Corporate Social Responsibility In Australia

Your task is to provide a 1200 words analysis on BankWest Corporate Social Responsibility case study provided in Blackboard (under the Resources link).  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.

Introduction

BankWest is an iconic Western Australian financial services institution. In 1995 BankWest a Government-owned Bank was 100% acquired by the Bank of Scotland, a 300-year-old major UK bank. In 1996 the bank went public where 50% of shares were allotted to the public. For the last two years, Bankwest was facing the Global Financial Crisis and they had merged with Commonwealth Bank.  Bankwest had also increased their loan interest rates above the rate set by the Central Bank. The changes in the lifecycle of the Bank were affecting its operations and Brand reputation.

Problem definition

The parent company Commonwealth Bank was already involved in CSR, therefore, it was imperative for BankWest to introduce the CSR strategy in Australia. It would improve the financial viability and also overcome the operational problems. BankWest's Head of Strategy Amanda and Managing Director, Jack Silverton had clarity about rolling out the CSR strategy for the bank. The problem in hand was to convince the different Divisional heads of the Bank to implement the CSR strategy. It was going to be tough as the heads were unconvinced of the costs versus benefits of the particular initiatives.

Evaluation of Alternatives

Definition of the Business purpose

The CSR strategy needed to be integrated with Vision, principles, process, and procedures of the Bank. It was agreed to have a dedicated Team or Governance structure which would steer and embed the CSR agenda.

The term Triple Bottom Line was coined by John Elkington. 'He called them three Ps: people, planet, and profit, or the “three pillars of sustainability”(Elkington, 1998). This is an indication of the purpose of Business is not only about making profits but also showing the concern for Social and Environmental aspects. These three Ps are measured as Economic, Social and Environmental aspects. Bankwest have indicated their CSR value or 3P's in exhibit 2 of a case study;

• People or Staff engagement as being able to attract and retain Staff. It also means to improve the employee’s Productivity and boost their satisfaction and morale.
• Social or Community impact to Attract and retain customers and colleagues. 
• Environmental impact to lower energy consumption and waste output. 

To determine whether to go ahead with the CSR implementation

CSR was defined by World Business Council for Sustainable development as 'a business commitment which contributes to sustainable economic development for the benefit of the employees, their families, the local community and the society at large' (Kotler & Lee, 2005). This means that companies aspiring to operate in the long run will have to take show a concern for all the stakeholders. In order to go ahead with the CSR, strategy company should be convinced about the decision and identify what are the drivers for implementation.

Porter and Kramer (2006) explain 'the four prevailing justifications for CSR are explained as being a moral obligation, sustainability, license to operate, and reputation. Finally, reputation is used by many companies to justify CSR initiatives on the grounds that they will improve a company's image, strengthen its brand, enliven morale and raise the value of its stock'.  (Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility – HBR). Similarly, BankWest has identified CSR initiative as essential for the continuing development of its external brand. 

Analysis of the cost benefits analysis 

A Benefit cost ratio (BCR) indicates the benefits realized versus the costs to execute the project as indicated in Exhibit 2 of the case study. Phil Hodkinson, Finance Director indicates 'for every dollar invested in CSR we will make three dollars back. 

The following benefits were anticipated for BankWest;

• CSR would help in improving the Brand reputation of the Bank with the external customers and suppliers
• CSR would result in internal branding and improve the internal culture. 
• Since the Bank was listed on the Australian Stock Exchange it was important for BankWest to improve their reputation with the shareholders.
• A set of core values called Guiding Principles were introduced to conduct responsible business.