Discuss about the Business Values Assessment Report for Public Funds.
Fallon (2017) states that corporate social responsibility (CSR) is a practice by a business organization to give back to society in different ways other than their usual goods and services. A popular practice contributes to the organizations’ performance, operations and reputation. In addition, more than just quality products and services attract consumers and more than half the percentage of consumers is ready to pay more money just to get products and services from businesses that are responsible in terms of social activities and environmental conservation practices (Hayzlett, 2016). This paper covers the Corporate Social Responsibility reports of two companies operating in different countries under the same industry.
Companies under discussion in this report are The Punjab National Bank (PNB) of India and HSBC Company. Punjab National Bank is a bank based in Delhi, India, although it has branches in many other parts of the world. It became operational in April 1895 as the first Swadeshi bank ever. This company operates under the banking industry in Delhi, India, and it is owned by the state. The bank has a brand image, which includes 122 years of operation, growing operational profit, low deposit charges and more than 10 crore customers. This bank performs several business activities ranging from collecting taxes, pension schemes, provision of public funds and government saving schemes, among other business activities.
Cases of fraud have been reported and drawn attention to this bank. One of them was issuance of Unauthorized Letters of Undertaking to companies that avail buyers’ credit (Saha, 2018). This is reported to have been done by an employee in collusion with a former employee of the bank.
HSBC is also a financial institution operating under the banking industry. This multinational bank is based in Hong Kong, China. It also has other branches around the world, including Newyork, Paris and London. It was established in 1865 with a purpose of financing trade between Asia and Europe. The HSBC is an organization engaging in mainly banking activities in the banking industry. The services include Global banking and markets, commercial banking, Retail banking and wealth management, and Global private banking.
One of the social performance issues reported on HSBC is value creation. The company acknowledges the importance of providing sustainable value to its stakeholders, but it does not give a broader explanation of the implementation process (Adams, 2015).
Punjab National Bank’s social report of the 2016-2017 financial years covers a range of issues. They include sustainability, corporate volunteering, social investments, health, green initiatives, collaboration, and promotion of sports among other initiatives.
The major themes evident in this report are social welfare and environmental conservation. According to the report, sustainability is one of the goals the bank is working towards but has not been achieved yet. It does not outline ways in which sustainability will be achieved, but rather acknowledges its importance only. Punjab National Bank also ensures that their staff participates fully on activities that involve corporate volunteering. The report however, does not illustrate on any volunteering initiatives they have participated so far. The report is brief and with important details omitted.
In terms of social investments, the bank has contributed through Farmers’ Welfare Trust, Rural Self-Training Centers and Financial Literacy and Credit Counseling centers, by funding and facilitating them. One of the green initiatives facilitated by this bank is environmental conservation. This is through creating awareness on conservation of water, electricity and paper. Campaigns on rain-water harvesting and environment-friendly constructions have been launched. Wind and solar energy have also been promoted in rural areas.
On the other hand, the HSBC Corporate Social Responsibility report covers issues like health, environment, water program, heritage, Malta Foundation and volunteering. It deeply explains the Malta Foundation, which is an initiative by the bank working towards providing quality life and education, promoting sustainable environment and preserving its historical heritage. All the activities by the foundation are covered in details. The tone in this report is clear, confident and concise.
Major similarities in the issues covered are health promotion, volunteering, environmental conservation and social welfare initiatives. The major difference is the theme of HSBC working to preserve the Malta’s historical heritage. For Punjab National Bank, the approach of reporting is pathetic since it covers content with very few details. The themes are more future plans than past achievements. HSBC gives the reader a clear understanding of all its social responsibility achievements, activities and plans.
Sustainable Development Goals are a list of objectives developed by United Nations to be achieved by the year 2030. The main agenda is to transform the world by solving problems faced by humankind to promote quality life, economic development and environmental conservation (Pradhan, et al, 2017).
HSBC bank has been working towards the achievement of Sustainable Development Goals through most of its projects. Quality education is the fourth goal among those aimed for achievement. It is relevant to HSBC in terms of the several initiatives it has launched in support of education. In the Corporate Social Responsibility report by HSBC, it is clearly and explicitly discussed under the Malta Foundation. The International Achieve program is one of the initiatives that sponsor students to re-engage and succeed in education. The approach of this reporting is effective, as it leaves no stone unturned.
The Punjab National Bank has also shown efforts in working towards Sustainable Development Goals. One of its major initiatives is conservation of the environment, a goal covered under climate action. In 2017, Punjab National Bank received a loan worth 0 million from the Asian Development Bank. This loan was meant to fund a project of installing solar systems on rooftops in industries and commercial buildings (Rajesh and Graham, 2017). The program was aimed at aiding the government in its plans to increase solar power generation and reduce carbon emission. This goal is implicitly mentioned in the Punjab National Bank Corporate Social Responsibility report. It is one of the ‘Green initiatives’ mentioned. The initiative aims at promoting wind energy and popularizing solar energy in rural areas. This kind of reporting is so shallow since it leaves a lot of information unexplained.
Social accounting is the process by which a business organization communicates the environmental and social impacts of its economic activities to a particular set of people or the whole community at large. The eight principles according to Zadek are evolution, completeness, disclosure, external verification, continuous improvement, management policies and systems, comparability and inclusivity (Essays UK, 2013).
The eight principles are some of the considerations that business organizations need to put in place when it comes to presenting Corporate Social Responsibility reports. Basing on the completeness principle, Punjab National Bank’s report does not meet it. Issues covered in the report are shallow and incomplete. The Green initiative is not covered in substantial details. The continuous improvement principle does not also reflect in this bank’s report. However, there are principles that have been considered. These include inclusivity, comparability, evolution and disclosure.
On the other hand, HSBC has complied with some of the principles of social quality accounting. The principles include completeness, disclosure, continuous improvement and inclusivity. HSBC Holdings has been participating in social and environmental welfare activities for so many years now. This is evident since their social responsibility report covers a wide range of initiatives undertaken over the years. The report is also externally verifiable because of the explicit explanations provided in the report. Contrarily, management policies and systems have not been mentioned in the HSBC Corporate Social Responsibility report. The report is inclusive of all the activities undertaken by the company. This ranges from its initiatives towards improving education, promoting health, campaigns to conserve the environment and funding to improve the livelihood of members of the society (Elias & Johannesson, 2013).
The mission of Punjab National Bank is ‘creating value for all its customers, investors and employees for being the first choice for all the stakeholders.’ Its vision is to position itself as the most preferred bank for customers, the best place to work in for employees and a benchmark of excellence for the banking industry. Business principles set by the bank include; respecting, protecting and restoring the environment, responsibly engaging in influencing the public and regulatory policy, supporting inclusive growth and equitable development, engaging and providing value to customers responsibly among other principles.
Being one of the business principles, environmental conservation is a practice, which the bank has shown efforts to respect. In its social responsibility report, it has implemented ‘Green practices’ which aim at conserving resources and the environment. Contrarily, the bank has reported cases of fraud in some of its branches (Bloomberg, 2018), incidents which violate the bank’s vision of being a benchmark of excellence.
HSBC’s vision is to be one of the world’s great specialist banking groups, driven by commitment to its core philosophies and values. Its mission is providing a comprehensive range of financial services, including commercial banking, private banking, corporate investment banking and personal financial services (Kolk, 2010). The business principles governing HSBC include outstanding customer service, effective and efficient operations, strong capital and liquidity, conservative lending policy, and strict expense lending. All the business values and principles stated by HSBC only aim at its internal operations. This means none of the values is aligned to their Corporate Social Responsibility report.
Following the discussion on the two companies, HSBC is more determined and focused on working towards the Sustainable Development Goals of the United Nations. This is evident from its social responsibility report. Its embrace to social welfare initiatives and efforts to implement their plans justifies this point. Programs like the Malta Foundation involve different kinds of community and social empowerment. In addition, HSBC has set aside $100 billion to facilitate clean energy and low-carbon technologies up to 2025 (Hermes, 2017). This intends to contribute to the United Nations’ goal of climate action and environmental conservation.
Furthermore, the social performance reports produced by the two companies explain how different they are despite being in the same industry. Punjab National Bank has no confidence in its Corporate Social Responsibility report from the way the content is presented. The themes covered in the report are discussed very briefly and implicitly. Most of the initiatives and programs are mere plans. Acknowledgements have been made on important factors that can be beneficial to the society. However, the report does not include a plan on how the factors can be implemented.
From the influence of the discussion, there are no fraud reports by HSBC. This is a point to disagree on since the company faced fraud and money laundering charges a few years ago. The accusations involved the HSBC Swiss branch helping its rich clients to evade payment of tax (Treanor, 2014). Most of the negative social performance and ethics have been omitted in these companies’ performance reports.
Conclusion
Precisely, Corporate Social Responsibility is an important tool that can be used by a business organization in developing itself. Having an active and focused Corporate Social Responsibility can help in documenting a good report worth reading. In modern days, investors, and other customers use a business’ social performance report as the basis on which they choose where to invest. A good and up to date social responsibility report gives a competitive advantage to an organization. Basing on the companies discussed here, HSBC stands a higher survival chance in competition.
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