Discuss about the Corporate Social Responsibility in Banking.
Corporate Social responsibility is a self regulation initiative by an organization to protect and promote sustainable environment and social well being of the locality that it operates (Allen and Craig, 2016). Corporate social responsibility (CSR) enable organizations integrate with the society with an aim of achieving sustainable developments. CSR involves initiatives to conserve the environment and projects that promote social wellness. CSR in banking refers to initiates that promote responsible investing, human rights protection, responsible lending and sustainable environmental policy in it operations and partners. Banks have a central role in the economical life of the companies and have capacity to influence their actions toward sustainable environment (Cristóbal, Albo and Irabien, 2010). Banks offer financial lending services in the society that are used in investing in several projects that can degrade the environment.
The following report will discuss the Commonwealth Bank of Australia Corporate Social Responsibility policy on carbon footprint. The report will analyze the Bank’s policy to reduce the carbon emission in the environment and the ability of the policy to reduce it carbon footprint. The report will also compare the Bank’s initiates and policies with HDFC Bank in India on corporate social responsibility in reducing carbon footprint.
Carbon footprint refers to amount of greenhouse gas emissions that can be associated to a certain organization (Carbonfund.org, 2017). Commonwealth Bank is one of the biggest and oldest banks in Australia with headquarters in Sydney. The Bank has several branches around the world and target customers around the globe. The Bank is involved in financing large projects in mining, agriculture, manufacturing, electricity, transport, manufacturing and property developments. These projects financed by the bank lead to high emission of carbon gases to the environment. This shows that the bank is related to the carbon emission because it finances the projects. These carbon emissions are attributed to the Bank’s carbon footprint on the basis of lending. This shows that the company has two sides of the carbon emission; one from the lending services that the bank offers to companies and the self carbon emission from its operations.
Commonwealth bank has adopted Global Carbon Disclosure regulation that requires transparency and disclosure of the carbon footprint from its operations and lending portfolio when reporting in the annual report. This CSR involves reporting all carbon emission that are associated with the business lending portfolio in it financial year while giving the annual report. This policy requires the bank to prepare a detailed report that shows the impact of their lending to carbon emission (Commbank.com.au, 2017). This policy also requires companies to report their carbon emission report to the bank. The bank uses this information to identify and act on opportunities that can improve its carbon performance.
The Bank recognizes it role in facilitating developments and growth through funding. The Bank recognizes it influence in funding projects that have impact on the environment. Enabling and facilitating developments is the major role of the bank and all development have carbon footprint. The Bank has therefore enacted strict environmental principles and instituted a social and governance lending commitments and Equator principles to be followed when approving funding. This means that companies seeking funding from the Commonwealth Bank will have to meet the environmental principles and abide by the social and governance commitments. These measures are meant to ensure the Bank influence carbon emissions by exercising responsible lending.
The Bank has rolled out solar energy to seventeen branches across Australia. These solar panels have saved 40% energy and saved 60% cost. The Bank is committed to generating it own electricity to replace the current usage of non renewable electricity. This solar program initiative is reducing the amount of carbon footprint of the company (Commbank.com.au, 2017). This initiative will reduce the carbon emission that who have been emitted to produce non renewable electricity.
The Bank has leased new offices at Australian Technological Park from 2015. The bank is moving its operations to buildings that are designed to achieve 5 Star NABERS Energy and six Star Green Star rating. The buildings are energy and water efficient. These buildings are built in modern designs that conserve the environment by reducing carbon emission and water wastage (Chakraborty and Roy, 2013). This initiative of the bank is meant to reduce the carbon footprint. This initiative will enable the Bank act responsibility to the environment.
The Housing Development Finance Corporation Limited (HDGFC) Bank was started in 1994 and was amongst the first Banks in India to get approved by Reserve Bank of India (RBI). The HDGFC bank has headquarters in Mumbai, India. The Bank has well developed sustainability policy to legislate carbon footprint. The Bank has a business philosophy that is strives to maintain balance between capita, nature and community (HDFC Bank.com, 2017). It believes in environmental conservation for sustainable business.
The business initiatives to carbon footprint reduction are as follows. First the company has introduced paperless banking. The ATMs of the banks have become paperless leading to reduction of carbon footprint. The company has initiated multichannel delivery that uses Net-Banking, Mobile-Banking and Phone-Banking. This initiative reduces the carbon emission that would be emitted in operations and customer travel to premises. Secondly, the bank has initiated solar ATMs in its efforts to reduce environmental footprint. The ATMs use rechargeable Batteries that use solar energy. This has reduced the use of conventional energy. Third, the Bank has introduced a energy management module in it 100branches across major cities. This program monitors and controls electricity usage and minimizes wastage. The program uses sensors to monitor. The program is also used to monitor diesel consumption in the DG sets. Fourth, the company has voluntary reports it carbon Disclosure as required by Global Reporting Initiatives on disclosing Carbon Emission. The Bank has been able to finish CDP leadership index in 2014-2015 financial year. This initiative help the Bank recognize it carbon emission and take responsibility by acting on opportunities to reduce it carbon footprint performance. Lastly, the HDFC Bank has complied to sustainable plus for corporate sustainable label. This involvement help the company conduct it ESG analysis and measure performance in terms of sustainability. This has enabled the Bank to be rated as Sustainable plus Gold Label.
From the two accounts outlined in this paper, Commonwealth Bank and HDFC Bank are conscious about the carbon footprint performance in their operations. Both Banks have initiatives aimed at reducing carbon emission to the environment (Svensson and Wagner, 2011). Both institutions are using solar energy as an alternative source of energy to reduce conventional electricity usage. The Banks also committed to disclosing their carbon footprint performance. On the contrary, it clear that the banks focus is different. Commonwealth Bank of Australia has great focus on the influence of their lending to carbon emission. The Bank requires companies being funded to abide to strict environmental principles and show commitment to Social and environmental policies. This is not addressed by the HDFC Bank in India. The HDFC Bank has also introduced paperless banking that conserves trees and reduces carbon emission in operations and transportation. This initiative is not addresses by the commonwealth Bank in Australia.
Conclusion
From our analysis of the Commonwealth Bank in Australia, it shows that Banks are getting involved in initiatives that promote sustainability through corporate social responsibility. The Banks are initiating programs and practices that conserve the environment voluntarily. The comparison of the India Bank and an Australian Bank, it shows that there is an international trend of organizations to involve in CSR initiatives to conserve the environment and promote sustainable business without intervention of regulators. Therefore, it can be concluded that organizations have turned to CSR activities to get approval from the society by contributing to sustainable economic development to the society.
References
Allen, M. and Craig, C. (2016). Rethinking corporate social responsibility in the age of climate change: a communication perspective. International Journal of Corporate Social Responsibility, 1(1).
Chakraborty, D. and Roy, J. (2013). Energy and carbon footprint: numbers matter in low energy and low carbon choices. Current Opinion in Environmental Sustainability, 5(2), pp.237-243.
Commbank.com.au. (2017). CommBank’s Sustainability Report 2016. [online] Available at: https://www.commbank.com.au/cr-report2016/cs-sustainably.html [Accessed 20 Apr. 2017].
Commbank.com.au. (2017). Commonwealth Bank implements sustainability policies and practices. [online] Available at: https://www.commbank.com.au/about-us/news/media-releases/2015/commonwealth-bank-implements-sustainability-policies-and-practices.html [Accessed 20 Apr. 2017].
Cristóbal, J., Albo, J. and Irabien, A. (2010). Environmental Sustainability Assessment of Electricity From Fossil Fuel Combustion: Carbon Footprint. Low Carbon Economy, 01(02), pp.86-91.
Carbonfund.org. (2017). Reduce – Carbonfund.org. [online] Available at: https://carbonfund.org/reduce/ [Accessed 20 Apr. 2017].
HDFC Bank.com. (2017). About us. [online] Available at: https://www.hdfcbank.com/aboutus/general/default.htm [Accessed 20 Apr. 2017].
HDFC Bank.com. (2017). We understand our responsibility. [online] Available at: https://www.hdfcbank.com/aboutus/csr/index.html [Accessed 20 Apr. 2017].
Svensson, G. and Wagner, B. (2011). Transformative business sustainability. European Business Review, 23(4), pp.334-352.
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