Corporate social responsibility (CSR) is one of the primary aspects that need to be followed by any company in order to perform its operations and deal with its customers with transparency and honesty (Tai & Chuang, 2014). The banking sector is one of the most important sectors that directly deal with the public in general. Moreover, as the banks are associated with the growth and development of the financial services and the financial resources, an additional responsibility of maintaining transparent and corrupt free operations so that it does not affect the customers as well as the economy of the nation. Of late, several reports of bank frauds and corrupt operations in Australian banks and financial services have come forward, which reflects the danger that the Australian society is in (Irvine, 2018). Moreover, these aspects also highlight the violation of the corporate social responsibility for which the banks are responsible. In this essay we are going to understand the idea of corporate social responsibility by analysing the case study of the actions and revelations of the Royal Commission which has been bestowed with the responsibility of investigating into the activities of the Australian banks.
The Royal Commission was appointed by the Australian government in March, 2018 to investigate and monitor the irregular events and present a detailed report to the government highlighting the actions that are required (Hutchens, 2018). Of late the investigations have highlighted several big banks and financial services such as the Commonwealth Bank and the AMP having been involved in financial malpractices. According to me, these frauds and improper practices have been going on for a long time. My understanding of the report says that such type of frauds which include improper charging of fees for financial services is a breach of the company policy, which cheats the customers of their rights and usurps improper amounts of money for personal benefits. According to my understanding of CSR, the bank poses immense responsibility towards the society as the customers are financially dependent on the banks and so is the economy (Ni & Van Wart 2015). It has been seen that the big four banks of Australia, namely, the Commonwealth Bank, Westpac, ANZ and NAB has $4.6 trillion in assets, which is approximately two and half times more than the $1.8 trillion Australian economy (Hutchens, 2018). Such immense wealth reflects the impact these banks can have on the economic sector of the country.
As the initial reports by the royal commission have highlighted the fraudulent activities of the bank, several high profile managers of the banks have stepped down from their positions accepting that the banks have been involved in improper activities (Hutchens, 2018). This aspect reflects that the banks have not been able to maintain their corporate social responsibility. I believe that strict punishments which are being considered by the royal commission must be enforced by the government so that the bank employees understand the severity of the issue (Irvine, 2018). These strict actions can also imbibe fear into the banking employees from attempting any further steps of fraudulent activities.
I believed that the primary motive of the Corporate Social Responsibility (CSR) of a company was to increase its resources and contribute to the society, but not involve itself in any fraud and deceptive activities (Friedman, 2007). I believed that the companies have a huge amount of resources at their disposal, which requires to be enhanced by different policies that can be adopted over a period of time. All the banks, similarly are business houses and they require to profit from their operations in order to operate their large infrastructure smoothly. Profit-making requires the bank to adopt several policies which can promote the different financial services and add additional services. However, it has to be taken care that these services are strictly profit making strategies but on a transparent scale.
However, in the recent times, this idea of CSR has changed with the events that have been reported all over the newspaper regarding the bank frauds. Several activities have been stated by the CEOs of banks such as Commonwealth bank and AMP, that they had been previously involved in improper activities such as charging improper fees from the customers for giving them financial services (Hutchens, 2018). These activities have increased the rate of corruption in the Australian financial services, where bribery and false transaction of funds on the basis of high security assets have increased. The banks have been involved in actions such as improper transactions of loans to unsuitable persons on the basis of influence from the higher sector. These activities defeat the purpose of the CSR, as they violate their responsibility towards the customers of providing them with fair services and justified regulations (Carroll, 2015). Moreover, such bribery and corruptions encourage the customers too of being involved in the fraudulent activities. The impact of these frauds have a deeper effect on the economic condition of the country which gets robbed of its revenues and taxes due to the under the table transactions.
After considering all these events my view towards the CSR has changed a lot. I believe that CSR has a much greater role just than the profit of the company and giving back to the society. CSR involves the company to prioritize the customers and the economic development of the country at the same time it thinks of its profits (Harrison & Freeman, 1999). The companies such as the banks need to be more responsible towards the society as its operations involve financial transactions which are very important for the building of any economy. An economy with successful banks has a large amount of wealth deposited, which can help the government to be involved in different developmental activities. Similarly, the customers are also benefited from fair banking practices. They do not require to pay more for the financial services and also does not have to depend on unfair means to get their work done.
The investigators of the royal commission have been furious over the condition of the banking sector in Australia in the recent times. They have been harsh while addressing the bank officials as their investigations have highlighted several misleading activities in which the banks have been involved (Irvine, 2018). I believe that the call for stricter punishments and criminal prosecutions are necessary for the banks to understand and defer from improper practices in the future. These activities should have been implemented much before so that so much loss of wealth would not have taken place. Moreover, the royal commission, which is now only involved in the banking sector is an alarming factor for the other industries and non-governmental organization who are involved in normal business or beneficiary management. These companies, if involved in such fraudulent activities can check their policies and alter their regulations accordingly to deter away from the misdeeds. CSR, of every company, including the banks should always look towards the benefit of both itself and the customer that it serves. CSR is a result of the mutual benefit system of the business policies which help both the entities (Suliman, Al-Khatib & Thomas, 2016). The survival of one of the entities is not possible without the other. Hence, if one of them is continuously exploited by the other, it will result in the exhaustion of resources in the future.
The essay helped to understand the different corrupted methods that had been adopted by the banks and how the royal commission is trying to monitor and check them in the future. The further analysis of the case study has also helped me to understand the different policies of the CSR and how they are responsible in the successful operation of a firm. It also helps in maintaining the reputation of the firm.
References:
Carroll, A. B. (2015). Corporate social responsibility. Organizational dynamics, 44(2), 87-96.
Friedman, M. (2007). The social responsibility of business is to increase its profits. In Corporate ethics and corporate governance (pp. 173-178). Springer, Berlin, Heidelberg.
Harrison, J. S., & Freeman, R. E. (1999). Stakeholders, social responsibility, and performance: Empirical evidence and theoretical perspectives. Academy of management Journal, 42(5), 479-485.
Hutchens, G. (2018). Banking royal commission: all you need to know – so far. Retrieved from https://www.theguardian.com/australia-news/2018/apr/20/banking-royal-commission-all-you-need-to-know-so-far
Irvine, J. (2018). ‘Stop being bastards’: how the royal commission could reform banks. Retrieved from https://www.smh.com.au/business/banking-and-finance/stop-being-bastards-how-the-royal-commission-could-reform-banks-20180921-p50577.html
Ni, A., & Van Wart, M. (2015). Corporate Social Responsibility: Doing Well and Doing Good. In Building Business-Government Relations (pp. 175-196). Routledge.
Suliman, A. M., Al-Khatib, H. T., & Thomas, S. E. (2016). Corporate social responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the Future, 15.
Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.
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