational pilot. The pilot enables the provision of electronic social security payments using financial management techniques specifically designed for families.
New challenges can come from all sorts of directions. Faced with the recent tragedy of the bushfires, the bank offered victims the chance to defer repayments on home loans, or to restructure loans without the usual bank fees. Other banks rose to the need as well, of course. The whole sector has become mindful of the need to be seen to act for the good of the community.
The business culture of Australia is not the friendliest to the concept of leadership within CSR. With the community generally wary of globalisation on the basis that it might lead to Australia becoming a 'branch office economy', an aspiration to lead the world in its social responsibility is potentially a source of considerable national pride.
Back in May 2001, the chairman of Westpac, Leon Davis said "We at Westpac believe that unless financial institutions expand their view of what constitutes socially responsible behaviour they will soon lag global best practice for their industry. We do not intend to lag best practice."
So far, the Dow Jones Index and the home-grown Reputation Index have rewarded this determination with considerable accolades. The next test is how Westpac is able to use this performance record to boost its business achievements in what remains a hostile environment.