Importance of CSR in banking cited

Faced with pressing social and environmental challenges in the Philippines today, banks are now aiming for a more sustainable growth whilst ensuring that their development and technological progress leaves a positive impact that is beneficial to everyone.

Throughout the years, the Philippine banking industry has recognized that prioritizing corporate social responsibility (CSR) could contribute to environmental conservation, social equity, and economic stability.

“Today, the introduction of ESG standards has eventually led this concept to be a core foundation for Philippine banks when it comes to being responsible corporate citizens,” the Bankers Association of the Philippines said.

“In particular, banks are being called upon to be mindful of the environmental impact they are leaving behind with their operations,” the BAP said.

Amid the globalized and competitive market, CSR initiatives help build trust and strengthen banks’ reputation with stakeholders such as customers, employees, investors and regulators. When lenders actively adhere to their CSR, they demonstrate commitment that is beyond profit making.

Some of the ways financial institutions embrace CSR are by investing in clean energy, promoting transparency and ethical governance, expanding financial inclusion as well as actively participating in philanthropy and volunteerism.

“Being socially responsible is viewed by the banking industry as a crucial step towards being responsible corporate citizens,” the BAP said.

“The industry’s stakeholders are not just stockholders, but also the entire Filipino public in general given our industry’s wide-ranging impact to the broader economy in general,” it added.

As a responsible corporate citizen, banks must be proactive in providing solutions to national issues, such as access to education and health, the BAP said. The private sector should also be willing to work with the government when it comes to development.

Dealing with pollutant-actors or introducing sustainable products such as green financing requires close collaboration with regulators like the Bangko Sentral ng Pilipinas (BSP).

Asked what are the key aspects a bank should highlight in their CSR strategy, the BAP said the ideal roadmap and policies for a bank to determine its own CSR should be best left to the decision-making of individual managements and boards.

“However, in general, an ideal CSR strategy should be well-developed to proactively address the pressing issues our country is facing today,” the BAP said.

The BAP said that in general, most big banks have invested in being responsible corporate citizens by assisting the government on building better schools or promoting better access to quality healthcare.

“Each bank, through their management and boards, have their own unique methodology in accurately determining the impact of their respective CSR programs. For example, when it comes to education, banks may try to look at how many students have benefited from the classrooms they have donated,” it said.

Measuring the impact of a bank’s CSR program would also depend on the strategy adopted by each bank, the BAP added.

The BAP has also been proactive when it comes to CSR, particularly with the Rafael B. Buenaventura Microfinance Resource Center Foundation Inc.

Since its establishment in 2007, the foundation has been supporting microfinance institutions (MFIs) through its various capacity-building programs.

“It is important to empower microfinance institutions so that consumers are empowered with more choices as to who can serve their financial needs the best. These institutions also have a unique position when it comes to understanding the needs of underserved communities,” the BAP said.

In 2012, the foundation, together with BAP-Credit Bureau (now known as the BAP Data Exchange Inc.), established the Microfinance Information Data Sharing System (MiDAS) to allow MFIs to submit reports, send inquiries and retrieve borrower information.

To summarize, CSR is not just a concept that banks adhere to to feel good about their businesses. CSR directly impacts a bank’s reputation, financial performance and sustainable growth.

By balancing earnings with sociallyrelevant purposes, banks significantly contribute to economic growth while ensuring their own success at the same time.

CSR is not just a concept that banks adhere to to feel good about their businesses. CSR directly impacts a bank’s reputation, financial performance and sustainable growth.