Sustainability is an integral part of every company. No company can grow and survive business effectively without using sustainability strategies and approaches. National Australia and Commonwealth bank have been taken in the task to explain and analyze the significance and strategies of sustainability. These banks provide full contribution in sustainability and corporate social responsibility to run the business effectively. Furthermore, the paper outlines the strategies, objectives, approaches of sustainability that help to protect the interest of the stakeholders globally. Along with this, weak and strong sustainability performance of both the banks also has been explained in the task. Both the banks are recognized for excellent sustainability practices and CSR. More detail of the task has been drawn below.
Commonwealth bank is a leading and growing provider of financial services including funds, premium, retail, investment and share broking products and services. The bank was incorporated in 1911 in Australia. The company has more than 800,000 shareholders and 52,000 employees (Linkedin, 2018). On the other hand, National Australia bank is the biggest financial institutions in Australia in terms of customers, earnings, and capitalization. The company has employed approx 30,000 employees who are serving more than 9 million customers across the globe (Linked, 2018).
Sustainability strategy, objectives or principles
National Australia bank uses climate change strategy to maintain sustainability in the environment and workplace as well. The bank uses this sustainability strategy to reduce own carbon footprint and negative impact of pollution (Sorrell, 2010). Apart from this, National Australia bank uses group environmental management policy to conduct business activities and functions successfully and to manage environmental sustainability globally (NationalAustraliabank, 2017).
On the other hand, Common wealth bank uses innovative strategies to earn more revenue and profitability. A new anti-bribery and corruption policy is adopted by Common wealth bank that states the Group’s zero tolerance approach to bribery, corruption and facilitation payment. Various actions and steps have been taken by Commonwealth bank to minimize carbon emissions and eliminate the risks and challenges of climate change (Commonwealth bank of Australia, 2018). Sustainability strategies are needed for both the companies to attain ample of benefits in the global market (Elliott, 2012).
The main aim of National Australian bank’s sustainability is to balance economic, social needs, environmental, and permitting prosperity for future generations. These include social progress, stable economic growth, environmental protection, and conservation of natural resources. Sustainability is a part of the business that Commonwealth bank conducts in the market. Commonwealth bank uses sustainability to be a leader in the banking industry. The other aim of the firm behind the using of sustainability is to reduce negative impact of global warming, pollution and carbon emission (Sustainabilitymatters, 2015).
Reasons for adopting sustainability approach
It has been found that climate change, resource scarcity and natural value put direct impact on operations and activities of the firm and environment. National Australia bank uses environmental agenda such as climate change, natural value and resource scarcity. Taking a sustainable and strategic strategy to handle and manage business is not just significant for the environment; it is needed for the long term success, growth and resilience of the firm. That is why the organization is committed to managing and understating the environmental attributes and impact and the dependency of the business on the natural capital and environment as well.
Apart from this, sustainability is initiated by the company to protect the natural and technological resources and save the right and interest of the stakeholders in the competitive market. It is stated that National Australia bank is caring for planet by implementing or adopting a sustainable strategy for handling business and helping customers to do so too (Kurapatskie and Darnall, 2013).
On the other hand, Commonwealth bank uses sustainability to tackle climate change and to improve and handle the carbon performance and productivity globally. The main sustainability vision of the company is to prevent financial crime, anti-money laundering, anti-bribery and corruption, economic and trade sanctions and data security and privacy. The organization has announced a updated and innovative environmental, social and governance practices and policies that support the bank’s efforts to make a favorable impact through the way or manner it does business (Doppelt, 2017). Commonwealth bank is committed to decrease and asses direct environmental impact by minimizing waste through recycling and effective use of resources. The company uses sustainability practices understand, handle, and assess the environmental opportunities and risks in the competitive market (Commbank, 2012). Moreover, the bank uses sustainability initiatives and practices that have helped the company:
Effectiveness of reporting on key stakeholders, interests and engagement approaches
It is portrayed that stakeholders play a major role in enhancing sustainability practices and approaches in the international market. In response to stakeholders, National Australia bank is constantly working towards the improvement and enhancement of sustainability strategies for protecting the society and environment as well. It uses the global reporting initiative (GRI) G4 sustainability reporting guidelines to run business smoothly. The main vision of National Australia bank is to be New Zealand and Australia’s most respected and effective bank. Maintaining a strong and constructive dialogue with stakeholders is significant for the company. It helps in discovering how the firm understands society expectations, show opportunities to improve and identify the sustainability issues.
It shall be analyzed that National Australia bank engages with a majority of stakeholders including ESG analysis, non-government organization, and advocacy organization to make a favorable environment, with their feedback and input forming an essential part of the decision making process of NAB. NAB engagement includes a combination of informal engagement with managers or leaders from a range of environmental and social backgrounds and formal and strong advisory group which provides assistance and guidance on the company’s engagement with indigenous people.
On the other hand, Commonwealth bank uses stakeholder engagement approach to enrich partnerships with various stakeholders and improves and promotes society participation. By using stakeholder engagement approach, the organization listens, responds and understands to stakeholder perspectives, demands and expectations in the competitive market. The firm has a wide range of forums dedicated to advancing and innovative stakeholder engagement that include indigenous advisory council, opportunity initiatives council, and CEO external advisory council.
It is further noted that Commonwealth bank has released wide range of disclosure regarding corporate responsibility performance and sustainability this year that include scorecard updates, tax transparency card, CDP submission and reconciliation action plan. It is investigated from the various analysis that Commonwealth bank plays an effective and significant role in enabling social and economic development, driving innovation, supporting employment and creating innovative opportunities. It further creates shareholder value by exercising business through a balanced lens which includes social, economic and environmental considerations. By monitoring on good and innovative business approaches, the company affects and impacts to positive environmental, social and economic outputs.
Areas of strong sustainability performance of the company
The areas of strong and dynamic sustainability performance of both the companies such as National Australia bank and Common wealth bank have been drawn below.
National Australia bank utilizes resources responsibly and effectively to stand out against the various competitors internationally. The company looks for innovative opportunities to reduce direct and adverse environmental risks, challenges and impacts from the products, services and operations. It gives consideration to eliminate and decrease the indirect environmental challenges and threats that may arise from relationship with suppliers and customers. The company is committed to render an inclusive, responsible and fair products and services.
NAB is constantly working with shareholder and advocacy organizations to attain a deeper understanding of issues and concerns regarding various environmental issues such as climate change, carbon risk disclosure and fossil fuel issues. It is elucidated that the company constantly consults a wide range of stakeholders to enhance and improve the approach or practice to human rights, interests and inadequate land acquisition.
It is seen that stakeholders of NAB expect to analyze and understand the social and environmental risks and challenges and impacts interconnected with products and services. Being a responsible lender, the company is expected to manage and control over the natural capital risks and threats. The organization further needs to consider biodiversity loss and ecosystem services degradation. All these initiatives help the company to make a strong image and financial position in the international market (Hardisty, 2010).
Commonwealth bank helps the customer’s to attain and acquire the skills and talents by using various education programs internationally. The company uses innovative capability to engage and empower businesses, people, societies and enhancing social outputs and financial well being through enormous services and products. It shall be showcased that the market dominance outcomes in great power and excellent responsibility. Commonwealth bank provides the wide range of finance to government and workers as well, they could influence various approaches or strategies in the competitive market.
One of the significant opportunity actions or initiatives are to build and improve the transparent stakeholder engagement approaches and procedures to promote the ongoing open dialogue (Brown, 2010). It is evaluated that sustainability reporting framework is a tool or framework to attract and retain wide range of key target audience in the international market. It is analyzed that Commonwealth bank continue to work with regulators, and government bodies to promote the sustainability and CSR practices in the global market. To protect the interests, concerns, risks and priorities of stakeholders, the company sets the targets and goals. It further sets new objectives and benchmarks to exercise sustainable value, vision, support and drive favorable change for all the stakeholders. All these initiatives are considered strong areas of sustainability which are being performed by Commonwealth bank (Johnson and Schaltegger, 2016).
Areas of weak sustainability performance of the company
It is seen that sustainability can be weak or strong depending on the nature of capital accumulation. The weak sustainability is concerned with maintaining and handling the total capital stock intact, stock, without regard to the partitioning of that capital among the four types. This will imply that various types of capital are less or more substitutable, at least within the boundaries of current levels of resource development, growth and current level of economic activity.
The weak sustainability include climate change issue, indigenous Australia issues and domestic and family violence that may affect the success and growth of National Australia bank. The company faces ample of challenges as they seek climate change, natural capital more effectively and sincerely and enhance and improve the operational efficiency (Jeucken, 2010). The main goal of National Australia bank is to make a favorable and long impact on the lives of people, shareholders, customers, and societies and on the environment in which the company operating and functioning. Ethics, business conduct and diversity are another issue in sustainability that may impact on the progress and long term targets of the firm. Responsible and effective lending practices (sustainability of products and services and handling ESG risks and challenges (Davies, 2013).
On the other hand, Commonwealth bank also faces ample of issues while maintaining sustainability in the environment and workplace as well (Theguardian, 2018). The weak sustainability in Commonwealth bank include survey of key internal stakeholders, stakeholder engagement, ESG analyst reporting and questions, and various material issues. It is stated that Commonwealth bank had been criticized by environmental groups that affected the progress and targets of the firm adversely. The bank committed to reduce the green house gas pollution caused by its lending but it did not render detail of how it would do so or how provide targets. Moreover, the company is being sued by ample of shareholders due to failure disclosure of climate change risks. Fossil fuel is another risk for the company that is influencing its brand image and reputation in the competitive market (Theguardian, 2018).
Established reporting frameworks (GRI)
In terms of GRI sustainability, the environmental sustainability dimensions consider the various impacts of organization steps and actions on the non-living and living system of the country such as land, air, water and ecosystems (NationalAustraliabank, 2017). Following are the reporting framework for National Australia bank in the context of the GRI index disclosure:
Profile disclosure 4.12: Externally and highly developed and built social, economic and environmental charters. rules, principles, other activities to which the company endorses and subscribes.
Disclosure on management approach FS1: Policies and approaches with particular social and environmental factors applied to business lines.
FS10: Percentage and number of organizations held in the institution’s portfolio with which the reporting company has interacted on social and environmental issues.
Profile disclosure 2.5: Number of nations where the firm operates and name of the nations with either primary operations, activities or that are particularly relevant to the issues related to sustainability (National Australia bank, 2011).
The GRI index reporting for Commonwealth bank has been discussed below.
GRI 305: Emissions that helps in reducing and preventing the negative impact of CHG emissions. It also focuses on the CHG intensity and integrity.
GRI 306: Effluents and waste, this index has been made to recycle the wastage.
GRI 403: Occupational health and safety, this GRI index helps in identifying and analyzing the types of injury, rates of injury, lost days, absenteeism, occupational diseases and number of work related fatalities.
GRI 201: Economic performance, it focuses on the direct economic value, financial implications, risks and climate change (Sustainabilitymatters, 2015).
External assurance, awards, sustainability ratings and other forms of recognition
It has been reported that National Australia bank is highly operated business with external stakeholders to get their outputs and feedback to help inform decisions and processes. The company has reduced in paper usage from 2015 baseline. It is committed to environmental financing by 2025 to support and address the climate change. It is introduced a climate bonds standard certified green bond.
The organization is committed to towards the reducing waste and consumption. It is further integrating natural capital considerations into day to day risk assessment process and decisions making. The social bond won the 2017 global capital sustainable and responsible global markets awards for the Asia Pacific Green. Since 2003, it has recognized as a global leader in banking industry. The company participates in external actions and initiatives that identify and measure responsible business (Laeven and Valencia, 2012).
Commonwealth bank is also engaged with talented people to maintain sustainability. It is highly and effectively engaged with employees and community, as shown by the group’s 2014 employee engagement score of 81%, up from 80% in 2013. It is extremely and highly supported the community by investing in their development and in programs designed to make a diverse, rewarding and safe workplace. Commonwealth bank has got various accolades for sustainability in the global market. The company won the “best responsible investor asset manager award” in the Asia asset management best of the best award 2016 along with this, Commonwealth bank received best application of ESG award in 2015 (Commbank, 2012).
Conclusion
On the above mentioned discussion it is concluded that sustainability is essential and unique for attaining long term mission and vision of the company. Along with this, it is also significant to attain competitive advantages in the global market. The above analysis shows the sustainability practices and strategies that are being exercised by Commonwealth bank and National Australia bank. It is analyzed that NAB and Commonwealth bank have been identified and recognized as the most sustainable business in Australian and they are global industry leader in sustainability respectively.
The report explains the strong and weak sustainability performance of the both the banks across the globe. The banks have got rewards and recognition with maintaining sustainability in the environment. Sustainability also protects the rights and interests of the stakeholders apart from this, it also helps in maximizing profitability and market share.
References
Brown, D.R., 2010. Institutional Development in Small States: Evidence from the Commonwealth Caribbean. Halduskultuur, 11(1).
Commbank.2012. Commonwealth bank’s commitment to sustainability
Commonwealth bank of Australia.2018. About us[Online].
Davies, G.R., 2013. Appraising weak and strong sustainability: Searching for a middle ground. Consilience: The Journal of Sustainable Development, 10(1), pp.111-124.
Doppelt, B., 2017. Leading change toward sustainability: A change-management guide for business, government and civil society. Routledge.
Elliott, J.A., 2012. An introduction to sustainable development. Routledge.
Hardisty, P.E., 2010. Environmental and economic sustainability. Crc Press.
Jeucken, M., 2010. Sustainable finance and banking: The financial sector and the future of the planet. Routledge.
Johnson, M.P. and Schaltegger, S., 2016. Two decades of sustainability management tools for SMEs: how far have we come?. Journal of Small Business Management, 54(2), pp.481-505.
Kurapatskie, B. and Darnall, N., 2013. Which corporate sustainability activities are associated with greater financial payoffs?. Business strategy and the environment, 22(1), pp.49-61.
Laeven, L. and Valencia, F., 2012. Resolution of banking crises. In Handbook of Safeguarding Global Financial Stability(pp. 231-258).
Lietaer, B., Arnsperger, C., Goerner, S. and Brunnhuber, S., 2012. Money and sustainability. The Missing Link. Axminster: Triarchy Press Ltd.
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Sorrell, S., 2010. Energy, economic growth and environmental sustainability: Five propositions. Sustainability, 2(6), pp.1784-1809.
Sustainabilitymatters.2015. Commonwealth bank’s new sustainability policies
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