What do we mean by corporate social responsibility and socially responsible banking?

Corporate social responsibility

In its action plan[1] of October 2011, the European Commission defines corporate social responsibility (CSR) as “the responsibility of enterprises for their impacts on society”.  

“Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their corporate social responsibility, enterprises must have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of:

  • maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large;
  • identifying, preventing and mitigating their possible adverse impacts.”

The practical content of CSR will depend on the size of the enterprise and the sector in which it is active.

An adequate CSR policy is a full part of the core activities of a company. It results from the conviction that the integration of CSR aspects is a necessary pillar for the long-term profitability and the stability of the company. CSR is therefore not just important for society, but also for the shareholders. It covers more than just PR or communication.

The CSR policy focuses on the social impact of the company’s core activities. Depending on the nature of these activities the policy will pay more attention to specific aspects of CSR and less to other aspects. CSR for companies in the chemical sector, for example, will focus more on the ecological impact. For financial institutions the emphasis will rather be on the impact on the economy and the interests of consumers.

Socially responsible banking

A socially responsible and sustainable banking sector accepts to take on responsibility for the impact of its activities on society and is prepared to be accountable for this.

The impact of the banking sector on the stability of the economy requires a sector managed with integrity and due diligence that:

  • handles the risks inherent to its activity in a realistic and responsible manner;
  • is transparent to customers and stakeholders about its operational management and the products offered;
  • pays attention to its basic function as engine of the economy, by e.g. lending to private persons and companies.

Characteristic of the activities of the financial sector is that it also has an indirect impact on a sustainable society. Via the integration of CSR criteria in the policy regarding the funding of governmental bodies, companies and private persons, borrowers are motivated to take sustainability into account in their projects.

Also via the offering of sustainable products (e.g. sustainable saving products, ethical funds, green loans) a sustainable economy is indirectly stimulated.

In addition, the financial sector, as a large-scale employer, also has social responsibility. We are thinking here of attractive and challenging long-term employment, as well as a fair and balanced remuneration policy.

Finally, the sector also has direct ecological impact due to, e.g., power and paper consumption in the many branches and the mobility of the employees. Also in the future, Febelfin will draw the attention of its members to the importance of CSR for a vigorous financial sector.

[1] COM(2011) 681 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - A renewed EU strategy 2011-14 for Corporate Social Responsibility