Social responsibility and sustainability Assignment 2022

Social responsibility and sustainability
task 3: Royal Commission into
Misconduct in the Banking
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Table of Contents
Introduction................................................................................................................................3
Sustainability theory and framework specific analysis..............................................................3
Ethical approach understanding from the theoretical perspective and business context...........5
Business decision making and diverse stakeholder’s interest inclusion....................................7
Legislation concerning social responsibility and ethical conduct..............................................9
Social Responsibility..............................................................................................................9
Ethical Conduct......................................................................................................................9
Reference..................................................................................................................................11
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Introduction
In the earlier time the company’s primary goal was based on the profit making reality. This
approach then was revised to focus on the wealth maximisation of the shareholders of the
business (Benn and Dunphy, 2013). Both of these approaches are more or less myopic in
nature as the business was following one kind of responsibility and stakeholder’s interest.
Then in the later year a more holistic and key stakeholder approach based business governing
approach developed which would be more responsible in its working and sustainable in
functioning.
In this report The Royal commission that focused their research and findings on the banking
sector misconduct in the commonwealth of Australia provided recommendations on the basis
of the governance, culture and remuneration, has been consulted to develop this holistic
report (royalcommission.gov, 2019). In this report those aspects would be discussed based on
the further research on those subjects. This report considers unequivocally that the principle
responsibility of financial miss-conduct in the financial service industry lies on the people
who are controlling and managing that entity. However this report also through light on other
aspect of a financial institute management and financial advice generated based on those
aspects.
The reports takes into account the role of the organisational culture, the way it is governed
and also simultaneously look into the remunerations, incentives, compensation practices
within the organisation along with the risk associated with the business conduct, compliance
and regulatory risk associated (royalcommission.gov, 2019). Taking note from the
commission report this report is aiming to address the business sustainability, business
responsibility and ethics, stakeholder interest specific decision making, and the principle and
legislation specific discussion on the business responsibility and the sustainability specific
practices (Benn and Dunphy, 2013).
Sustainability theory and framework specific analysis
One of the important sustainability frameworks for the businesses would be the triple bottom
line framework. This is an important accounting framework that is developed in a holistic
approach and not just focusing on the profitability aspect or the one bottom line of the
business. In this triple bottom-line framework there are three Ps that are the profit, planet and
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people (Schulz and Flanigan, 2016). This framework is focusing on the business activities
which would influence the sustainability factor of the business. One of the important benefits
of this approach is that the business in this approach is not only focusing on the shareholder’s
value maximisation or profitability aspect but also the greater environmental and social
values.
The people aspect of this model takes into consideration the larger stakeholder’s of the
business, namely the staffs, surrounding community, suppliers, distributors and so on. Their
well being, welfare and supporting them would be an important responsibility of the business.
On the other hand the planet aspect focuses on the ecological impact of the business and
minimising that negative impact would be an important responsibility for the business
(Schulz and Flanigan, 2016). The business also has to be financially viable and they have to
manage the financial health along with long term profitability, as without the sound financial
position the business would not be able to fulfil other responsibilities.
This theoretical framework can be understood from the CBA or the Commonwealth Bank of
Australia’s perspectives. In recent times, there were few incidents that influenced the APRA
for the Prudential Inquiry on the CBA from the perspective of accountability, culture and the
governance of the banking group (apra.gov, 2018). The report highlighted the non financial
risk associated with the working of CBA. This risk factor would be negative for the
profitability and long term financial health of the banking group and thus is impacting one of
the important bottom-line for the sustainability of the business.
Further the report cited the complacency, risk reaction approach, inability to learn from the
mistakes and experiences. It becomes insular, excessive, collaborative and collegial
environment of working that influence the scope for constructive criticism. These are some of
the important cultural issues in the organisation which are increasing the risk factors
(apra.gov, 2018). In this process the customers were also getting negatively influenced and it
impact the people centric sustainability issue.
The Royal commission also dealt with the non financial risk factor. In the context of the CBA
this report stated that the prudential inquiry showed that the lack of capability to manage this
non financial risk from the compliance and the operational risk perspective was significant.
The report has recognised that the global financial crisis has influenced this kind of financial
organisation to employ more and more resource for the financial risk management but for the
non financial risk the lack of attention is evident (royalcommission.gov, 2019). Thus the
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