The objective of Corporate Social Responsibility (CSR) is to put obligation on the firms to conduct their business operations as per the ethical ways. Under the process of CSR, firms must take into account the impact of their businesses on social, economic, environmental and human rights factors (Schwartz 2017). Under the process of CSR Reporting, firms are required to disclose the necessary information to the target groups regarding their performance in the sustainability areas (Frederick 2016). This report aims in the analysis and evaluation of the crucial dimensions of CSR reporting of National Australian Bank (NAB). The report also analyzes three CSR related theories as the motivation of CSR reporting.
As per the above discussion, it is needed for the companies to provide all the required information to the shareholders about their sustainability performance. In the general aspect, companies are needed to disclose information about certain sustainability aspects in CSR reports; they are People, Community, Environment and Governance (Asif et al. 2013). It is also needed for NAB to take into consideration all these aspects in the process of CSR reporting.
Under the aspect of people factor in CSR reporting, NAB has considered their employees, customers and community people. NAB has handled this aspect by taking into consideration the feedback of the customers with the aim to cater to the banking needs of their customers; such as hardship assistance, speedy resolution of the customer complaints, independent customer complaints, hardship support through the branch network and others (nab.com.au 2018). In case of the employees and other organizational staffs, NAB has ensured the health, safety and wellbeing of them by taking various health and safety initiatives. After that, NAB has shows their commitment towards gender equality at workplace in all aspect of business by the year 2020. Moreover, NAB has handed this aspect of CSR reporting by taking various other initiatives like effective training for their career development, pat equality, LGBTI+ and others (Tai and Chuang 2014).
In case of the community aspect in CSR reporting, NAB has handled this aspect by taking into account certain community related issues such as financial inclusion and resilience, social coherence, environmental wellbeing and others. At the same time, NAB has shown their commitment towards the aspect of community development by setting Sustainability Development Goals (SDGs) set out by the United Nations General Assembly as a part of their 2030 Agenda. Some crucial factors that NAB has considered for handling community development are no property, zero hunger, good health and well-being, quality education, gender equality, affordable energy and many others (nab.com.au 2018).
With the aim to handle the sustainability aspect of good governance in CSR reporting, NAB has implemented effective governance systems as it plays a critical role for the management of business risks and for providing finance to the customers in responsible basis. The governance mechanism of NAB includes the management of climate change, issues in human rights and other risks in the areas of loan books (Deng, Kang and Low 2013). Lastly, under the environmental aspect of CSR reporting, NAB has handled this by taking an initiative of environment financing that includes the pledge of the bank for delivering $55 billion by the year 2025. In addition, since the October 2015, NAB has provided $23 billion in the process of environmental financing (nab.com.au 2018).
The investors can apply certain CSR relate theories in order to find the motivation of the firms for preparing and presenting the CSR reports. In this context, three specific theories are Legitimacy Theory, Stakeholder Theory and Institutional Theory. The following discussion shows the application of these theories for finding the motivation of NAB for CSR reporting.
Legitimacy Theory: Wide use of this legitimacy theory can be seen all over the world in order to explain the disclosure of social and environmental performance information of the firms. According to the principles of this particular theory, the aim of the business organizations is to continue their operations within the norms and bonds of their respective societies (Fernando and Lawrence 2014). This perspective indicates towards the voluntary requirement of the firms to disclose their business operations having impact on the societies. Hence, according to the legitimacy theory, the effort to operate under the social bond and norm puts the obligation on NAB to disclose the information of their business activities having effects on societies, environments and communities. For this reason, it can be considered as a major motivation for NAB for CSR reporting (Chan, Watson and Woodliff 2014).
Stakeholder Theory: The connection of this stakeholder theory can be seen with the organizational management and business ethics. According to the principles of stakeholder theory, it is the obligation on the firms for the protection of the stakeholders’ interests in the companies (Brown and Forster 2013). Positive relation between this stakeholder theory and CSR reporting can be seen due to the presence of the belief that the presence of business ethics works as a major part to motivate the firms in the process of various sustainability activities. For this reason, it is needed for the business organizations to continue their business operation ethically for providing satisfaction to the key stakeholders of business like shareholders, customers, community and others (Cordeiro and Tewari 2015). In the presence of all these reason, it is also needed for NAB to ensure the disclosure of the information of this sustainability performance through CSR reporting. Hence, it can be considered as a major motivation for NAB for CSR reporting.
Institutional Theory: According to the concept of institutional theory, the institutional environment or filed governs the behavior of the business organizations. There are three major components of the above-mentioned institutional environment; they are organizations’ social context, business activities of the organizations and organizations’ social relationship (Marano and Kostova 2016). In the recent years, the concept of this theory indicates towards a crucial aspect that there has been a growing tendency for the companies to match the tendency of CSR reporting; and the matching of this aspect can be seen in NAB. In this context, it requires to mention the fact that NAB has prepared and presented their sustainability report as per the principles of Global Reporting Initiatives (GRI) and one major aim of this is to stay operating in the business environment of Australia (Meyerand Höllerer 2014). For this reason, it has become a major necessity for NAB to disclose the information about their performance in different sustainability aspects.
As per the above discussion, NAB has certain components in the process of CSR reporting and all these aspects have major positive impact on the communities of the country. The aim of NAB is to become a trusted member of the community by taking into consideration the major community issues (nab.com.au 2018). In the recent years, NAB has taken their community investment initiative in the forms of community partnership, volunteering program, grand, donations and local sponsorship. In the year 2018, NAB has made an investment of $54.4 million in various community activities and it is more than $10 million from the last year. Increase in this investment came from the increased investments in NAB’s microfinance programs with partnership with Good Shepherd Microfinance. In the current situation, NAB has a workplace of 33,000 people. The employment of NAB includes two days of volunteer days in a year with a non-profit organization; and NAB contributed 15397 volunteer days in the year 2018 (nab.com.au 2018).
In addition, NAB has contributed donation up to $1200 per employee and more than 550 no-profit organizations have received this donation in the year 2018. NAB has been majorly contributing towards the community development with the help of NAB Foundations that is a philanthropic arm of the bank supporting the new and innovative ways for addressing the social issues. On every year, this foundation is committed to provide six grants worth $1.6 million with the aim to address the issues in regional communities, environmental problems like water access, water quality, climate change and others (nab.com.au 2018). NAB considers domestic and family violence as silent issues and they address this issue by raising awareness and critical support to help their customers, employees and communities. In 2018, NAB progressed towards their 2025 science-based GHG emission target by delivering 12 percent reductions from 2015. NAB has also extended their support towards the progress of the indigenous community, development of rural communities by employing more than 2000 people from rural communities, helping the drought affected people and others (nab.com.au 2018).
Conclusion
It can be seen from the above discussion that NAB has handled the required aspects of CSR reporting by addressing the sustainability issues in the areas of community engagement, people development, environmental issues and government issues. The above discussion also shows that the application of the CSR related theories can identify the motivations behind CSR reporting. It can also be observed from the above discussion that NAB has made major contribution towards the development of their communities with the help of various sustainability initiatives. These aspects show the responsibility of the bank towards their suatinabiity issues related to their business operations
References
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Brown, J.A. and Forster, W.R., 2013. CSR and stakeholder theory: A tale of Adam Smith. Journal of business ethics, 112(2), pp.301-312.
Chan, M.C., Watson, J. and Woodliff, D., 2014. Corporate governance quality and CSR disclosures. Journal of Business Ethics, 125(1), pp.59-73.
Cordeiro, J.J. and Tewari, M., 2015. Firm characteristics, industry context, and investor reactions to environmental CSR: A stakeholder theory approach. Journal of Business Ethics, 130(4), pp.833-849.
Deng, X., Kang, J.K. and Low, B.S., 2013. Corporate social responsibility and stakeholder value maximization: Evidence from mergers. Journal of financial Economics, 110(1), pp.87-109.
Fernando, S. and Lawrence, S., 2014. A theoretical framework for CSR practices: integrating legitimacy theory, stakeholder theory and institutional theory. Journal of Theoretical Accounting Research, 10(1), pp.149-178.
Frederick, W.C., 2016. Commentary: corporate social responsibility: deep roots, flourishing growth, promising future. Frontiers in psychology, 7, p.129.
Marano, V. and Kostova, T., 2016. Unpacking the institutional complexity in adoption of CSR practices in multinational enterprises. Journal of Management Studies, 53(1), pp.28-54.
Meyer, R.E. and Höllerer, M.A., 2014. Does institutional theory need redirecting?. Journal of Management Studies, 51(7), pp.1221-1233.
Nab.com.au., 2018. Sustainability Report 2018. [online] Available at: https://www.nab.com.au/content/dam/nabrwd/documents/reports/corporate/2018-sustainability-report.pdf [Accessed 25 Nov. 2018].
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