Corporate Social Responsibility and Banking

The assignment delves into the crucial topic of corporate social responsibility (CSR) within the banking sector. It examines various research articles that investigate the relationship between financial performance and CSR in Islamic banks, the impact of large controlling shareholders on stock price synchronicity, and the influence of stakeholder theory on green marketing strategies. Additionally, it considers the role of banking and monetary policy in financing a low-carbon economy and explores the evolving role of employees in service theory and practice. The assignment provides a comprehensive analysis of CSR's significance in contemporary banking.

Running head: ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
Name of the Student
Name of the University
Author Note

1ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
Table of Contents
Part B - Analysis of the Commonwealth Bank Stakeholders..........................................................2
Part C - Recommendations..............................................................................................................5
References........................................................................................................................................8

2ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
Part B - Analysis of the Commonwealth Bank Stakeholders
The fundamental legitimate obligations of executives are to act in compliance with
established goals of the Bank in light of a sound concern for the bank. Furthermore, the
obligations are owed to the bank for the most part and not the investors at a given point of time.
Although the huge responsibility of governing the bank as a whole is endowed upon the
directors, they receive various incentives especially in the form of money.
The most prominent task of shareholders is to provide the funding. Furnishing
information is also a major responsibility of the shareholders (Bebchuk, Cohen and Wang 2014).
Shareholders of the Commonwealth Bank have the capacity to impact the company’s decisions
to a certain extent. Shareholders can expect a total return of about 104.8% at the end of 5 years
(Commbank.com.au, 2018). Apart from this, special discounts and bonuses are also given to the
shareholders. Shareholders consequently expect to be treated with importance while important
decisions are made.
Customers are the primary source of income for the bank. Banks invest the money
deposited by the customers and gain huge profits from it. Customers expect a secure and hassle
free deposition and transaction of their finances. According to the Shareholder Review of 2016
of the bank, deposits made by the customers represented 66% of the total group funding
(Commbank.com.au, 2018).
As in any other line of work, bank employees regulate and conduct all the interactions
with customers. Their tireless efforts ensure the productivity of the bank at large. Employees
receive bonuses and special benefits in return. The profession of banking is regarded as very
respectable in general.

3ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
Bank directors and the management teams are the gatekeepers of money related
solidity, which is a standout amongst the most valuable open merchandise. Bank management
teams need to guarantee that the bank procedure as considered and executed by administration
has a proper functional profile. That budgetary information precisely portrays the bank's state in
general and thus cautious measures are needed to ensure investors' cash and investors' assets
security (Boubaker, Mansali and Rjiba 2014). In short, the directors perform their activities
without acquiring unreasonable risks. According to the normative model, supervisors or
directors need to ensure that unnecessary and impetuous risks are not taken by the bank (Parente
et al. 2016). Establishing a well scrutinized policy can reduce these risks significantly. It is the
responsibility of the director to make sure that all the employees and workers adhere to those
norms and regulations (Agné, Dellmuth and Tallberg 2015). However, introducing a policy that
somewhat restricts the actions of employees and workers can be challenging at times. Thus it
needs to be in congruence with the bank's ideologies and should be of the best interests of all the
employees as well (Bukair and Rahman 2015). Nevertheless, directors need to maintain a
certain level of independency while constructing these policies. Any bias or partiality will not be
tolerated on the part of the director as the director of the bank is usually held accountable for any
major issues that the bank faces.
Employees are considered as the limbs of any working organizations. From day to day
interaction with the customers to making sure all the transactions are completed securely and on
time, every duty is distributed among employees at different levels (Ferdous and Moniruzzaman
2015). Thus, it is essential that they work with commitment and perseverance. Bank workers,
otherwise called bank employees, are in charge of the vast majority of the ordinary operations at
money related establishments. They must monitor all the cash that goes through a bank. This is

4ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
no simple errand, as a bank of this magnitude has numerous exchanges each day. The expected
set of responsibilities of a bank employee uncovers what bank employees do to screen each
penny (Sharif and Rashid 2014). According to the Lawrence Kohlberg's different stages of
moral development model, the pre conventional level suggests that obedience and self interest
should be incorporated in the employees (Mallin, Farag and Ow-Yong 2014). Employees should
have the urge to avoid punishments or penalties at any cost. This urge can be enhanced
significantly if the work in hand can be viewed from a perspective of self interest. Working
harder for benefits or incentives will only elevate the overall quality of the work. Conventions
are the second level of Kohlberg’s hypothesis (Thoma, Bebeau and Narvaez 2016). Working by
the social norms and maintaining a respectable character should be the main focus of the
employees. Several laws and policies are also been implemented and developed in banks to
maintain any such policies.
The stakeholder theory refers to the management procedures of an organization that
comprises of business ethics, morals and values (Hung 2015). According to the model, a bank
has primarily two types of stakeholders, viz. Internal Stakeholders and External Stakeholders.
Internal stakeholders are the various employees associated with the bank, the managers and the
owners of the bank (Hörisch, Freeman and Schaltegger 2014). Whereas, society, shareholders,
customers and the suppliers are the instances of external stakeholders. This theory is concerned
with providing the maximum value to the stakeholders, especially shareholders. Since a bank
relies heavily on the shareholders, both financially and administratively, it is the duty of the
shareholders to encourage a steady prosperity of the bank. Shareholders, who have been
associated with the bank for long and have significant knowledge about the bank's functionality,
can provide guidance to the board of directors. In case the directing board decides on doing

5ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
something unethical, the shareholders can sell the shares and consequently make the bank incur
huge financial losses.
Part C - Recommendations (Memorandum)
dd/mm/yyyy
MEMOANDUM TO: The Board of Directors, The Commonwealth Bank of Australia
FROM: -name-
SUBJECT: Restoring credibility of the Commonwealth Bank of Australia.
The three areas that should be regarded more important than the rest are the action of the
board, functionality of the management and the assimilation of a decent human resource
department.
Rest’s four component model is named after its developer, James Rest (1983). It
describes the four abilities. Moral affectability concentrates on the capability to distinguish
between the circumstances that are ethical and those which are not. Moral judgment obliges the
person of concern to analyse the situation and take appropriate action. Moral inspiration includes
prioritization of ethical rationalities. Finally, moral actions are meant to be taken on the basis of
moral skills that are required.
The main purpose of the board of directors is to make sure that the company prospers as a
whole (Jizi et al. 2014). Apart from all the professional issues, the board members face various
issues regarding corporate governance. It is of paramount importance that the board members

6ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
regularly meet and discuss the numerous policies and norms. Members are entrusted with
governing the bank in the right direction. In recent times, the bank has been involved in various
dishonoring acts and issues that even made the CEO resign. Thus an overall change is needed,
starting at the top of the administration.
Clueless management adds to instability of the administration significantly. Without a
good management team to implement the strategies and policies defined by the board of
directors, no organization can function accurately. A capable management team will guide the
bank to a more productive and profitable path (Campiglio 2016). With introduction of systematic
policies that ensures profitability of the bank and the skills to operate even under substandard
leadership of board members, a good management team can take the bank a long way.
A well-structured human resource development department can provide the bank with
stability and honesty. From recruiting skilled and honest employees to maintaining a safe and
honest environment in the office, human resources department ensures that a certain level of
dignity is maintained through the hierarchy of officials.
It is evident from the reports in the recent times that there is a lack of proper and ethical
leadership in the Commonwealth Bank of Australia. Thus, a change in the leadership would cast
an overall change over the bank for good. A bank of such high popularity will always be under
the radar of media and other inspective organizations. Any sort of corruption or fraudulence will
be exposed sooner or later. Time and again the bank has been involved in controversies. In spite
of existing norms and policies of the bank, employees at different levels have been involved in
corruption. A rigid board of members with ethical mindset will make certain that corruption is
not tolerated within the bank.

7ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
A management team with strong ethics helps to maintain a standard quality of work.
Different ethical programs and norms highlight the required values while making sure that the
organization’s ideologies are in alignment with these values. A proper management team
dedicates itself to the promotion of the bank’s public image. Scrutinizing every policy from an
ethical point of view leads to an ethical environment overall. Needless to say, in the context of
recent scandals, the bank needs it more than ever. It is better to invest more on ensuring a
corruption free administration than to face a litigation charge.
Thoughtfulness regarding business morals is basic amid times of principal change and is
of utmost importance in times much like those confronted now by organizations, both
philanthropic or for benefit. Amid times of progress, there is regularly no reasonable good
compass to manage pioneers through complex clashes about what is correct or off-base.
Proceeding with thoughtfulness regarding morals in the working environment sharpens pioneers
and staff to how they need to act — reliably. Human Resource department will ensure a better
relation between customer and the employees. In recent times the public image of the bank has
somewhat been derelict. Employees need to be assessed carefully depending on their
personalities and attitudes. Human resource department complies with the laws established for
the benefit of workers as well as the organization itself. In case the department fails to do so, the
working environment may become unsafe inside the bank which will in turn result in degraded
productivity and cause dissatisfaction among employees and customers, both. Human Resource
officials must outline and screen work procedures to diminish the open doors for internal
larceny. Human resource strategies should scrutinize and carefully observe each steps of money
collection, handling that money and keep accounts of all exercises by means of video
surveillance. In case a corrupt official makes an attempt to take money from a bank, the HR

8ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
division must deal with the necessary lawful actions and regulatory procedures required by the
bank's policies.

9ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
References
Boubaker, S., Mansali, H. and Rjiba, H., 2014. Large controlling shareholders and stock price
synchronicity. Journal of Banking & Finance, 40, pp.80-96.
Parente, T.C., Parente, T.C., Machado Filho, C.A.P. and Machado Filho, C.A.P., 2016.
Corporate social responsibility: perceptions of directors in Brazil. Management Research
Review, 39(11), pp.1472-1493.
Sharif, M. and Rashid, K., 2014. Corporate governance and corporate social responsibility (CSR)
reporting: an empirical evidence from commercial banks (CB) of Pakistan. Quality &
Quantity, 48(5), pp.2501-2521.
Mallin, C., Farag, H. and Ow-Yong, K., 2014. Corporate social responsibility and financial
performance in Islamic banks. Journal of Economic Behavior & Organization, 103, pp.S21-S38.
Bebchuk, L., Cohen, A. and Wang, C.C., 2014. Golden parachutes and the wealth of
shareholders. Journal of Corporate Finance, 25, pp.140-154.
Boubaker, S., Mansali, H. and Rjiba, H., 2014. Large controlling shareholders and stock price

10ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
synchronicity. Journal of Banking & Finance, 40, pp.80-96.
Hörisch, J., Freeman, R.E. and Schaltegger, S., 2014. Applying stakeholder theory in
sustainability management: Links, similarities, dissimilarities, and a conceptual
framework. Organization & Environment, 27(4), pp.328-346.
Hung, H.F., 2015. The Causal Model of Green Marketing Strategy from View of Stakeholder
Theory and Marketing Exchange. Journalof BusinessandEconomics, p.460.
Campiglio, E., 2016. Beyond carbon pricing: The role of banking and monetary policy in
financing the transition to a low-carbon economy. Ecological Economics, 121, pp.220-230.
Agné, H., Dellmuth, L.M. and Tallberg, J., 2015. Does stakeholder involvement foster
democratic legitimacy in international organizations? An empirical assessment of a normative
theory. The Review of International Organizations, 10(4), pp.465-488
Thoma, S.J., Bebeau, M.J. and Narvaez, D., 2016. How not to evaluate a psychological measure:
Rebuttal to criticism of the Defining Issues Test of moral judgment development by Curzer and
colleagues. Theory and Research in Education, 14(2), pp.241-249.
Commbank.com.au. (2018). Cite a Website - Cite This For Me. [online] Available at:
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/annual-
reports/annual_report_2017_14_aug_2017.pdf [Accessed 12 Jan. 2018].
Bowen, D.E., 2016. The changing role of employees in service theory and practice: An
interdisciplinary view. Human Resource Management Review, 26(1), pp.4-13.

11ETHICAL RESPONSIBILITIES OF THE STAKEHOLDERS OF CBA
Bukair, A.A. and Rahman, A.A., 2015. The effect of the board of directors' characteristics on
corporate social responsibility disclosure by Islamic banks. Journal of Management
Research, 7(2), p.506.
Ferdous, M. and Moniruzzaman, M., 2015. An empirical evidence of corporate social
responsibility by banking sector based on Bangladesh. Asian Business Review, 3(4), pp.82-87.
Jizi, M.I., Salama, A., Dixon, R. and Stratling, R., 2014. Corporate governance and corporate
social responsibility disclosure: Evidence from the US banking sector. Journal of Business
Ethics, 125(4), pp.601-615.