Top bank starts to look into its social footprintFebruary 2011
An international bank is commissioning and publishing independent reports reviewing the social and economic impacts of its operations in various nations.
Standard Chartered, which is asking academics to do the research, claims to be the first financial institution to produce such reviews. It recently published the first two reports, on Ghana and Indonesia.
The studies have three main aims – to discover more precisely what the bank’s direct and indirect impacts are in every country, to ‘contribute to the wider debate on the social usefulness of banking’, and to find pointers to making its impacts more positive.
Although the bank will not commission socio-economic impact reviews in all 70 countries in which it operates, it will cover a cross-section of nations and will also look at its impact on various industry sectors.
Standard Chartered, a top 20 FTSE company employing more than 80,000 people worldwide, is listed and headquartered in the UK but concentrates mainly on emerging markets.
The initial two studies, both 48 pages long, have been undertaken by Ethan Kapstein, chair in political economy at Insead business school, and were intended to cover one country in which Standard Chartered has a large presence (Ghana) and one where its operations are more limited (Indonesia).
The Ghana study shows that Standard Chartered activities amounted to $400million (£250m, €299m) of value added to the economy in 2009, equivalent to 2.6 per cent of the country’s gross domestic product, and supported about 156,000 jobs, or about 1.5 per cent of the workforce.
Other impacts included improving access to finance for poorer people, notably through its Access 247 product, which allows those with as little as $7 to open a bank account, and a significant role in improving standards for business, such as helping to formalize structures for corporate governance and introducing measures to tackle financial crime.
The study says the bank also provides a ‘world-class’ training ground for professionals in the Ghanaian financial sector, with 13 Standard Chartered alumni now holding key positions in Ghana’s banking sector.
However, the bank believes more can be done, especially by improving services to small- and medium-sized enterprises.
The Indonesia study reaches similar conclusions, but on a smaller scale. It concludes that the bank adds value of about 0.8 per cent of gross domestic product, but recommends that it should play a more active role in supporting increased infrastructure investment and agricultural financing.
Standard Chartered’s decision to commission social impact reviews is unusual, but similar tasks have been undertaken in other sectors. Some mobile technology companies, notably Vodafone, have compiled reviews of their social impacts in emerging countries, and in 2004 Unilever commissioned an Oxfam study of the impacts of its Indonesian operations, which it then published.
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