Are The Fair Bank Guide and the Dutch banks heading for a frontal collision?

9 februari 2011

What has happened in the dialogue between The Fair Bank Guide (De Eerlijk Bankwijzer) and the Dutch Banks? At the end of January The Fair Bank Guide celebrated its second birthday and clearly the tension between the two parties had increased in the past year. The question arises, what has happened, or was it obvious from the start that the two parties would collide at some point?

The aim of the benchmark that has been developed by The Fair Bank Guide is to initiate a ‘race to the top’ between banks on the subject of corporate social responsibility (CSR). Ideally this will lead to a self-reinforcing process in which social, environmental and economic standards are raised on continuous basis. I believe the Dutch banks support this vision, when indeed as is said, all standards are being taken into account. Yet there’s a gap between the ambition and the actual measurements of the tool. Environmental and social indicators are being measured in abundance, yet economic indicators are not being taken into account. Some examples:

As professor Bert Scholtens from the University of Groningen brought forward during his presentation at the symposium, government bonds are not part of the tool. In case my bank has many government bonds in Greece, Ireland or Spain, I’d rather have them focusing on the mitigation of these risks than developing a new environmental or social guideline. Both are important, of course, but which one is most relevant at the moment?

A much heard critic is that a policy can be developed but not used adequately. Ticking the box will even so lead to a full score at the ranking tool, but doesn’t do justice to reality. Likewise it’s possible that a bank invests heavily in alterative energy but doesn’t have a climate policy. The result is a low score, which contradicts with reality again.

Even more, personally I’m happy to know that my bank has a good policy on for example animal rights, but as a client I want good customer service too. This is not part of the benchmark, but for most consumers top priority when ranking a bank (or any company as a matter of fact).

Banks have a responsible role to play as their position in society is unique. Judging the CSR quality of a bank merely by its environmental and social policies doesn’t do justice to its overall CSR performance. This should be realized by The Fair Bank Guide and lead to some reservation in their statements. However, reading the press release, one gets the impression The Fair Bank Guide is increasingly using the stick instead of the carrot. Giuseppe van der Helm, Executive Director at VBDO quite rightly pointed out, that The Fair Bank Guide should involve consumers in a positive way and be careful not to lose them believing responsible banking is nonsense.

Obviously bringing in positive aspects implies sound CSR management and transparency from banks. Additionally The Fair Bank Guide should develop a more comprehensive view on CSR. This would probably give them more credibility on their statements and reinforce the important role they can play in enhancing CSR management at the banks. This way, the collision can be prevented and let’s be fair, wouldn’t improvement of this relationship benefit both parties?

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