Corporate Social Responsibility is being recognized by the decision makers in the financial institutions.
Financial institutions have realized that anything that benefits society would enhance revenue for the financial institutions. An organization’s CSR policy must be viable like its business model.
They must spearhead socioeconomic transformations and product innovation strategies to ensure environmental sustainability.
Banks are increasingly becoming environmentally sensitive. They are using paperless statements, electronic payments while installing carbon neutral buildings to reduce emissions and cut costs.
Thereby, the financial institutions are driving the change to a low-carbon business growth. FIs collaborate with NGOs to fund the education of children from the lower income groups.
They also deliver vocational training, encourage sports/educational events, exhibitions, natural disasters relief events among others.
Global financial institutions are looking at the connection between profit and social growth in emerging nations.
They are ushering in economic development through microfinance initiatives. Banks perform healthcare programs in partnership with the NGOs.
Financial Institutions function in an effective business climate. Therefore, FIs have to overcome obstacles to ensure CSR is viable.
Absence of a Framework
Financial institutions initiate CSR functions in the absence of a framework for benchmarking CSR. The real value of CSR is difficult to quantify since best practices don’t exist.
Financial institutions have to function in a very competitive environment. Any effort to fund CSR initiatives is constrained by limited budgets and the bottom line.
Complex regulations require significant expenditure with regard to regulatory compliance. FIs must collaborate with the government to revamp regulation via governing bodies.
Customers are looking for viable products and services. Financial institutions must establish a positive market scenario and a feasible business environment.
FIs must constantly look for opportunities for new products/services through CSR activities. They have to fund a low-carbon infrastructure and green economies.
The lack of business stability is forcing financial institutions to downsize, CSR may not be able to stop downsizing, but it can be done in a positive manner.
CSR metrics like energy usage, water consumption, CO2 emission denote a firm’s environment- friendly initiatives.
Feasible CSR initiatives need an in-depth insight on factors influencing decision-making with regard to CSR.
Financial institutions must understand government policies effectively to resolve issues related to viable CSR.
Connecting the dollar value and brand equity of an organization could be a complex process.
CSR has resulted in tremendous benefits for society – community welfare, economic growth, and environment security.
Some of the benefits of CSR:
Improves Brand Equity.
- Cements long-standing business relationship.
- Enhances financial results.
- Increases business development.
The driving force behind a viable CSR
Financial Institutions must review their portfolio and do a detailed audit of the economic and environmental outcome of business performance in retail/commercial banking, asset management, investment/private banking.
Products, processes and people are key features of any CSR initiative. Solutions must be personalized for distinct components.
Top-notch innovation is vital for viable CSR initiatives. It would lead to the development of new products/processing techniques.
A comprehensive CSR strategy is vital for a viable CSR. All CSR functions must be reported. The details of a CSR activity such as investments, tangible/intangible outcomes must be informed to stakeholders.
Financial Institutions realize that CSR is an internal aspect of a viable business. CSR must be installed across the business life cycle to facilitate the long-term business growth.