SCIENTIFIC JOURNAL No. 499 SERVICE MANAGEMENT vol. 3 8 EWA KULIŃSKA-SADŁOCHA Poznań University of Economics THE PRO SOCIETY PROJECTS AND THE ENVIRONMENT PROTECTION INITIATIVES OF THE BANKS IN POLAND. Introduction The banks are one of the most important institutions in the market economy. They act as the financial agents contributing to maintaining the balance between the demand and the supply for funds. They are the only economic entities authorized to collect and invest the individuals money. As a result they are obliged to obey a number of external regulations as well as constantly care for the social trust. To a large extent, the bank s good image, in particular its responsibility and credibility, make for the financial success. The evaluation of the banks operations, apart from their financial situation, includes the way the business is developed and the social responsibilities that are fulfilled. Therefore, more and more banks do not limit their operations to the basic ones, namely providing the services. The banks respond to the needs of the customers and try to support important social undertakings such as participation in the pro society projects and environmental protection projects. The leading banks in the world have been participating in similar activities for several years. As their experience shows, making these aspects the part of their business became the basis of their long term development and success. Also, some Polish banks contribute to the similar activities, however, the crucial difference between these activities is the scale, the approach and the evaluation of the impact these initiatives have on the banks operations. The author of this paper will try to explain these differences but also evaluate pro social and pro ecological projects. Thus, the author mainly based on the information provided by the banks quoted on the Warsaw Stock Exchange and the strategic investors.. Pro - social and environmental values in the banks declarations Each organization willing to survive and succeed must use a set of strong and reasonable beliefs / values and follow them whatever operation it requires. Such a set of values (the economic, the social and the ethical ones) can be referred to as the system of values. It constitutes an important element of the organizational culture. German literature often refers to it Filozofia i wizja przedsiębiorstwa. Zarządzanie na Świecie 993, No., p. 3.
4 Ewa Kulińska-Sadłocha as spiritual management base. Following such a system of values at work guaranties commitment and loyalty on the part of the employees, effective management as well as trust and loyalty of the customers the major profit source 3. The so called stakeholders, that are the groups created by the customers, the shareholders, the employees and the society, are interested in the development of the banking system of values. The declared values are closely related to the needs and the expectations of all these groups (different for each group) and result from both bank s voluntary and involuntary response to the different constraints made by those various groups. Among the values most often found in the banks one can differentiate between the following ones: caring for the customers, the social responsibility, the environmental approach, the high quality of the operations, the basic role of the informal communication, an honest competition, the good working conditions, etc. Regarding the information of key importance to the Banks, it is announced in the Internet, annual reports, Business Ethics Codes or the so called CSR Principles (Corporate Social Responsibility). Environment protection values as well as the values related to the so called social responsibility are among the most popular ones and the most supported by the society 4, and those most often declared for by the bank are the following: - the customers satisfaction friendly approach, competence, being open, creating long lasting relations, providing confidentiality, high quality of services; - the employees satisfaction the proper motivation systems, the social perks, the trainings, the health care system, just and reliable appraisal systems; - the shareholders satisfaction providing concise information policy, the efficient - communication, improving the principles regarding the corporate order, share rate - growth; - commitment to the society responsibility, sponsoring, grants, donations, projects for the local community, lobbing and other activities that can help in the process of opinion creating; - caring for the environment environment protection policy, environment management certificates, efficient supply use, etc. Based on the information available, it can be concluded that, as regards pro social and environment protection values of the banks under research, the best banks are those with the foreign strategic investor quoted on the Stock Exchange such as : Bank BPH SA, Bank Handlowy SA, BRE Bank SA, Bank Polska Kasa Opieki SA. BZ WBK SA., Kredyt Bank SA, DZ Bank Polska SA, Fortis Bank Polska SA, ING Bank Śląski SA. The cooperation with the strategic investor, as regards this aspect, allowed them to share knowledge and motivated them to seek other solutions. Thus, the pro social standards, already in force, were quickly adjusted to the Polish environment and implemented afterwards. However, the banks attention was mainly directed toward those declarations referring to the customers, the employees and the shareholders satisfaction as well as pro society projects. As far as the environment protection declarations are concerned, in most cases, they are limited to a brief note about the lack of Einführung in das Controlling. J. Weber (ed.). Schäffer-Poeschel Verlag, Stuttgart 994, p. 6. 3 A. Stachowicz-Stanuasch: Czym są główne wartości organizacji i dlaczego warto je ogłaszać? In: Instrumenty zarządzania we współczesnym przedsiębiorstwie. K. Zimniewicz (ed.). Akademia Ekonomiczna w Poznaniu, Poznań 3, p. 33. 4 M. Strumińska: Zielona rewolucja. Bank 4, No. 6, p. 7.
The pro-society projects financial involvement, whatsoever, in transactions and activities that do not meet the Polish environment protection standards or those printed by the World Bank. The only exception here is Bank Ochrony Środowiska SA. It turns out that the environment protection factor in Poland is still undervalued by those banks and their strategic investors. The reasons are mainly insufficient ecological awareness of the Polish society as well as high financial requirements made by the strategic investors. Also, the fact that the strategic investors very often impose ready- made patterns which do not always meet the Polish reality and the expectations results in the fact that some of the values are still nothing but declarations. 3. The analysis of the banks participation in the pro society projects in Poland The contribution to the pro society projects is among the priorities set by many banks in Poland. They get actively involved in the life of the society through the religious, national and more often due to foreign strategic investors international level. They not only support financially many public institutions but also the individuals who suffered injustice. In order to do that many banks established their own foundations supporting charitable, cultural and educational events. Among the biggest ones are the following foundations : Fundacja Banku Zachodniego WBK S.A. (BZ WBK S.A. Foundation), Fundacja Bankowa im. dr Mariana Kantona Banku Pekao SA (PKO SA Foundation named after dr Marian Kanton), Fundacja BRE Banku (BRE Foundation), Fundacja Bankowa im. Leopolda Kronenberga Citibanku Handlowego (Citibank Handlowy Foundation named after Leopold Kronenberg) or Fundacja Warty i Kredyt Banku (Warta and Credit Bank Foundation). The banks support many events either directly or through the foundations in the area of: - culture and the national heritage protection support covers the theaters, the philharmonics, the museums, the libraries, the cultural events, the artists, the publishing houses as well as the alterations and maintenance of the monuments; - social welfare support covers the foundations and societies that provide help to the sick, suffering misfortune, homeless, and also the orphanages and public custody units; - heath care and life protection financial support of the hospitals, foundations and associations responsible for heath care and life protection: to purchase medical equipment and vehicles, the banks very often finance the activities promoting healthy lifestyle both among the employees as well as the society; - sport and education organizing and financing the sport events, the universities and scientific conferences, scholarships, educational programs at schools and educational custody units, research sponsoring. The recent years show that the employee voluntary work became more and more popular. And it is related to voluntary sharing of the knowledge and skills in the selected public events. Many banks create possibilities and encourage their staff to participate in such types of activity. For example, Citibank Handlowy gives their employees a possibility to take one day off to perform voluntary work and also allows them to recommend the donation in the amount of PLN. to the organization in which the employee have worked for hours as a voluntary worker. Also such banks as Bank Zachodni WBK, ING Bank Śląski or Bank BPH strongly support pro social and charitable activities of their employees. Voluntary workers collect money and other goods for the poor and people who suffer misfortune in life, organize sport events, training for children and also the unemployed, work for non-profit organizations and undertake many other initiatives, e.g.: Bank BPH staff participated in the event called PCK Honorable Blood Donors - in 6 they donated 3 liters.
6 Ewa Kulińska-Sadłocha The banks also try to connect pro - social activity and business operations, e.g.: they issue payment cards (the so called affinity). The key characteristics of these cards are that part of the commissions and the fees is designated to support selected institutions (e.g.: Bank BPH, Bank Zachodni WBK SA). Due to this each user can support the selected institution, either scientific, cultural or charitable one and he does not incur any costs, whatsoever, which makes such type of cards more and more popular among the customers. The banks contribution to the public events is best noticed in their charity and sponsoring activities. All information about the banks contribution can be found on the Internet, leaflets, standard annual reports or special briefs (in Poland only Bank BPH SA publishes a special report entitled Social responsibility of the business, in which it presents last year projects to support the customers, shareholders, staff and the society). The only defect of these reports is the fact that they hardly ever contain information about the amounts designated for the public activities. It is difficult to determine the reason of this behavior. Is it fear of: - comparison between the banks financial contribution to the society which may result in competition in this area or - critical evaluation of too low donations for the social events in comparison with the very good financial results throughout the year? Among few banks which give access to such information are Bank Zachodni WBK SA and BRE Bank SA. In 4 Bank Zachodni WBK designated for numerous social undertakings PLN,3 mln (c.a.,3% net profit), in PLN, mln (c.a.,7 % net profit), and in 6 PLN,7 mln (c.a..,7 % net profit). On the other hand, the total expenditure of BRE Bank, mbank and MultiBank Foundation in 6 amounted to PLN 3,4 mln (that is c.a.,8% net profit), of which PLN,4 mln for education, PLN, mln for culture, PLN,6 mln for health and social welfare system and PLN,3 mln for other purposes. To compare, in the German strategic investor of BRE Bank - Commerzbank AG spent EUR,4 mln for the charitable activities that is c.a.,36 % net profit, which is much lower as compared to the financial results than the expenditure made by BRE Bank group. On the other hand, one of the biggest banks in the world - Deutsche Bank AG - pays annually % of the dividend only for its Research Foundation which this year equaled c.a. EUR mln while the banks total donations for the public projects amounted to EUR 8, mln that is c.a., % net profit in 6. Nowadays, the so called Sustainability Reports in the foreign banks are very popular and very often they include the part devoted to the realization of the environment protection Policy. What is more, they are subject to the external audit. It is due to the fact that activities for the society are perceived as a success factor in the longer period and more often taken into consideration by the rating institutions. Thus, one may expect that in the near future this practice will reach the Polish market and the banks activities for the society will be reflected in the special reports or it will become in case of the banks constituting the capital groups - a part of the audited report at the level of the strategic investor. 4. The analysis of the environment protection initiatives in the banks business Taking care of the natural environment can be reflected in the declared values of the banks operating in Poland but in most cases it does not go beyond the declaration stage. As opposed to the commitment for the society, pro ecological initiatives are very rarely undertaken by the banks. However, bearing in mind the role the banks perform in the economy, their influence on
The pro-society projects 7 the natural environment can be very substantial. The experience of the banks in the world shows that they can have important influence on the limitations of the natural environment in two ways : - directly by following the local, national and international rules concerning environment protection; the controlled usage of the natural resources necessary to run the business; decreasing the emission of the chemicals that pollute air, water and the soil; active participation in the special ecological programs by ONZ and other international institutions, mutual financing of the activity of the organizations involved in the environment protection; an active participation in pro- ecological investments; organizing trainings and information briefs as regards the environment protection for the banks employees; the implementation of the environment protection systems (ISO 4); - indirectly by eliminating those transactions (in particular in reference to the loan and investment operations) which could have a negative influence on the natural environment; evaluation of the ecological risk in the credit, investment, trust and assets management activity; offering ecological products in the investment, credit and deposit operations, selecting the customers, suppliers and counter -parties who obey environment standards and norms in their activity; running and financing the trainings and information briefs for the society. Already, in the 8 ties of XX century the international institutions involved in the environment protections noticed that the banks role here is a crucial one. As a result, in 99 during the conference in Rio de Janeiro ONZ Declaration on Banking and Environment was prepared (amended in May 997). This declaration constitutes the basis of the banking ecology 6. Among the financial institutions which signed it and then made an obligation to undertake operations to provide long term balanced development were Polish institutions such as the National Environment Protection and Hydro Administration Fund (Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej) and 4 banks: Bank Gdański S.A., Bank Ochrony Środowiska S.A., Bank Pekao S.A., Bank Zachodni S.A. These institutions were present on this list till the end of together with similar institutions from all over the world. The list was updated in 6 with 69 institutions remaining. At present, the largest group constitute the European institutions 9, Asian and Australian 48 and north America. Among the European institutions the leading ones come from Germany, Switzerland and Great Britain (tab. ). One should pay attention to the fact that there is no Polish institution on this list. However, the list includes the strategic investors of the banks running their business in Poland such as: Citigroup, Commerzbank AG, Fortis B.V., Nordea AB, Unicredit Group. All these banks stress the importance of the environment protection and provide information on their direct and indirect activities as regards the natural environment. This practice is not applied in their affiliated companies in Poland. It is easy to find the declarations about environment protection but it is difficult to find information on the relevant activities undertaken. The only bank in Poland that stresses its interests in the natural environment is Bank Ochrony Środowiska SA. It is covered by its mission which basically is about: supporting and participating in the realization of the state s policy as regards environmental protection and the regional development, cooperation with the ecological and other institutions that have funds for Comp. G. Borys: Ryzyko ekologiczne w działalności banku. Biblioteka Menadżera i Bankowca, Warszawa, pp. 37-43. 6 G. Borys: Proekologiczna reorientacja banków u progu XXI wieku. Prawo Bankowe, No., p. 69.
8 Ewa Kulińska-Sadłocha Table. The list of the European institutions which signed ONZ declaration No. Country Financial institutions volume No. Country Financial institutions volume Up till Up-dated list Up till Up-dated list Albania Germany 34 Andora 6 Norway 3 Austria 6 7 Poland 4 6 7 8 9 3 4 Belgium Croatia Cyprus Denmark Finland France Greece Spain Holland Ireland Island 6 6 7 7 8 9 3 4 6 7 Portugal Rusia Rumania Slovenia Switzerland Sweden Turkey Hungary Italy Great Britain 9 6 6 8 4 6 Source: own elaboration on the basis of: UN data: www.unep.org. Total 4 9 the environment protection activities. This bank has been publishing Ecological Reports which contain reports on the environment protection initiatives for 8 years. Its basic activities are the evaluation and granting loans for the pro ecological investments the purpose of which is to raise the quality of the natural environment and the life of the city and country dwellers. In order to do so, the bank founded a special sector within its structure in 997, headed by the Chief Ecologist. The sector consists of the professionals with the technical and financial skills necessary for the environment protection area. In addition, the bank: - cooperates with the companies, foundations and organizations as well as the institutions involved in the environment protection and the regional development process, - grants KLON (maple) awards for the companies for their outstanding economic and ecological achievements, - finances the scholarships for the best students from the universities environment protection departments, - offers technical ecological consulting for the companies, - supports financially and with its know how all the pro-ecological events, competitions, the purpose of which is to raise the ecological awareness of the society. Last year BOŚ introduced a new deposit product, the so called Eco - deposit. It differs from other deposits in such a way that BOŚ contributes to the conservation of nature with each ecodeposit - it taps the Bank s own funds for charge-offs to the benefit of programs protecting declining animal species. However, in comparison with other European banks the activities undertaken by BOŚ, as regards environment protection, are not very much outstanding but modest ones. There are no further projects concerning the rational use of the resources in the current bank s operations such as: paper, energy, water, etc. The bank does not mention the document
The pro-society projects 9 which is considered a standard one in those banks that declare environment protection approach. It is the so called eco-balance, that is qualitative and quantitative comparison of all the factors in the bank that have some impact on the natural environment. It does not declare the use of the ecological risk in the investment consulting procedures as well as having in the offer the investment fund to invest in the shares of those companies that are involved in the social and ecological projects. It is typical for all the remaining banks in Poland. It is even more difficult to find the improper use of the pro ecological projects. One might say that pro ecological initiatives of the banks in Poland, as opposed to their involvement for the society, are practically invisible. It is due to the fact that ecological issues are treated by these institutions as those which raise the costs and the ecological awareness of the Polish society is still much lower than in the economically developed countries. However, it is not the only reason. One should remember that the management boards of the banks are evaluated based on the financial results by the foreign investors. Therefore, they are not interested in the projects which increase costs. Also, as far as the environment protection regulations in Poland are concerned, they are much more liberal and not so much obeyed as in other European countries. In addition, the parties interested have no ability to control the banks activity in this area. One should notice that each year the ecological awareness of the Polish society increases, including the level of the ecological awareness and readiness to protect the ecological rights. It can be reflected in the development of the environment protection forces the establishment and development of various organizations that have impact on the functioning of the multi branch companies. One should expect that in the nearest future the banks will be settled based on the projects related to environment protection.. The end The banking practice proves that the banks, being the public trust institutions, take into account the economic situation but also the expectations of the: customers, the employees and the society. In such a way, they strengthen their image. They notice the social problems and try to take care of the customers. They respond to the needs in the nearest environment by sponsoring or charitable projects supporting socially important events. However, the banks consider the pro society projects to belong in the charitable or public relation category and the environment protection projects as those generating large costs. They do not notice the potential behind those projects as regards the savings and gaining the advantage over other banks. Many banks perceive the pro social and environment protection projects as a temporary mean to improve their image or reshape the public opinion. On the other hand, the banks in the world make their care for the natural environment and the people their trade mark. Unfortunately, in Poland such projects are rarely considered long term investment that will allow to gain advantage over the competitors. In order to let them be perceived as long term investments it seems to be necessary to link them to the overall bank strategy. Therefore, the environment protection as well as pro society projects must become the integral parts of the bank s organizational culture, be reflected in its values and mission.
6 Ewa Kulińska-Sadłocha ZAANGAŻOWANIE NA RZECZ SPOŁECZEŃSTWA ORAZ PROEKOLOGICZNE INICJATYWY BANKÓW W POLSCE Streszczenie Liczące się banki na świecie angażują się w działania na rzecz społeczeństwa oraz ochrony środowiska naturalnego już od kilkunastu lat. I jak pokazało doświadczenie wielu z nich uwzględnienie tych aspektów w bieżącej działalności stało się podstawą ich długoterminowego rozwoju i sukcesu. Także banki działające w Polsce coraz częściej podkreślają swoje zaangażowanie na rzecz społeczeństwa oraz proekologiczną orientację. Jednak rzadko w przeciwieństwie do wielu banków zagranicznych - uważają działania w tym zakresie za długoterminową inwestycję, która pozwala na uzyskanie przewagi konkurencyjnej. W artykule starano się wskazać na przyczyny tego stanu oraz różnice nie tylko w skali podejmowanych działań, ale również w ich postrzeganiu i ocenie przez same banki. W tym celu poddano analizie prospołeczne i proekologiczne inicjatywy banków notowanych na GPW w Warszawie. Zwrócono również uwagę na wpływ inwestorów strategicznych na prospołeczne i proekologiczne działania oraz ich zakres, a także na rolę, jaką mogą banki odegrać w dziedzinie ochrony środowiska naturalnego. Stwierdzono m.in.: że najczęściej zaangażowanie na rzecz społeczeństwa oraz proekologiczne inicjatywy traktowane są jako działania doraźne, wykorzystywane w celu poprawy wizerunku czy wpływu na zmianę opinii otoczenia. Banki nie dostrzegają też ich potencjału w zakresie oszczędności - w szczególności działań proekologicznych. W zasadzie czynnik ekologiczny - w przeciwieństwie do zaangażowania na rzecz społeczeństwa - jest ciągle przez banki działające w Polsce, a także ich inwestorów strategicznych, niedoceniany. Mając na uwadze fakt, że inicjatywy tego typu coraz częściej są elementem oceny działalności banków nie tylko przez interesariuszy (klientów, akcjonariuszy, pracowników i społeczeństwa), ale również przez instytucje ratingowe, należy się spodziewać w najbliższym czasie zmiany ich postrzegania przez banki w Polsce oraz powiązania z ogólną strategią rozwoju banku.