Corporate Responsibilities and Ethics

This report focuses on the CSR activities and governance structure of National Australia Bank through the application of analytical framework such as Wartick and Cochrane’s Typology and Carroll’s Pyramid. The report also highlights how National Australia Bank responds to the expectations of key stakeholders along with the gaps in the espoused and realized performance on CSR.

RUNNING HEAD: Corporate Responsibilities and Ethics
Corporate Responsibilities and Ethics

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Contents
Introduction......................................................................................................................................2
Background of National Australia Bank..........................................................................................2
CSR Activities of National Australia Bank.....................................................................................2
Carroll’s Pyramid of Corporate Social Responsibility....................................................................3
Wartick and Cochrane’s Typology..................................................................................................5
Governance Structure......................................................................................................................5
Response to Key Stakeholder Expectations....................................................................................6
Gaps between Espoused and Realized Performance on CSR..........................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
Corporate Social Responsibility (CSR) can be defined as a management concept in which the
environmental and social concerns are integrated by the companies in their business operations.
CSR is the way in which a balance between the social, economic and environmental imperatives
is achieved by a company along with addressing the expectations of the stakeholders and
shareholders. The proper implementation of a CSR concept in a company brings a number of
competitive advantages such as increased profits and sales, savings in operations cost, efficient
base of human resource, improved reputation and brand image, better risk management processes
and decision making and improved productivity (Schwartz, 2017).
This report focuses on the CSR activities and governance structure of National Australia Bank
through the application of analytical framework such as Wartick and Cochrane’s Typology and
Carroll’s Pyramid. The report also highlights how National Australia Bank responds to the
expectations of key stakeholders along with the gaps in the espoused and realized performance
on CSR.
Background of National Australia Bank
National Australia Bank is considered to be one of the largest financial institutions in Australia
in terms of customers, earnings and market capitalization. The bank has employed more than
30,000 employees for the serving its customers who are spread at more than 900 locations in
Australia, New Zealand and all across the world. Being the largest business bank of Australia, it
also works with small, medium and large businesses. The bank was formed in the year 1982 as
National Commercial Banking Corporation of Australia Limited by the merger of Commercial
Banking Company of Sydney and National Bank of Australasia. The resultant company was later
renamed as National Australia Bank Limited. The Bank is included in the list of ASX Top- 100
companies as its stock meets the investment benchmarks and minimum volume.
CSR Activities of National Australia Bank
The approach adopted by National Australia Bank for undertaking social responsibility is to
make a sustainable and positive impact in the lives of their people, customers, communities,

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shareholders and environment. Such practices are adopted for the purpose of achieving their
vision i.e. to become the most respected bank of Australia and New Zealand. They aim at
creating a social impact along with building on corporate responsibility and strong foundations in
philanthropy for leveraging the expertise and core assets in the creation of shared value.
The basic aim behind their activities is to keep their customers as their prime focus along with
using their strength as a major employer, bank and community’s active member for making
difference in these areas:
Resilience and Financial Inclusion- Assisting people in accessing affordable and fair financial
services. They aim at helping Australian and New Zealanders to build financial resilience for
recovering from financial shocks.
Environmental wellbeing- They address the opportunities and risks due to climate change that
arise from transition to low- carbon communities. Overall their aim is to adopt a sustainable
approach for the purpose of minimizing their environmental footprint in the management of their
business along with providing assistance to the customers in doing the same.
Social Cohesion- National Australia Bank works with their partners for the purpose of
addressing enormous issues of the society in order to build connected and stronger communities.
This includes family and domestic violence, gender equality, supporting indigenous success
along with the exploration of their role in affordable housing (Tai & Chuang, 2014).
Carroll’s Pyramid of Corporate Social Responsibility
Different corporate social responsibilities have been organized by Carroll as a four- layered
pyramid model which is also known as pyramid of responsibilities. The different responsibilities
mentioned in the pyramid are economic, legal, ethical and philanthropic.

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(Source: Carroll, 2016)
The economic responsibilities of as an establishment are to become profitable, make strategic
decisions and to minimize cost. In other words, a society requires the economic performance of
an organization. The second layer comprise of the legal responsibilities required by the society.
It includes expectations such as obeying the law. The next stage is of the ethical responsibilities
which are expected but not required by the society. The ethical responsibilities require the
organization to behave ethically by performing the acts which are fair and right for the
organization and avoid harm. Philanthropic responsibilities are on the top of CRR pyramid of
Carroll and require an organization to perform the role of a good corporate citizen by taking
steps for improving the quality of life of the society (Radzi, Lee, Halim & Siwar, 2018).
National Australia Bank established its foundation with the fulfillment of its economic
responsibilities. When it was able to generate sufficient profits with minimum costs then it
headed towards other responsibilities. For fulfilling its legal responsibilities, National Australia
Bank has set up an audit committee which is responsible for ensuring the compliances with the
applicable laws, rules and regulations. The ethical responsibilities of the bank are aimed to be
fulfilled by following five values along with the policies and odes formulated by them which
guide them in their behavior and decision making. Such values include do the right thing, be
bold, will to win, passion for customers and respect for people. Philanthropic responsibilities are
aimed to be fulfilled by the bank by undertaking diversity and inclusion in the workplace along

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with the promotion of gender equality. It supports Indigenous Australians along with supporting
the customers in staying safe from domestic and family violence and assisting in crisis and
natural disasters.
Wartick and Cochrane’s Typology
The interpretation made by Carroll relating to CSR was advanced by Wartick and Cochran. Their
model reflects the interaction between the process of social responsiveness, principles of social
responsibility and policies that are developed for the purpose of addressing the social issues
(Zucchella & Urban, 2014).
The application of this framework in the context of National Australia Bank provides that every
attempt is made by the bank for bringing a positive change in the society and making Australia
move forward. It has contributed $13.4 billion towards the financing activities that supports
transition towards low carbon economy and address climate change. It has also contributed
$44.6 million towards the development of the communities in the year 2017. It also provides
hardship assistance to the customers and supports them in staying safe from family and domestic
violence (National Australia Bank, 2016).
Governance Structure
The governance structure of National Australia Bank comprises of the following parties which in
turn assists in the enhancement of accountability to the stakeholders and shareholders, ensuring
accurate and timely disclosure of material facts and maintaining business integrity and ethics.
Board of Directors- the board of National Australia Bank is capable of providing the overall
strategic direction for the entire group along with representing and serving the interest of their
shareholders by way of creating sustainable value. The board comprise of majority of
independent non- executive directors having broad range of skills, expertise and experience from
different backgrounds.
Board Committees- for the purpose of effectively carrying out the responsibilities, a number of
committees have been established by the board such as risk committee, audit committee,
remuneration committee, nomination committee.

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Audit Committee- the board is supported by the audit committee for maintaining the internal
control system of the National Australia Bank’s group along with ensuring the compliances with
the applicable rules, laws and regulations. The audit committee is also responsible for applying
the procedures and accounting standards that are designed for the purpose of safeguarding the
assets of the organization and for the maintenance of integrity in reporting and external financial
disclosure.
Risk Committee- the board is supported by the risk committee by way of overseeing the risk
profile of the National Australia Bank along with making appropriate recommendations that are
concerned with the future risk appetite and practices related to management of risk. The risk
committee is responsible for reviewing the plans of management for mitigating risks, monitoring
the implementation of the plans and operation of control systems and internal compliances.
Remuneration Committee- the remuneration committee performs the function of supporting the
board by way of assessing and reviewing the remuneration practices and policies of the National
Australia Bank. The committee also performs the annual assessment of the effectiveness of the
policies in the support of their business strategy.
Nomination Committee- the nomination committee performs the function of supporting the
board in monitoring its composition and size including succession planning for senior
management and directors, evaluation of the performances of individual directors and board
committees and overseeing the professional development program of the board.
Response to Key Stakeholder Expectations
National Australia Bank takes all possible steps for responding towards the expectations of the
stakeholders. It strives to maintain a constructive and open dialogue with the stakeholders by
considering it important for the business. This is their way of understanding the expectations of
the community, identifying the issues and discovering the opportunities for bringing
improvement. The key stakeholders of National Australia Bank include employees and
contractors, customers, analysts, investors (fund managers, shareholders and superannuation
funds), suppliers, regulators, government and industry bodies, broader community such as their
community partners and non- government organizations (NGOs) and media.

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For the purpose of responding towards the expectations of the key stakeholders, National
Australia Bank has identified 7 major themes that are of prime importance to the stakeholders
and it is aligned with their ability for delivering their strategy. It continuously consults with a
number of stakeholders for improving their approach to modern slavery, human rights and
improper land acquisition. Their approach for the engagement of the stakeholders has been set
out in their Corporate Responsibility Policy which takes into account Stakeholder Engagement
Standard AA1000. They interact with their stakeholders in a responsive, respectful, authentic and
open manner in the issues relating to mutual importance. More than $ 500,000 has been
contributed by the National Australia Bank in the form of donations for supporting the
communities in their recovering from flooding, cyclones and other natural disasters (National
Australia Bank, 2016).
Gaps between Espoused and Realized Performance on CSR
There are some gaps in the espoused and realized performance on CSR by National Australia
Bank. Their aim was to make a sustainable and positive contribution to the businesses, people
and communities to whom the bank owes its success. The female representation on the board is
only 39% which is required to be increased for attaining its perspective of maintaining gender
equality in the workplace and the community. Moreover, among the 33,000 people employed by
the bank, approximately 200 employees are Indigenous Australians. The figure is required to be
increased for achieving the objective of creating a stronger community by way of supporting
Indigenous success (Sethi, Martell & Demir, 2017).
The amount of small loans and facilities provided to be utilized in the villages is further required
to be increased. More than 513,000 small loans have been granted since 2005 (National Australia
Bank, 2016). The bank needs to understand that the granting of small loans have the capability
of changing the entire scenario by contributing towards the individual development of the people
in the society. However, there is still a need for contributing more towards the recovery of the
communities from the trauma and fulfillment of their needs (Boulouta & Pitelis, 2014).

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Conclusion
Therefore, it can be concluded that National Australia Bank aims at becoming a good corporate
citizen by fulfilling its responsibilities towards the society. The CSR Activities of National
Australia Bank include assisting people in recovering from financial shocks, addressing societal
issues such as gender inequality, family and domestic violence and aims at supporting
indigenous success. It also aims at addressing the risk of climate change and takes steps for
minimizing their impact on the environment. The analytical frameworks such as Carroll’s
Pyramid and Wartick and Cochrane’s Typology have been applied on the practices undertaken
by National Australia Bank. The governance structure provides that various committees have
been formulated for ensuring overall compliance. However, there are some gaps in the
performance of CSR which are still required to be met.

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References
Boulouta, I. and Pitelis, C.N., 2014. Who needs CSR? The impact of corporate social
responsibility on national competitiveness. Journal of business ethics, 119(3), pp.349-364.
Carroll, A.B., 2016. Carroll’s pyramid of CSR: taking another look. International journal of
corporate social responsibility, 1(1), p.3.
National Australia Bank. 2016. CORPORATE GOVERNANCE AT NAB 2016 Corporate
Governance Statement, [Online]. Available at:
https://www.nab.com.au/content/dam/nabrwd/About-Us/corporategovernance/2016-corporate-
governance-statement.pdf [Accessed on: 15 June 2018].
Radzi, N.A.M., Lee, K.E., Halim, S.A. and Siwar, C., 2018. What Drives Them to Do CSR?
Another Empirical Study of CSR Motives from the Perspective of the Internal and External
Stakeholders. International Information Institute (Tokyo). Information, 21(3), pp.909-928.
Schwartz, M.S., 2017. Corporate social responsibility. Routledge.
Sethi, S.P., Martell, T.F. and Demir, M., 2017. An evaluation of the quality of corporate social
responsibility reports by some of the world’s largest financial institutions. Journal of business
ethics, 140(4), pp.787-805.
Tai, F.M. and Chuang, S.H., 2014. Corporate social responsibility. Ibusiness, 6(03), p.117.
Zucchella, A. and Urban, S., 2014. Futures of the sustainable firm: An evolutionary
perspective. Futures, 63, pp.86-100.