BUS320 - AMP's Actions: An Analysis of CSR and Ethical Theories

This report examines the ethical issues surrounding Australian Mutual Provident (AMP) following the Banking Royal Commission, focusing on the organization's continued charging of deceased customers for life insurance. It evaluates AMP's actions through the lens of Corporate Social Responsibility (CSR), stakeholder analysis, and ethical theories. The report discusses the concept of creating shared value and analyzes AMP's sustainability strategies concerning customers, community, and people. It also assesses AMP's adherence to the ASX 2010 principles and recommendations, emphasizing the importance of ethical conduct, risk management, and responsible remuneration. Ultimately, the report questions the ethical justification of charging deceased customers and highlights the need for AMP to align its practices with ethical standards and stakeholder expectations.

Running head: CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
Name of the Student
Name of the University
Author note

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Table of Contents
Introduction:........................................................................................................................4
Background and ethical question:....................................................................................5
Corporate Social Responsibility:.....................................................................................5
Creating shared value:.....................................................................................................7
Stakeholder analysis:.......................................................................................................8
ASX 2010 principles and recommendations:................................................................10
Ethical analysis:.............................................................................................................12

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Introduction:
The assignment will analyse an issue relating to the companies investigated by the
Banking Royal Commission. The chosen organization in this assignment is Australian Mutual
provident. The organization was founded in the year 1849 and has been a key financial service
provider in Australia. The organization has its operation in Australia and New Zealand and the
headquarter lies at Sydney, Australia. AMP has the largest shareholders registered in Australia;
this is because when AMP demutualised the policy holder of the organization received shares
(loans, retirement and education 2018).

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Background and ethical question:
After the investigation conducted by the banking royal commission, it can be seen that
AMP continues to charge the dead customers life insurance (Boleat 2012). AMP has admitted
that they continue to deduct life insurance premium from their deceased customer (Siegel 2013).
The reports suggest that the organization has charged more than 4600 deceased superannuation
life insurance customers. This has been done intentionally knowing that they are dead and there
was no more life insurer. The largest wealth manager of AMP owes about 1.3 million dollar in
lost earnings and the insurance premium to the deceased family members. The organization
knew about one of the similar incidents in 2016, but the organization started to investigate in
July after the revelations in the banking royal commission. On Monday, the customer and the
wealth executive told the enquiry team that there are other kinds of fees that also have been
deducted from the deceased customer’s account that also need to be refunded. The banking royal
commission heard the same incident when one of the staffs of the AMP questioned whether it is
justifiable to charge from the deceased customer’s bank account. Mr. Sainsburry explained that
the money which has been deducted from the account of the deceased customers will be
refunded once the death claim was submitted (Karim, Huda nad Khan 2012).
The ethical question that arises from the current scenario is that is it justifiable to charge
the deceased customer’s and deduct for their life insurance when there is no life to insure. The
amount which was deducted from the customer needs to be refunded to the deceased customer
family.

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Corporate Social Responsibility:
Corporate social responsibility is a management theory where an organization integrates
the entire social and the environmental concerns in their workplace environment to better
the interaction with the key stakeholders of the company (Saeidi et al. 2015). CSR helps
in providing better understanding of the environment and the responsibilities which helps
the company to achieve balance among the economic, social and environmental
imperatives and at the same time fulfilling the expectations of the key stakeholders of the
organization.
The organization has certain rules and regulations that they need to follow for
sustaining in the organization. The organization is very much committed in managing the
business in a sustainable manner for example the organization created long-term, shared
values for their customers and the community. The sustainability of AMP is mainly built
within the three areas of focus – customers, community and people. AMP have been
involved in sustainability, when they reduced their environmental footprints being an
organization and improved the gender diversity in the organization. According to AMP
the organization is recognised for their social, environmental and governance policies
through the inclusion in FTSE4Good index series (Belghitar, Clark and Deshmukh 2014).
To help and continue the progress that the organization made till date and to set a path for
future the organization is focused on strengthening their sustainability strategies. AMP is
looking forward to:
 Continue in integrating the sustainability in Australia Mutual Provident entire
strategy by changing their business from product and distribution to customer-led
organization.

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 Create robust targets and indicators for the expected performance (Nicholson et
al. 2012).
 Identifying the ways how the organization can implement Taskforce
recommendation in the climate-related financial disclosures.
 Expand the materiality process which was undertaken in 2017 to gain more
feedback from the stakeholders.
Creating shared value:
Creating shared value is a business concept that was first introduced in the Harvard
Business review article named as Strategy & Society: the link between competitive advantage
and the corporate social responsibility (Crane, Palazzo and Spence 2014). The concept was
explained by Professor Mark Kramer and Michael Porter in 2011. They explained that the shared
value is used by the organizations to measure or create measurable value by addressing and
identifying the social and the environmental issues that may come up and intersect with the
business operation. Creating shared value will help in developing the future markets and will
also strengthen the economy and the community. Creating shared value helps in increasing the
profit at the same time provides benefits to the community. Porter and Kramer explained that the
shared value can be created in three different ways:
 Re-conceiving the markets and the product: Develop profitable service and products
to fulfil and meet the social issues with the objective of rectifying the conditions
(Lane and Watson 2012).
 Redefining productivity: Identify the social and environmental constraints in the
industry and then successfully address the following constraints while maximising the
productivity of the suppliers and the company.

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 Develop industry clusters: Increase the productivity and the growth by strengthening
the competitive aspects of the business.
The organizations can increase their share value by implementing the ISO 14001 standards,
which will make the organization greener and will put the organization in a better position for the
tenders. This will help them by giving them a competitive advantage in the industry. This ISO
standard will help the organization to reduce their operational cost by using the reuse and
recycling principles. There are other ISO standards that focus on increasing their product quality
which will also help them to create shared value.
Stakeholder analysis:
Stakeholder’s analysis is a method that is used for facilitating institutional and policy
reform processes by accounting for and often including the needs of those people who have a
stake or interest in the organizational reforms (Wagner, Hassanein and Head 2008). A
stakeholder is any person who are interested in the organization and who can be affected by the
organizational process. It is important to analyse the stakeholders of the company as they plays a
vital role in deciding the revenue of the organization. Stakeholders of the organization can be
individuals, unorganized groups or any organizations.
The four major attributes that are important for the stakeholder’s analysis are -
Stakeholders position on the reform issue, level of interest they have in a specific reform, level of
influence they hold and the coalition/group to which they are associated with. These attributes
are measured with the help of various data collection methods, which includes interview with the
knowledgeable country experts who can explain the stakeholder’s needs and the actual
st6akeholders of the company.

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The level of stakeholder’s influence highly depends on the quantity and the type of power
and resources the stakeholders can put to promote their position on the reform. The level of
salience and interest is the importance and the priority that the stakeholders put in the reform
area. Stakeholders plays an important role in the organization, they help in setting up the rules
and the regulations of the company, the targets and the objectives for which the organization will
work. There are number of stakeholders in a company and it varies from industry to industry.
The stakeholder’s power and their impact on the organizational policy making process
are conducted in several steps. The initial step is to form a continuum. These stakeholders are
mapped on a continuum, which indicates support for the new reform on a scale of 0 to 100 from
low to high. The second stage is organizing the data of the stakeholder’s according to
power/influence and the salience of each of the stakeholders for understanding their potential
opposition and support for the reform that is proposed. More often a particular matrix is taken for
organizing and classifying the data of the stakeholders. Stakeholders are grouped according to
the following aspects:
 Promoters: Stakeholders who possess a high priority in the reform policy and their
action can have a huge impact on the policy implementation.
 Defenders: These are the stakeholders who have a high priority in the reform but
who does not have a huge impact on the policy implementation.
 Latent: These are the stakeholders who can affect the reform implementation but
possess very low priority to the policy.
 Apathetic: Stakeholders who does not possess much power in the reform
implementation as well as does not possess any power in the policy.

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The stakeholders of the company are the most important aspect. AMP should analyse their key
stakeholders correctly and then make their policy band reforms. The key stakeholders of the
organization are the customer, government and the shareholders. The organization needs to
divide them in a specific group so that they can fulfil each of their desires and interests towards
the organization.
ASX 2010 principles and recommendations:
The principles and the recommendations of the ASX 2010 are listed below:
 Grow a solid for the foundation for the management and oversight: An establish company
should grow a strong foundation and ma01ke proper roles and responsibilities for the
board and the management (Ross, Weill and Robertson 2006). This will also include how
the performance of the employees will be evaluated and monitored. This will make the
things clear for the stakeholders of the company and there will not be any conflict about
the individual role and responsibilities. The organization must up a parameter by which
the performance of the individuals will be measured.
 Structure the management: The listed organization should have a management of
appropriate composition, skills, size and commitment. If there is effective board of
members who are excellent in their positions then the organization can be highly
benefited by that. The organization needs to have an effective employees who understand
their role and executes their duties correctly then the organization can be more
competitive in the environment.
 Ethical acts: The organization needs to act ethically and responsibly in the industry.
Following the ethical guidelines and maintaining those and then achieving the objectives
should be the aim of the organziatio9nj. The organization needs to follow proper

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environmental and social rules and regulations do that their operation does not affects the
common people. The organization needs to create ethical guideline for the stakeholders
so that it does not affect in the later stage.
 Balanced and timely disclosure: An organization should make balanced and timely
disclosure of all the matters concerning an individual person and would expect having a
material effect on value an price of the securities.
 Recognize and manage risk: The organization needs to establish an effective risk
management system that will help the organization to identify the risks and will help to
implement proper guidelines so that the threats can be avoided. A risk management
framework needs to be established first and then according to that the organization needs
to work. Periodic review of the framework also needs to be done so that they can handle
the changes in the industry and the market. The risk management system helps in
managing the risks and also helps in reducing the loss of the organization.
 Remunerate responsibly and fairly: The organization needs to act fairly so that it can
attract the best and the most effective directors in the organization, which will help them
to design the executive remuneration to attract, motivate and retain the senior executives
of the highest in the organization. The organization needs to0 attract the best and the most
talented board of directors and the executives which will prove to be fruitful for the
organization.
 Respect the rights of security holders: A listed entity should respect the rights of its
security holders by providing them with appropriate information and facilities to allow
them to exercise those rights effectively.

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The organization needs to follow the following principles in order to effectively perform
in the industry. The organization needs to manage their risks and form proper risk
management system, which will help the organization to lead in an effective manner.

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Ethical analysis:
In general terms ethics is the study which involves morality. It examines the objectives
and the significance of establishing moral norms (Utz and Wimmer 2014).
Banking ethics is the system of standards and rules of conduct for the organizational body
and for its employees. Banking ethics can also be defined as the particular economic ethic’s form
that covers the conduct of the banking employees. The banking ethics helps the financial body to
operate the business smoothly and helps to follow the proper rules and guidelines. Many
researchers believe the banking ethics is a type of professional ethics that includes in the field of
finance, which exists along with the universal principles of morality and is characterized by
specific norms of human behaviour in its specific activity.
The banking ethics are two levels of manifestation:
 Corporate banking ethics, that is, a set of ethical standards of conduct of the bank as a
legal entity.
 Bank etiquette- rules of conduct for the bank employee. Depending on the scope this can
be distinguished into two forms of banking ethics the internal and the external banking
ethics.
 Internal banking ethics contains rules of conduct between bank managers, shareholders
and the employees. This type of ethics is designed to create a favourable psychological
climate and cultivation of the spirit of cooperation in the banks, avoiding and resolving
internal conflicts and prevent domestic bank fraud.
External banking ethics governs the conduct of bank managers and employees
with business representatives of the bank. It meant to create a positive image of banking

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institutions, fostering collaboration, avoidance and resolution of external conflicts of
banks. Actual theory examines the bank as a financial institution customer oriented,
occupied by permanent lifting quality of its products, whose business is based on massive
deployment of information technologies. This inevitably leads to improving ethical
banking standards.
Modern banks are motivated to have ethical conduct based on the following
considerations:
 Ethical behaviour can become a competitive advantage that can help the bank to expand
its customer base and increase revenue.
 Reputation and positive image of the bank also attract customers ethically aware.
 Banks well-known for ethical conduct may be able to attract and retain qualified and
honest employees, optimizing human resources management and internal management
and improving operational efficiency.
 Positive bank’s reputation can facilitate effective and timely obtaining of additional
capital. With the deployment changes in philosophical visions, social, economic and
global financial metamorphoses, banking ethics has become one of the concepts
addressed in the most diverse.
Basic principles of the banking ethics are:
 Mutual trust is most vital which can lead to successful operation of the banking
sectors. Valuable and important offers are often discussed and contracted over
telephones, without any witness, this is where mutual trust is needed.

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 Principle of mutual benefit and interest means that none of the partners in a business
relationship should feel cheated
 Principle of good intentions is very important for business ethics and moral
behaviour. This basically means that there is no intention to treat business partner in
an immoral, if it relates to fraud, theft or other undesired handling a business
partner4.
 Principle of business compromise and business tolerance refers to harmonize
conflicting interests of participants in the business process.
 Principle of ethical improvement of business behaviour is availability business
partner to accept the mistake that was made as a result of his own actions. He should
admit mistakes and to respond in an appropriate manner.
 Principle of demonopolization of one's own position as monopolistic behaviour on
the market contains no ethical value market.

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Conclusion:
The aim of this assignment was to analyse an issue relating to the companies
investigated by the Banking Royal Commission. The chosen organization for this assignment is
Australian Mutual provident, founded in the year 1849 and has been a key financial service
provider in Australia. After investigation by the banking royal commission, it can be seen that
the organization continues to charge from the dead customer’s life insurance. The ethical
question that arises from the current scenario is that is it justifiable to charge the deceased
customer’s and deduct for their life insurance when there is no life to insure. The amount which
was deducted from the customer needs to be refunded to the deceased customer family.
Corporate social responsibility has also been discussed in this assignment. Corporate social
responsibility is a management theory where an organization integrates the entire social and the
environmental concerns in their workplace environment to better the interaction with the key
stakeholders of the company. Stakeholder’s analysis has also been done so that the organization
can understand the key stakeholders of the company.

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References:
Belghitar, Y., Clark, E. and Deshmukh, N., 2014. Does it pay to be ethical? Evidence from the
FTSE4Good. Journal of Banking & Finance, 47, pp.54-62.
Boleat, M.J., 2012. Building Society Industry (RLE Banking & Finance). Routledge.
Crane, A., Palazzo, G., Spence, L.J. and Matten, D., 2014. Contesting the value of “creating
shared value”. California management review, 56(2), pp.130-153.
Karim, M.R., Huda, K.N. and Khan, R.S., 2012. Significance of training and post training
evaluation for employee effectiveness: An empirical study on Sainsbury’s Supermarket Ltd,
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Lane, R. and Watson, M., 2012. Stewardship of things: The radical potential of product
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materials. Geoforum, 43(6), pp.1254-1265.
loans, H., retirement, S. and education, N. (2018). AMP Personal Banking - Accounts, Super,
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[Accessed 26 Sep. 2018].
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Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate
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socially responsible mutual funds. Journal of Asset Management, 15(1), pp.72-82.
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