Welcome to a world where the Tories have declared their commitment to becoming carbon neutral, Marks & Spencer is waging war on the lie of the label and The Body Shop is hitting out on domestic violence.Corporate social responsibility has become the new darling of the boardroom. It has gone beyond being a buzz word to becoming central to a brand’s sales and marketing strategy. And it’s paying off. Being good is, apparently, good for business. Just look at how M&S reversed its fortunes with sales up 10.5 per cent the quarter after its ethical advertising broke. And how BP’s business continues to grow as it seeks to reduce emissions that cause global warming. So why is it, when you think of companies doing their bit and taking a stance, not many financial services brands spring to mind? Yes, there’s Amex and its red card designed to make poverty history and The Co-operative Bank with its ethical stance, but is that it? It certainly seems so. It may surprise you then to look at the Business in the Community ‘Companies that Count Index’. Out of the 131 participants, five of the top 10 are financial services companies. The Co-operative Bank tops the poll, Barclays is at number three and CIS is equal tenth with HBOS and Lloyds TSB. So, with the exception of The Co-operative Bank, why aren’t firms shouting about their success? Especially when trust in the industry continues to decline? A recent study by Taylor Nelson Sofres shows that more than 25 per cent of consumers believe business does not treat them fairly. Money Marketing research with YouGov at the end of last year showed that consumer trust levels in financial services companies were declining rapidly – dropping by a whopping 50 per cent in just under a year. You would have thought that this would be just the moment that companies should be shouting from the rooftops about their CSR credentials. One problem is that savvy consumers think companies only turn to the policies and practices of corporate social responsibility to polish an otherwise tarnished image. CSR becomes an exercise in box-ticking, not brand-building. Consultancy firm Smart chief executive Amanda Jordan says: “Senior figures in the banking world feel disappointed that the progress they have made in CSR isn’t being better recognised outside the CSR world. “Only recently, John Varley, chief executive of Barclays, said in its CSR report that the challenge was convinc-ing a wary public that its responsible banking commitment was real.” It may be true that financial institutions are misunderstood by a cynical audience but no one can expect the wider world to recognise improvement when communications weapons are not being fully deployed. The investment sector is also aware of the importance of CSR. FTSE Group SRI senior executive David Harris says: “There is an increasing focus from the investment community on the ‘extra-financial’ performance of companies. The FTSE4Good Index Series captures this by only including companies that meet a range of environmental and social requirements, cover-ing issues such as supply chain labour standards, environmental responsibi-lity, human rights, countering bribery practices and climate change.” So why aren’t financial services companies putting their head above the parapet and weaving CSR into the very fabric of their brand and marketing activity? There are several reasons. First, British banks, building societies and financial companies have a history of conservatism. Criticism about misselling and ever rising profit levels has made firms run scared, and as a result, more cautious. Second, chief executives and their boards don’t see CSR as core to their business and a reason why consumers chose them. Marketing communications in our world still focuses too heavily on price, product and performance despite the fact we instinctively know that consumers “buy” brands and strong brands with an emotional difference can, in the words of David Ogilvy, “potentially demand a premium forever”. This smacks of short-sightedness. Just look at Co-operative Financial Services. CFS chief executive David Anderson says: “The issues of social responsibility and ecological sustainability are higher up the minds of consumers than they have ever been. Long-term success in business is now inextricably linked with operating in a responsible manner and customers are increasingly voting with their wallets.” The Co-operative Bank can go as far as asserting that up to 24 per cent of its pre-tax profits, some 30m, can be attributed to ethically motivated customers. Third, others in the industry are waiting to see what happens with treat customers fairly and until all financial services companies adhere to these principles, any CSR activity is judged as peripheral. The strategy of keeping heads low has clearly failed. Mistrust is high and strong brands with a cohesive and powerful point of view are few and far between. There’s some great work being done. From Barclaycard’s Horizons scheme, that supports 50,000 disadvantaged lone parents and their families, through to HBOS contributing 43.1m to local communities. The industry needs to shout about these and other initiatives, especially in the light of the FSA’s treating customers fairly campaign.
Schroders is gearing up for the Isa season with a special offer to promote its multimanager portfolios. The initial charge on the Schroder S&P high alpha, strategic balanced and cautious managed distribution portfolios will be waived or up to 5 per cent commission offered until April 5, 2007. The offer applies to all direct unit […]
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