One of the positive effects of the financial crisis in 2008-2009 is an increased attention to Corporate Social Responsibility (CSR) in the Financial Services sector. Cynics may argue that it is about time and cite JF Kennedy with his famous quote “Ask not what your country can do for you, ask what you can do for your country”. Michael Wolf, CEO at Swedbank, shows that the sector is sensitive to these sentiments with his statement in their latest annual report:
The capital that banks are most lacking right now is reputational capital. Fostering the relationship with the community, explaining what we do and convincing people of our benefit to society will be one of the top priorities going forward.
In this blog post, I will focus on the challenges that organizations face when then they want to assume their social responsibility. These challenges are common to all sectors; it is not limited to Financial Services. Naturally, I will take my responsibility as an IT Consultant and show how IT can be leveraged to address these challenges.
You do not have to read many CSR-reports to identify a common pattern. The responsible organizations are making good progress on sustainability, but a majority of the improvements are gained externally. For example, you will see that they have been successful in reducing paper consumption to customers while the internal paper consumption is unchanged. It is not that these organizations are sinister and pass on their responsibility to external counterparts. No, it is a symptom of the real problem. All you have to do to change the behavior of an external party is to initiate a project to inform customers on new reporting routines, screen vendors for environmental programs or change investment policies. But improvements internally require a changed mindset. It is a process, not a distinct project.
Christian Clausen, Group CEO at Nordea, expressed this disconnect between the talk on the importance of sustainability and the actual progress in their previous CSR-report:
Although the majority of our employees rated the various issues we work with as important, only 45 % say that they are aware of our CSR work. They know and value the separate aspects and actions but they do not recognize or understand the overall concept. This is a challenge to all leaders to overcome.
So how do you start to walk the talk?
The first step is to recognize that the change process has to be managed with a vision, conviction, persistence and mandate to change the behavior of the employees. One of our clients, Telenor is a role model for organizations that want to change the way their employees work. They had the vision that “Connected People Work Smarter” and they were ready to embark on a four year journey to attain this vision. They understood that 80% of the effort would be about changing the mindset. The remaining 20% was about providing technology. But they didn’t only invest in technology to enable virtual collaboration. A conviction that you cannot manage what you do not measure had them to invest in an innovative business intelligence solution to track progress and identify lagging units. The solution gave them the tools to manage the change process and to get new insight into the value of virtual collaboration.
Several scholars, accountants and management consultants have tried to assess the value of CSR-programs. Most of them have tried, in vain, to prove that CSR-adherence add shareholder value. But I think that it easier than that, at least in financial services. CSR-adherence is about restoring trust externally and pride of being a banker internally. Walking the CSR-Talk is an important step towards that vision.