Analysis of CSR Reporting of Wells Fargo & Company

This document provides an analysis of the CSR reporting of Wells Fargo & Company, a multinational financial service provider. It evaluates a news article on the company's CSR activities and highlights its transparency in environmental, social, and governance metrics. The document also discusses the importance of CSR reporting, accounting theories related to financial and CSR reporting, and the initiatives taken by Wells Fargo to fulfill its corporate social responsibilities. Recommendations for improving CSR reporting are provided based on the analysis.

Running head: ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Accounting Theory and Contemporary Issues
Name of the Student:
Name of the University:
Authors Note:

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Executive summary:
Corporate social responsibility is the internationally accepted self-regulatory norms to be
followed by the corporate entities while conducting the business operations. Over the years the
importance of corporate social responsibility have increased by multiple folds. As a result
corporates are now under obligation to compulsorily follow the standard norms and regulations
and make report on corporate social responsibility initiatives taken by them in a financial year.
Along with the financial reports the business entities are under compulsion to prepare annual
corporate social responsibility or CSR report. Wells Fargo Company is an American company
providing financial services in America and other parts of the globe has certain responsibilities
towards CSR reporting. An in-depth analysis of the CSR reporting of the company has been
made here to identify the areas to improve for the company in the future.

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Contents
Executive summary:........................................................................................................................1
Introduction:....................................................................................................................................3
News piece on CSR activities of Wells Fargo:................................................................................3
Corporate Social Responsibility highlights:..................................................................................10
Recommendations:........................................................................................................................12
Conclusion:....................................................................................................................................14
References:....................................................................................................................................15

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Introduction:
An American multi-national financial service provider, Wells Fargo & Company is a
multi-national company with its operations stretching to different parts of the globe.
Headquartered in San Francisco, California, the company also has number of central offices in
all across the USA. Wells Fargo is the fourth largest bank in the world in terms of market
capitalization. It is also the third largest US bank in terms of total asset value. As mentioned at
the start of the document that the business organizations including financial service providers are
under obligation to make annual report on their corporate social responsibility initiatives to let
the stakeholders of the organizations know about the various social and important initiatives
taken by them to fulfil their responsibilities under CSR guidelines (Amira, 2013).
News piece on CSR activities of Wells Fargo:
A recent news piece on the CSR of Wells Fargo & Company has been chosen for evaluation in
this document. The evaluation of the news article shall be made with the objective of providing
neutral perspective of CSR reporting of the company along with providing recommendations to
improve the CSR reporting of the company in the future (Www08.wellsfargomedia.com, 2019).
Wells Fargo among the most transparent on environmental, social and governance metrics is an
article published by the Newsroom on May 13, 2019. Thus, the heading of the news article as
can be seen from the screen shot of the news article attached below it is clear that the company
has been quite transparent in its CSR reporting.

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
As per the news piece a study was commissioned and conducted by Financial Times with the
agenda of identifying the firms which have been extremely transparent on environmental, social
and governance metrics. The study commissioned found Wells Fargo as the most transparent in
all the three facets of social, governance and environmental metrics. The summary of the study
published on 8th April’s edition of the publication. The edition on April 8 ranked not only the
most transparent companies as well as companies which were least transparent in the social,
environmental and governance metrics (Newsroom.wf.com, 2019). The following extract from
the news piece edition of 8th April, 2019 shows that Wells Fargo is one of the most transparent
companies in terms of social, environmental and governance metrics.

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
As can be seen from the above extract that the transparency gap for Wells Fargo is merely 11%
which is extremely positive however, not perfect (Newsroom.wf.com, 2019).
Companies operating in a country must follow the legal statue governing the functioning of
corporate and other business entities in the country. The Corporations Act 2001 is the premier
statue governing the functions and operations of corporate and business entities. Necessary
responsibilities must be followed by an organization as per the Corporations Act 2001 while
conducting the business operations in the country. In respect of financial reporting as well as
reporting on corporate social responsibilities entities operating in Australia must comply with the
financial reporting requirements as stated by the Australian Accounting Standards Board.
AASBs are the official standards to be followed by the companies operating in the country to
prepare financial reports as well as CSR report (Buhmann, 2011).
The objective behind issuing accounting standards is to improve the quality of financial reporting
by the organizations, both business and non-business organizations. Financial reporting is the
process where the financial statements are prepared to disclose the financial position and
performance of an organization as on a particular date. Financial reports will be redundant and of

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
minimum use if certain qualitative characteristics such as understand ability, comparability and
simplicity are not present in the reports. In order to achieve these objectives each country has
followed different procedure to integrate accounting standards in such manner to ensure that the
financial reports have all these qualitative characteristics (Crisan and Borza, 2012). Accounting
standards have been developed to reduce the alternative accounting treatments for different
financial transactions to the minimum to enable comparability of financial statements including
CSR reports of different entities. CSR reporting has the objective of disclosing important
information about the different CSR initiatives taken by an organization to fulfil its
responsibilities towards, social, environmental and governance metrics (Hoque, Uddin, Ibrahim
and Mamun, 2014).
Accounting theories:
With the objective of introducing coherent sets of accounting principles and policies the
accounting theories are developed. Accounting theories mainly state that the accounting records
from which financial reports and CSR reports are prepared must be true and fair as only fair
presentation of financial performance and position of an organization is possible if the source
document from which the financial reports have been prepared is true and correct. As per the
news piece published in the Newsroom it has already been seen that Wells Fargo has been
designated under most transparent group when it comes to complying with social, environmental
and governance metrics (HyeJung Ban, 2014).
The company provides financial services in America, Australia and other parts of the globe is
one of the largest banks in all across the globe has certain responsibilities towards social,
environmental and governance metrics. With the objective of assessing the steps and initiatives
taken by the company a detailed investigation on the CSR reporting of the company must be

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
carried out. The fact that the study commissioned by the Financial Times found Wells Fargo as
most transparent is certainly a huge boost to the CSR reporting of the company however, it is
still important to conduct investigation on CSR activities of the company to comment on the
initiatives taken by the company and on its CSR reporting (Koep, 2017).
Marry Wenzel is the head of Sustainability and Corporate Responsibility of Wells Fargo &
Company stated that it is of utmost importance for the company to comply with the corporate
social responsibilities of the company as it believes that it is going to get huge return from the
stakeholders for complying with social, environmental and governance metrics and being
transparent certainly helps in achieving these goals. According to the Head of Sustainability and
Corporate Responsibility of Wells Fargo & Company it is firstly important to assess the strengths
and weaknesses of the company before setting sustainability goals. Once the goals are set the
company has always tried to stay in line with these goals irrespective of the situation (Park, Lee
and Kim, 2014).
The financial statements, income statement to be precise shall give a primary understanding
about the financial performance of the company which is equally important to the corporate
social responsibilities of the company. It is because companies now a days require to spend
certain percentage of its profit on the corporate social responsibility initiatives to comply with
the mandatory requirements of spending minimum amount of profit on social and environmental
matters. The profit and loss account of Wells Fargo for the last five years shall be helpful in
understanding the minimum amount of money the company needed to spend on social and
environmental issues in last five years to comply with the requirements of CSR (Teodorescu,
2014).
INCOME STATEMENT OF WELLS FARGO & CO

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
All amounts are in US$ millions barring per share
data.
2014-
12
2015-
12
2016-
12
2017-
12
2018-
12
Revenue
Interest income
Income from Leases and Loans 36497 37379 40298 42186 44891
Income from other assets 11055 11898 13365 16723 19756
Total interest income 47552 49277 53663 58909 64647
Expenses (interests)
Interest on Deposits 1096 963 1395 3013 5622
Interest on Short-term borrowing 59 64 330 758 1717
Other interest expense 2870 2949 4184 5581 7313
Total interest expense 4025 3976 5909 9352 14652
Net interest income 43527 45301 47754 49557 49995
Noninterest revenue
Commissions and fees 33491 34181 33374 31473 29533
Lending and deposit-related fees 14370 14379 13968 11983 10217
Securities gains (losses) 593 952 942 479 108
Credit card income 3431 3720 3936 3960 3907
Insurance premium 1655 1694 1268 1049 429
Other income -
15100
-
16400
-
13854
-
11380
-9296
Total noninterest revenue 38440 38526 39634 37564 34898
Total net revenue 81967 83827 87388 87121 84893
Provisions for credit losses 1395 2442 3770 2528 1744
Noninterest expenses
Compensation and benefits 29942 30681 31893 33371 33024
Occupancy expense 2925 2886 2855 2849 2888
Tech, communication and equipment 1973 2063 2154 2237 2444
Amortization of intangibles 1370 1246 1192 1152 1058
Other expenses 12827 13098 14283 18875 16712
Total noninterest expenses 49037 49974 52377 58484 56126
Income (loss) from cont ops before taxes 31535 31411 31241 26109 27023
Provision (benefit) for taxes 10307 10365 10075 4917 5662
Other income (expense) 1829 1848 772 991 1032
Net income 23057 22894 21938 22183 22393
Preferred dividend 1236 1424 1565 1629 1704
Net income available to common shareholders 21821 21470 20373 20554 20689
Earnings per share
Basic 4.17 4.18 4.03 4.14 4.31
Diluted 4.1 4.12 3.99 4.1 4.28

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
The Corporations Act 2001 does not specify any particular percentage of profit to be spent on
corporate social initiatives rather it is more complex with the Act specifically mentions that
turnover is also one of the crucial yardsticks thus, there is no point of using profit as the main
yardstick for spending on social and corporate initiatives (Wells Fargo & Co., 2008).
Corporate Social Responsibility highlights:
The annual report of Wells Fargo & Company will be helpful in understanding the initiatives
taken by the company to fulfill its corporate social responsibilities. The annual report of the
company clearly indicates that the following initiatives have been taken by the company to
comply with its obligations as a part of the society (Young and Marais, 2011).
Strengthening communities:
The company has made a huge contribution to the society by strengthening the community with
contribution of more than $444 million and 2 million hours to the social cause in all across the
globe. The contribution of $444 million and 2 million hours have been fully invested to improve
the lives of people in all across the globe. The contribution of $444 million with 2 million hours
have played a major role in strengthening the economies in different country including US and
Australia.
Contribution towards empowering diverse and small businesses:
Diverse and small businesses often end up creating more job than large business houses. Small
and diverse businesses create huge value for the economy as a whole. The company has
contributed to growth of small and diverse businesses by empowering these businesses. In fact
the company has awarded $94.8 million in capital and revenue grants to help the small and

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
diverse businesses to grow. Since 2015 the company has specifically taken initiatives to
empower small businesses to grow.
Economic equity and employment:
The company also supports economic equity and employment of more than 36000 people
through empowerment of small and diverse businesses in different parts of the globe including
Australia.
Taking initiatives to accelerate low carbon economy:
The company has created string organizational culture and as a result the company met its 100%
electricity requirements by using renewable energy. The company has also pledged to provide
$200 billion to finance sustainable business projects on or before 2030 (Wells Fargo focuses on
sustainable homeownership, 2017).
Reduction of carbon foot print by reducing the emission of greenhouse gas:
The company has pledge support to reduce greenhouse gas emission by going green. Thus, the
company not only uses renewable energy to meet its electricity and other energy requirements
but the company has also specific weeks where it invest significant amount of time and funds to
spread awareness about the importance of using clean energy. Expansion of access to clean
energy by providing more than 2000 tribal households with low income solar power to reduce
the energy bills. The company has also taken responsibility of providing training to more than
10000 people in clean energy. The company has already provided 3500 with necessary training
in clean energy.
Affordable housing scheme for economically backward people:

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
The company has finance more than 31800 affordable housing projects including rental units for
economically backward people. In addition the company has also created 3900 home owners
with its neighborhood lift program. With the objective of revitalizing neighborhood the company
provides the home buyers down payment assistance in education and other aspects of life.
Financial health improvements:
The banking program of the company has reached more than 1.7 million people by providing
them financial education in the banking and financial service sector. The company has given
special attention to the students with disabilities in this program to ensure equal playing field for
both able and differently able people.
Recommendations:
The reason for the news piece to term Wells Fargo as most transparent in social, economic and
governance metrics is mainly due to the above steps the company has taken over the years to
improve the lives of millions in all across the globe including Australia. However, as seen in the
extract of publication of Newsroom on 8th April, there is still 11% transparency gap. Thus,
though the company is certainly positively placed with most transparent group in the study
commissioned by the Financial Times there is still significant room of improvement. In order to
further reduce the transparency gap of 11% the following steps shall be taken by the
management of the company.
Documentation and maintenance of proper record for each and every single financial transaction
in relation to the corporate social responsibility initiatives:
The company should maintain documents and records for each and every single transaction and
events concerning the CSR initiatives of the company.

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
A committee with independent Board members shall form a CSR committee:
A committee with independent board members shall be formed to look after all activities and
operations in relation with corporate social responsibility initiatives.
Regular meeting of the committee:
Often it has been seen that the CSR committee is though formed but they seldom meet and
discuss on important CSR issues. Thus, the company should ensure that the CSR committee is
not only formed but also held meeting at regular intervals to discuss important CSR issues.
More detailed accounting of contribution towards the society:
The company has already contributed $444 million in fund and 2 million hours in empowering
the society. It is important to keep detailed accounts of amount spent and time invested on
different activities to ensure accountability.
In addition the company should increase its contribution in every social and environmental
causes that it has decided to enter. Thus, from affordable housing to financial education to the
students; from accessing clean energy to reducing greenhouse gas emission. Increasing efforts
and contribution in these causes will help in further improving the CSR reporting transparency
on social environmental and governance metrics.
Conclusion:
In conclusion it is safe to say that Wells Fargo & Company has been outstanding as far as
CSR initiatives and reporting are concerned. The news article describing Wells Fargo as most
transparent in social environmental and governance metrics is a proof to that observation.
However, there is room for improvement and by following the suggestive course of actions the

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
company can further decrease the transparency gap of 11% as per the study commissioned by the
Financial Times and published by the Newsroom on 8th April, 2019.

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
References:
Amira, N. (2013). Looking for Evidence of the Relationship between Corporate Social
Responsibilities and Corporate Financial Performance in an Emerging Market. SSRN
Electronic Journal, 2(3), pp.12-37.
Buhmann, K. (2011). The Danish CSR Reporting Requirement as Reflexive Law: Employing
CSR as a Modality to Promote Public Policy. SSRN Electronic Journal, 2(3), pp.12-35.
Crisan, C. and Borza, A. (2012). Social Entrepreneurship and Corporate Social
Responsibilities. International Business Research, 5(2), p.7.
Hoque, N., Uddin, M., Ibrahim, M. and Mamun, A. (2014). Corporate Social Responsibilities
(CSR) as a Means of Materializing Corporate Vision: A Volvo Group Approach. Asian
Social Science, 10(11), pp.33-46.
HyeJung Ban (2014). The Impact of CEO Characteristics on Corporate Social
Responsibilities. Korea International Accounting Review, null(53), pp.252-275.
Koep, L. (2017). Tensions in Aspirational CSR Communication—A Longitudinal Investigation
of CSR Reporting. Sustainability, 9(12), p.2202.
Newsroom.wf.com. (2019). [online] Available at: https://newsroom.wf.com/sites/wellsfargo3-
e.newshq.businesswire.com/files/doc_library/file/FT_HIP_Investor_ESG_transparency.pdf
[Accessed 16 May 2019].
Newsroom.wf.com. (2019). Wells Fargo Among ‘Most Transparent’ on Environmental, Social,
and Governance Metrics | Wells Fargo Online Newsroom. [online] Available at:

ACCOUNTING THEORY AND CONTEMPORARY ISSUES
https://newsroom.wf.com/press-release/awards-and-recognition/wells-fargo-among-most-
transparent-environmental-social-and [Accessed 16 May 2019].
Park, J., Lee, H. and Kim, C. (2014). Corporate social responsibilities, consumer trust and
corporate reputation: South Korean consumers' perspectives. Journal of Business Research,
67(3), pp.295-302.
Teodorescu, M. (2014). Landmarks of Corporate Social Responsibilities in
Romania. International Letters of Social and Humanistic Sciences, 26(2), pp.53-62.
Wells Fargo & Co. (2008). Mergent's Dividend Achievers, 5(4), pp.306-306.
Wells Fargo focuses on sustainable homeownership. (2017). Corporate Philanthropy Report,
32(3), pp.1-12.
Www08.wellsfargomedia.com. (2019). [online] Available at:
https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/annual-reports/
2018-annual-report.pdf [Accessed 16 May 2019].
Young, S. and Marais, M. (2011). CSR Reporting: An Institutional Perspective. SSRN Electronic
Journal, 3(5), pp.76-98.