Corporate Social Responsibility and its Impact on Banks

CORPORATE SOCIAL RESPONSIBILITY 1
CORPORATE SOCIAL RESPONSIBILITY
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CORPORATE SOCIAL RESPONSIBILITY 2
Introduction
Corporate Social Responsibility is an organization’s intellect of responsibility to the
environment and community i.e. both societal and environmental, in which it operates. It’s the
mechanism through which corporate institutions in the economy accomplish their charitable
visions to the society. It’s a powerful tool of making sustainable competitive profit and attaining
long-term values for both stakeholder and shareholder.
The existence of the corporate social responsibility framework has led to the following
three models; the stakeholder theory, the business ethics theory and the shareholder value theory
of Corporate Social Responsibility. In the stakeholder theory, ethical and pragmatic as thought to
corporate success assumes large welfares of investors than the shareholder welfare, the theory
insists on special social rather than others not related to the organization. The business ethics
theory substantiates Corporate Social Responsibility on the following basis; changing and
developing responsiveness and anticipations, intrinsic ethical values, and corporate citizenship.
The theory sees Corporate Social Responsibility as more charitable and moral concern but not
legal and economic. In the shareholder value theory, Neoclassical economists argue that the role
of a corporate is doing legal business that leads to the growth of the society and economy and its
role in the society ought not be tangled with the social responsibilities carried out by
organizations who are not profit oriented, government band NGOs. Under this theory, it’s
believed that investors are the business managers and the stakeholders are their agents who have
the responsibility to serve the shareholders attention rather than any others (Brock, 2008, p.75).
Corporate social responsibility is progressively becoming one main part of the corporate
agenda for financial institutions (FIs). As argued by the different theories, every partner in the
system has its interest and wanted them given more or all the attention by the corporate. Balance

CORPORATE SOCIAL RESPONSIBILITY 3
for the interests of the stakeholders and shareholders have to be considered for smooth running
of business and a positive impact to the society. Banks are one of the components in the financial
sector and thus can be good companies to use as a case study.
Evaluation of CSR initiatives employed by banks
Recently, Barclays bank has invested in community based activities and grassroots
development largely valuing the potential in transforming lives through the sporting activities
(Morgan, 2013, p.251). Barclaycard Free Kicks by 2004 invested $1.5 million to fund football in
underprivileged communities, helping over 200000 children and giving them strong links with
football foundation. In 2004, the bank launched a program called Spaces for Sport. This is a
global grassroots sporting campaign that gives less privileged youths a room for positive values
of sport and earn a living from sporting. The strategies are now global and operate on 200
community centers in UK with over 53000 visits weekly (Steen, 2014, p.102)
The LLYODS banking group also has a direct impact in the economics status of the
society; it is one of the major employer and buyer of commodities and services from the society.
It’s one of the largest employers that is a private sector spending 4.4 billion Euros on salary and
5 billion Euros in purchasing goods and services from the society. The bank has a active
investment in the community, community charitable program and sports sponsorship (Genetay,
and Molyneux, 2016, p.77).
These banks have received a positive reputation, there was a good employee turnover and
there was increased customer satisfaction. These were attributed by the fact that the community
saw a payback from the banks. Involvements of these banks in addressing society problems had a
positive impact to the society and the banks themselves. It is thus important for the business