What initiatives is your chosen company taking to protect the environment, eg., by working with government and NGOs? What actions is the company taking to reduce its environmental impact? Is it monitoring and reporting on progress? Is it independently audited?
Does your business play a role in poverty alleviation, internationally? Has the company taken any voluntary initiatives to fight corruption? EG, The Global Compact. Does the company have a good record on the observance of human rights?
Does the company have a good record of ethical management of people? Have there been issues with unethical marketing practices?
What are the company’s governance structures? Have there been ethical issues associated with poor governance?
What is the company’s record on philanthropy? What is the company doing to give back to society?
The corporate Responsibility and governance structure are very significant facet of any business as they support in recognizing problems and permit the corporation to reimburse to all the stakeholders of the company and the society. The corporate responsibility, ethics and governance structure not only support in maintaining a great loyal customer foundation, but are also important for long term development, future progress and achievement. These activities support the inside relations with the workforce of organization.
The corporate social responsibility is not only limited to the appropriate ecological practices, but it expands to arranging all values of company with the objective of consumers, workers, depositors, dealers, supervisors, managers and the general public (Zientara, 2017). The worldwide significance of corporate social responsibility can be simply outlined by the many international corporations created for the same, which are frequently defining the subject matters regarding corporate social responsibility and ethical responsibilities of corporations (Katamba, et. al, 2012).These corporations are Global Reporting Initiative, the Organization for Economic cooperation and development, the UN Global Compact, the World Business Council for Justifiable growth, and the International Organization for Standardization.
In this report, various aspects of the corporate social responsibility, governance structure and ethics of Commonwealth Bank is discussed and critically examined.
Corporate social responsibility
The Corporate governance structure means policies, procedures, practices, system, rules and regulations which guides, monitors and controls the organizations. The corporate social responsibility is mainly the structure of policies, rules, regulations and practices which allows the board being clear, fair and responsible (Tricker, 2015).There are many aspects of the corporate governance structure such as nation, citizens, roles, policies and frameworks. Every organization has internal and external stakeholders. The company is responsible for the satisfaction of internal and external stakeholders. The corporate responsibility refers to the way for the organizations to fulfill the responsibilities for common and environmental impacts of the operations of business. The main objective of company is to develop, make and render the services and goods. The corporate social responsibility forms the filter for the company’s action. CSR makes the organizations responsible and ethical.
The company selected for the assessment is Commonwealth Bank. Commonwealth Bank of Australia is multinational bank. The commonwealth bank does business across the world such as New Zealand, USA, Asia and United Kingdom. Commonwealth Bank renders the financial services such as insurance services, fund management, retail, banking services, deposits and banking services. It is largest listed organization in Australia on Australian security exchange at August, 2015. It involves brands such as Bank west, Colonial first state investments, ASB Bank, Commonwealth insurance and Commonwealth securities. The main purpose of this report is to examine the procedures of Commonwealth Bank in respect of corporate governance structure, ethics, corporate social responsibility and application of these practices in proper manner.
There are many models have been established from past ages to review the corporate social responsibility structure of an organization. These are two types of models which have been used to examine the actions and corporate governance structure of the corporate social responsibility, are Carroll’s Pyramid and Wartick and Cochrane’s Typology. Archie B. Caroll had established the Pyramid of corporate social responsibility, to examine the corporate social responsibilities and common matter in the board (Schwartz, 2011). The system is based on the meaning of corporate social responsibility given by Archie B. Caroll himself. It has been held by Caroll that corporate social responsibility actions of an entity is restricted within four types of opportunities for the society such as fiscal, legal, ethical and discretionary.
A corporation has to be economically liable by giving the excellent goods at reasonable prices to the society and by making incomes. Also the board of company is required to maximize the long term financial proceeds to the company’s shareholders. The financial advantages can be inspected by the stability of value of share in the share market and distribution of the incomes as cash dividend (Reuters, 2018).
The commonwealth bank has an important role in economy. The company has a legal responsibility. It deals with compliance with laws, rules and regulations. Commonwealth bank makes report on commitment to responsible tax payers and action of highest honesty in comply with tax laws. It also recognizes the human rights and supplier compliance with the international human rights laws (Commonwealth Bank, 2018).
Ethical responsibility means implementation of ethical principles and engagement in moral activities. The common wealth bank promotes ethical behavior and positive customer behavior. The ethical standards comply with independence and ethical requirements. The relevant requirements include confidentiality, integrity and objectivity (Commonwealth Bank, 2018).
The philanthropic responsibility deals with the contribution in the social issues and development of the environment of the company. The corporate responsibility is essential not only for own people and community partners but also for clients, depositors and stakeholders. Commonwealth bank creates the work place that reflects communities where company operates need of the customers.
Wartick and Cochrane’s typology is other model for the study of the corporate social responsibility function of the company. The Wartick and Cochrane made this three dimensional model named as Corporate Social performance Model in 1985, consisting three factors such as the issue of social difficulty, the social responsibility’s kinds and the corporate reaction’s scope (Morrison,2015). Wartick and Cochrane model is motivated from pyramid of Caroll. The Wartick and Cochrane model recognizes social matters, problems and the corporate activities in this respect. The commonwealth bank has established corporate social responsibility standards which are link with the Performance Standard of International Finance Corporation on Environment and Social Sustainability. The corporation involves in social assessment and financial assessment to understand the effects of the actions of business and lessening of negative assessments on the society through the all stages of the procedures (Pascoe, 2016).
Stakeholders of the company-
The commonwealth bank has variety of forums committed to advancing stakeholders. It involves external stakeholders such as chief executive officer external advisory panel, customer advocate community council and original advisory council. The stakeholders inside the company include community affairs stakeholder council and opportunity initiatives council. The stakeholder group majorly involves customers, employees, investors, suppliers, charities, community organizations, non-governmental organizations, service providers, academics, media and regulators (Moon, 2014).
Environment of Commonwealth Bank-
Commonwealth Bank is committed to protecting the environment of the society and the natural resources for the sustainable use. The company is associated with the new water conservation initiative with popular Economizer Home Loan that could potentially contribute up to $3 million in spending on the water saving devices by bank. The company knows that their operations are creating direct or indirect impact on the environment. This makes the company to follow the environment policy in which they can manage the direct and indirect environmental impacts. The bank is currently contributing in the global transition so that they can reduce the carbon emission by the year 2050. Bank knows that most of the operations affect the environment due to which they keep monitoring and reporting the progress of initiatives and steps taken by them for protecting the environment. Commonwealth bank has engage PWC for the independent audit of the non-financial metrics that include environment, customer, social and governance metrics (PWC, 2018).
The method to human rights is essential to the vision of the commonwealth bank group to safeguarding and improving well-being of individuals, businesses and communities. The human rights statement confirms liability and commitment to respect human rights. The ESG risk assessment process is good step for the protection of human rights. It makes focus on the some key areas such as health, safety, energy, pollution, labour, human rights, anti-corruption, governance and water. It is the good step to stop corruption. The Commonwealth Bank is connected with United Nations Global Impact (UNGC). It communicates progress on the UNGC principles such as human rights, labour, anti-corruption matters and environmental issues. Thus the company is maintaining good record on the adherence of human rights. The company has made approaches to the corporate responsibilities to stop inequality and the poverty. These approaches are based upon the customer experience and financial responsibility. Thus company maintains good record of ethical management of people by providing educations, training and using innovations. There is no existence of any unethical marketing practice because of good corporate structure (Jamnik, 2017)
Governance structure of company-
The governance structure of Commonwealth Bank as defined in the Annual Report, 2017. It contains various parties with following responsibilities-
- Board- The board of company is liable to form corporate responsibility strategy and to monitor the effectiveness of strategy. It is also a responsibility of board to approve ESG disclosures in the annual report of company.
- Executive committee- The executive committee guides the development and application of the corporate responsibility strategy and ESG risk assessment policies. It also makes sure proper ESG governance in the appropriate place.
- Business units-It is a duty of business unit to integrate ESG considerations, risk of business and opportunities in the business. It also monitors the ESG progress, performance and the reporting.
- The corporate responsibility team- The corporate responsibility team gives the strategic advice to the company. It also facilitates the ESG governance and ESG reporting internally and externally.
- External Advisory Panel-The External Advisory Panel is managed by chief executive officer along with four members of the Australian community. The purpose of External Advisory Panel is to render the structured input and consider the issues such as advocacy, education and the diversity.
- Opportunity Initiatives Council- Opportunity Initiatives Council includes senior staff designated by executive committee (Carroll and Buccholtz, 2014).
Commonwealth bank is keeping promoting and helping the community due to which they have the positive record for the support of community. The bank is aware that they take the support from the community due to which they give back to community in terms of benefits. The bank made the investment of $16 million for providing education facility in 2017. Commonwealth bank also provides the assurance to the females in the senior management role. In addition, it provides assistance to more than 5,000 workers to helper in 264 domestic and global community organizations (Commonwealth Bank of Australia, 2017).
As per the above analysis it can be concluded that the corporations must have social responsibilities. The corporate social responsibility is considered as heart and soul of company. It keeps honesty of moral foundation both inside and outside the company. The corporate social responsibility used as shorthand for business contribution to sustainable growth. CSR has a key role in the affairs of the company. Many issues related to development such as education, health, medical, child labour, corruption, poverty, are centralized around the corporate social responsibility in corporation. The corporations having social responsibilities earn more profits and other benefits. Thus CSR should not considered as an act on the behalf of rich big corporations but it is required to be treated as moral obligation on their behalf. As per the corporate social responsibility policy of Commonwealth Bank, it can be concluded that the corporate social responsibility activities help in maintaining brand name worldwide.
Carroll, A. B., and Buccholtz, A. K. (2014) Business and Society: Ethics, Sustainability, and Stakeholder Management. 9th ed. Boston, MA: Cengage Learning.
Commonwealth Bank of Australia (2017) Commonwealth Bank of Australia’s 2017 Corporate Responsibility Report: Strengthening Our Investment 9n Education [Online]. Available from: https://www.commbank.com.au/guidance/newsroom/2017-Corporate-Responsibility-Report-201708.html[Accessed 17/06/18].
Commonwealth Bank. (2018) Annual Report 2017. [online] Available from: https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/annual-reports/annual_report_2017_14_aug_2017.pdf [Accessed 17/06/18].
Commonwealth Bank. (2018) Sustainable Development Report 2017. [online] Available from: https://www.commbank.com.au/about-us/investors/annual-reports.html [Accessed 17/06/18].
Jamnik, A. (2017) The Challenges Of Business Ethics: The Basic Principles Of Business Ethics - Ethical Codex In Business. [online] Available from: file:///C:/Users/System04100/Downloads/RIC_volume_3_issue_3_Anton_Jamnik%20(1).pdf [Accessed 05/06/2018].
Katamba, D., Zipfel, C., Haag, D., and Kazooba, C. T. (2012) Principles of Corporate Social Responsibility (CSR): A Guide for students and practicing managers in developing and emerging countries. Houston: Strategic Book Publishing and Rights Co.
Moon, J. (2014) Corporate Social Responsibility: A Very Short Introduction. New York: Oxford University Press, p. 3.
Morrison, J. (2015) Business Ethics: New Challenges in a Globalised World. London: Palgrave Macmillan, p. 226
Pascoe, M. (2016) Unethical Rio Tinto seeing shares surge up. [online] Available from: https://au.finance.yahoo.com/news/unethical-rio-tinto-seeing-shares-surge-up-034629798.html [Accessed 07/06/18].
PWC (2018) Independent Assurance Report to the Board of Directors of Commonwealth Bank of Australia[Online]. Available from: https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/corporate-responsibility/2017/fy17-assurance-statement.pdf[Accessed 17/06/18].
Reuters (2018) Mongolia end stand-off to build huge copper mine. [online] Available from: https://www.reuters.com/article/rio-tinto-plc-oyu-tolgoi-idUSL3N0Y95MT20150519 [Accessed 17/06/18].
Schwartz, M. S. (2011) Corporate Social Responsibility: An Ethical Approach. New York: Broadview Press.
Tricker, B. (2015) Corporate Governance: Principle, Policies and Practices. 3rd ed. Oxford: Oxford University Press.
Zientara, P. (2017) Socio emotional Wealth and Corporate Social Responsibility: A Critical Analysis. Journal of Business Ethics, 144(1), pp. 185–186.