CORPORATE RESPONSIBILITY SHOULD BE VOLUNTARY NOT MANDATED

Sydney, 14 October, 2005: The Australian Bankers’ Association (ABA) said accomplishing goals related to corporate responsibility (CR) is best achieved through voluntary adoption of business practices that reflect flexible and strategic decision-making by the Board of Directors.

In its submission to the Parliamentary Joint Committee on Corporations and Financial Services Inquiry into CR, the ABA states that mandating CR will not result in better outcomes, as prescribing requirements could result in a ‘tick the box approach’ which defeats the spirit and intent of the concept of CR.

The ABA agrees with the definition by the European Commission:

‘Corporate social responsibility is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.’ ¹

The banking industry in Australia is widely recognised for its leadership in the area of corporate responsibility, with a broad range of stakeholder engagement programs and corporate responsibility activities, such as philanthropic programs benefiting the wider community, flexible working arrangements benefiting the Australian workforce, responsible ecological management benefiting the environment and accessible banking products and services benefiting all customers.

Banks in Australia value the communities within which they operate and are committed to giving something back to those communities. Every year, community organisations receive over $90 million of direct support in various forms, from banks.

For example, banks support programs such as junior cricket, Opera Australia, community cinema, heritage buildings, zoos, theatres, orchestras, academic chairs, Surf Lifesaving (including rescue helicopters), programs in indigenous communities and country arts festivals. They also provide ‘in kind’ support such as time donated by bank staff on worthy local projects, packing food hampers or baking food for the homeless. As a major employer, banks have adopted progressive workplace policies and staff enjoy flexible and respectful workplaces.
 
The banking industry is also developing and participating in initiatives in financial literacy.

David Bell, Chief Executive of the ABA, said: “These programs and practices demonstrate banks’ voluntary commitment to social and environmental performance, as well as financial performance. Some banks even produce a CR report along with their annual report and financial statements.”

“This has all developed without laws mandating requirements which could simply lead to a prescriptive or ‘one size fits all’ approach.”

“Also, corporate governance demands on directors are considerable and have grown in recent years.  Adding to this burden with prescriptive legislation may discourage potential new directors entering the boardroom as well as diverting current directors from performing their important roles.”

“Australia’s banks have demonstrated that an important part of making corporate decisions and developing competitive advantage is by delivering shareholder value through business efficiencies and strategies that take account of shareholder and other stakeholders’ interests.”

The ABA makes the following points in its submission:

For further information:

Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

ENDS

¹ Green Paper. Promoting a Framework for Corporate Social Responsibility. Commission of European Communities. Brussels. (p6)