A new platform of employee engagement is being created.
Trying to regain economic traction has been especially hard for the banking industry whose reputation has been tarnished after a host of financial scandals, such as the mortgage crisis and the massive credit crunch that crippled the US economy. Some banks are beginning to use corporate social responsibility (CSR) initiatives to help rehabilitate their image and improve profitability.
Northern Trust, an investment management and fund administrator, recently made the commitment to begin exploring the benefits of CSR. This week, the company unveiled its first CSR report outlining its global initiatives for 2010 and targets for 2011. In an industry that is under high scrutiny, this is a major move toward establishing greater credibility. According to the Global Reporting Initiative (GRI), a set of guidelines widely used in CSR reporting, Northern Trust is only the second bank in the US to have its report checked.
‘The banking industry, probably more than any other in recent years, has seen how risky it can be to be only concerned with minimal legal compliance to the detriment of stakeholder interests,’ says Michael Torrance, a lawyer at Norton Rose Group’s Toronto office. Torrance advises firms on international standards of corporate responsibility and sustainability as they pertain to corporate governance.
Torrance says the newly enacted Dodd-Frank Act, and other US legislation designed to reduce corruption and increase accountability, suggest that all companies will face increasing pressure to improve disclosure and transparency going forward.
‘This move by Northern Trust can provide it with a competitive advantage and allow the corporation to enter markets and maintain business, and even help it avoid greater scrutiny from regulators,’ says Torrance. ‘Its competitors will no doubt be watching to see if this is something they should be doing as well [and this] could also be important from a business perspective because many of the risks associated with CSR translate into operating risks that can affect profitability.’
Some of the measures highlighted in the Northern Trust report include its 30 percent reduction in global paper usage; 180,000 volunteer hours donated to organizations by Northern Trust partners globally; $45 million spent with minority and women-owned firms in the US; $14 million cash contributions to charities and civic organizations worldwide; and its London office operating 100 percent on renewable energy, according to the corporation.
John Spinnato, general counsel and vice president of CSR for Sanofi-Aventis North America, says CSR initiatives can have a number of positive effects on company productivity, culture and employee morale.
‘Reporting forces an organization to be aware of its practices and how well they are being implemented from the strategic to the operational level,’ he says, adding that ‘When employees are donating time for communities it builds a culture within the organization, which is critical because it allows employees to be more engaged and this creates a comfortable working environment.’
Spinnato also notes that employees want to take pride in their every day responsibilities. ‘If employees are engaged then the whole ethical culture of an organization will improve.’
Experts also say CSR reporting gets companies more prepared for going through the process of submitting to new regulations that may arise in the future. The more disclosures the company makes, the better it should be at making them. Having a third-party weigh in on a firm’s CSR efforts is always a good practice that firms should adopt to help reap in more financial rewards.
