What Changes Will the Final Report from the Banking Royal Commission Incite in Sustainability?
A few weeks ago, the final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was tabled in Parliament after being submitted by Commissioner the Honourable Kenneth Madison Hayne AC QC the previous Friday.
76 recommendations were provided in the report along with a referral of 24 entities and companies for criminal and civil proceedings. While these recommendations will have a significant impact on both the businesses and the customers, no one recommendation specifically addresses corporate sustainability on an economic, social or environmental level.
However, these recommendations on a whole set a different tone for corporate sustainability when it comes to the financial services industry.
Many of these large organisations were focusing on the fantastic work they were doing in the local community, in ensuring their emissions stayed low, in creating a sustainable future; their corporate sustainability reports detailed their efforts. However, they were not ensuring their customers were the focus of their ethical practices.
Being an ethical company starts with ensuring ethical business practices are carried out by your company. The first step of sustainability is to ensure these practices are in place within your organisation. Customers need to be the number one focus of this with staff following closely behind.
While the Banking Royal Commission has encouraged financial service providers to return to ethical practices, this is an important lesson for all organisations. The HIH Royal Commission in 2003 taught us lessons we should have learnt before a royal commission like the Banking Royal Commission was required. It is important that we don't just apply these lessons to the financial sector as all organisations should be ensuring ethical business is their first port of call when it comes to embarking on a journey of economic, social and environmental sustainability.
Last year, I spoke about what we had learnt from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ahead of the next round of hearings. It is worth going back to what we wrote in this article.
November 12, 2018
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has shed an incredible light on the danger of corporate social responsibility becoming lip service. The findings of these hearings thus far have shown that corporate social responsibility alone does not make an impact - an organisation needs to make a commitment to sustainability as a part of its core organisational and operational values in order to make genuine progress towards economic, social and environmental sustainability.
Almost all of these institutions had published corporate social responsibility plans. An overwhelming majority of these included a commitment to the Global Goals. However, these institutions found themselves in these situations because their programs and commitments were treated as side projects, not as core values within the organisation which should then have been translated into day-to-day operations.
Practices which many of us would take for granted within other industries, such as the most glaring one raised in the executive summary of the commission's interim report of not charging advice fees to people who had passed away, were raised as areas of concern. These were not included in companies' corporate social responsibility commitments because who would think about including some of the most basic of human rights in their detailed CSR plan? The breakdown of these practices occurs when companies treat a commitment to economic, social and environmental sustainability as a side project in their business, not as part of their core values.
To prevent this, organisations need to ensure their commitment to sustainability is genuine, meaningful, holistic and implemented at all levels of their organisation. When it comes to a commitment to sustainability, organisations need to make a commitment to their customers first; they need to commit to treating their customers with respect by honouring their basic human rights because a loyal consumer base can only be built on a strong foundation of respect. It is from there that companies can grow their commitment to sustainability by addressing the more challenging issues presented in the immediate and global community when it comes to topics like gender equality and climate change.
Jumping the gun with these impressive commitments to planting billions of trees and educational programs which reach millions of people before focusing on the basics allows room for these commitments to fall apart. In the same way that you cannot understand calculus until you have mastered basic arithmetic, creating a strong sustainability plan in your business requires building from the ground up.
For many of these organisations, consumer trust has been lost, and it will require a strong commitment to economic and social sustainability directly towards these organisations' consumer bases in order to rebuild this broken trust.
For more information about corporate sustainability and the Royal Commission, please contact a member of our team today!