Westpac is the first and the oldest bank of Australia. It is the largest bank in New Zealand and major banking organization in Australia. Westpac offers a broad range of institutional, consumer and business banking services as well as the wealth management services.
The financial services portfolio of Westpac is focused upon the vision “To be one of the world’s great service companies, helping our customers, communities and people to prosper and grow.” (Westpac, 2018) Westpac is a front runner in corporate social responsibility and the company continues to display strong management of the risks and opportunities of sustainability.
Westpac have strategic capabilities. The management processes of Westpac are impressive. Westpac has showed their ability to seek the profit opportunities through adopting the enhanced CSR practices. Westpac is a leader in carbon finance and the climate change in Australia. It supports the climate initiatives and trade renewable energy and carbon credits certificates by its focused environmental markets group. In order to handle the main issue, it has implemented wide range of initiatives for the purpose to address the financial exclusions (The Banker, 2018).
Components of corporate social responsibility practiced
For Westpac, sustainability is an operating principle for maximizing the social, environmental and the economic value. The sustainable development is the goal of the bank.
Social: the sustainability strategy of the bank is implemented through providing the finance and support. The bank is focused upon creating innovative partnerships in an effective manner with the industry, government and the social sector for creating more affordable long-term options related to housing, which will be a continuous and an important objective for the bank. The bank has established foundation that provides monetary support to NGOs working for social welfare. The bank provides health banking benefits to the customers and the community.
The bank reviews all the products and the services that are offered to the customers through engaging with the customers in an effective manner. The job opportunities and the training are also provided to the employees of the bank. The bank became treasurer for Australian Gas Company in the year 2017. Social impact framework was also developed by the bank in the year 2015. The bank also launched Socially Responsible Investment (SRI) product in the year 2000 in Australia.
Environmental: Westpac is the first bank to publish environmental policy. The bank issued Westpac Climate bond and also launched energy efficacy finance program which was in partnership with the Clean Energy Finance Corporation in the year 2016. The environmental policy is followed by the bank continuously. The bank joined the Australian Greenhouse Challenge in order to measure as well as manages the greenhouse gas emissions in 1996 (Westpac, 2017).
Economic: The financial performance of the bank in the present time is good. The bank’s net profit has increased by 7%. The digital transformation of the bank enhanced strategically. The returns of Westpac in the year 2017 are 13.8%. The shareholder return of the bank is 14.5 %.
Ethical: the highest standards of the corporate governance are followed for all the activities. The regular review and the improvement of the governance practices are performed. The bank also contributes to overseas and local debates related to best practices of corporate governance. The bank pays and rewards the executives, ensure that the market is informed, control and manage risks. The auditing and the verification practices are followed in order to manage the financial reports and present them to the stakeholders (Westpac, 2018).
Legal: Westpac is the second largest tax payer with a rate of 30.4% tax. The bank pays a tax of $ 3.5 billion. All the rules and the regulations are followed by the bank. The bank has also received the awards for its practices of sustainability (Westpac, 2017).
Critical analysis of CSR Reporting
The stakeholder theory defines that the aim of the business should be to create value for the stakeholders of the business, it is important to consider the suppliers, customers, communities, employees and the shareholders of the business. This theory helps in establishing the connection between the business and its stakeholders. It is argued by the theory that it is important for the organization to create value for all the stakeholders (Stakeholder Theory, 2018).
Some criticisms of the stakeholder theory are also presented. Mainly, it is important and ethical to involve the people who are affected by the organization and the actions of the organization. But, it is unethical when it breaks fiduciary duty of the manager towards the shareholders which is called as Stakeholder Paradox. Sometimes, when the organization follows the stakeholder theory, it is not possible for the organization to make profit and attain the growth (Stakeholder Map, 2018).
Westpac is committed to the transparent, best and regular reporting for enabling the stakeholders of the bank to evaluate and compare the performance. The bank recognizes the importance of providing the regular reports of the performance to the stakeholders. The bank applies best and external practice standards for the reporting. The review of the reporting is performed continuously in order to make sure and meet the requirements of the stakeholders of the bank and the investors as well (Westpac, 2018). In context to the annual performance reporting, an integrated approach is used by the bank for the reporting of the performance related to the different dimension of business such as environmental, governance, financial and social aspects.
Global Reporting Initiative G4 Reporting Framework, AA1000 APS and Independent Assurance are the practice standards that are used by the bank for developing annual sustainability reporting. Global Reporting Initiative G4 Reporting Framework has been applied by the bank since 2012. After that in the year 2014, G4 reporting framework of GRI was adopted by the bank that includes the disclosures related to the financial services in order to bring the focus upon the important areas that are important. It helps in providing the detailed information to the stakeholders of the bank. It helps in providing the benefits to the stakeholders. The purpose of the bank is to serve the customers of the bank in an efficient manner, through the financial services of wide variety that is offered by the bank.
In this framework, the disclosure related to the analysis and the strategy, ethics, governance, integrity and the other extensive data related to the performance of the bank related to important material are reported. The principles are implemented by the bank in order to refine the content of the report through application of G4 framework. The inclusiveness of the stakeholder is one of the principles that is followed by the bank. The process related to the engagement of the stakeholders is also reported by the bank. Along with this, the influence of the engagement upon the content of the report is also presented in the report of the bank. In context to the sustainability, the bank outlines sustainability in which the objectives are set as well as reported on progress against the objectives (Westpac, 2018).
The input legitimacy is related to functioning of an institution that includes how the members in the organization are selected, how the power is exercised and the procedures that are followed by the organization through which the decisions are made. Output legitimacy is related to the assessment by the public for the relevance and the quality of the performance of the institution. Both forms of legitimacy state the assessment by the public (Potter, 2008). The bank develops the reports that provides with all the information related to the performance of the bank in an effective manner, which provides the ability to the public to assess the performance in an easier manner. All the strategies that are followed by the bank, the information related to the members of the bank and the power holders in the bank are also presented in the annual reports of the bank.
Impact of CSR Components
The CSR components of the bank help in maintaining the reputation of the bank in the eyes of the customers and the other stakeholders of the bank. The experiences of the stakeholders helps in evaluating the reputation of the organization hence, the overall evaluation by the stakeholders can help in deriving the corporate reputation (Ramachandran, 2015).
The local community is affected by the corporate social responsibility components of bank. The consumers of the bank are highly influenced by the activities that are performed by the bank in context to CSR. It also affects the perception of the community towards the bank which can eventually help in enhancing the bank in terms of economy (Mohr LA, 2005).
The company with strong ethical values helps in increasing the value of the bank in the eyes of the local community. This increases the loyalty of the consumer. CSR make the bank more attractive and attracts the customers towards the bank. The environmentally conscious decisions of the bank lead to lower waste as well as lower costs. The local community gets impacted when they are able to obtain the job opportunities. This helps in increasing the trust upon the bank (Ali et al., 2010).
The bank also performs the activities related to the welfare of the community through taking the social initiatives for the benefit of the community. This helps in enhancing the reputation of the bank highly. It also helps in satisfying the stakeholders of the bank, which is important for survival.
Conclusion
CSR activities are important as it helps in enhancing the reputation. Westpac undertakes the activities related to all the components of CSR such as social, environmental, legal, economic, and ethical. The bank has also received awards for its CSR activities. To ensure transparency, banks provide details of all its CSR activities on its website. The stakeholder theory is important in order to create the value for the stakeholders and satisfy them simultaneously. The bank is contributing to welfare of local communities by providing employment opportunities and by contributing to NGOs throughout Australia. The bank has also taken several measures to reduce environmental impact through climate action plan.
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Potter, A., 2008. Two Concepts of Legitimacy.
Ramachandran, R., 2015. Do Companies Benefit by CSR? Journal of Research and Development, 3(2).
Stakeholder Map, 2018. Stakeholder Theory.
Stakeholder Theory, 2018. About the Stakeholder Theory.
The Banker, 2018. Corporate Social Responsibility: Westpac. The Banker.
Westpac, 2017. 2017 Westpac Group Annual Review & Sustainability Report. Westpac.
Westpac, 2017. 2017 Westpac Group Sustainability Performance Report. Westpac.
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Westpac, 2018. Corporate responsibility and our business.
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