So Barclays and GSK don’t quite have sustainability in their DNA after all.
What a shame.
Barclays (a bank which is listed in the top 10% of the DJSI leading companies, with a score of 92% on the FTSE4Good, 10th best company on the 2011 Bloomberg Green Bank Rating, gold entrant in the BITC CR Index – and a lot lot more) has manipulated the London and the Euro Interbank Offered Rate, LIBOR and EURIBOR respectively: apparently Barclays’ traders did this to make the bank look more secure sometimes, and to make a profit quite often. For at least four years. On a daily basis. Quite serious.
Now the Chairman and the Chief Executive have resigned and the company has to pay the biggest fine ever imposed in the UK: £290m (AUS$438m). But there’s more to it than just a fixed fine of course. Like, as Sara points, distrust. Just a note – the scandal plunged the bank’s shares by 17% in just a couple of days (£4bn of its market value) and some analysts estimate that it can still spread to several more billions.
GSK (a pharmaceutical listed as well in the top 10% of the DJSI leading companies, with a score of 92% on the FTSE4Good, awarded by Extel as the ‘Leading Quoted Company for IR with Sustainability Investors’, and the outstanding leader in the Access To Medicine Index) is facing a drug fraud scandal. For at least seven years, GSK bribed doctors (with money, Hawaiian spas, and tickets to Madonna concerts) to prescribe antidepressants for unapproved uses.
And now it must pay – US$3bn (AU$2.92bn). Yes, “bn” as in “billion”.
But these must be isolated cases, right?
Well, it seems like Barclays is only one in a long list of manipulators of the LIBOR and EURIBOR that are currently under investigation. And have you seen the fines to big drug companies for misbehaviour in the last three years?
On Wednesday, The Guardian Sustainable Business will host a live panel to explore a question: ‘Where does a company’s responsibility begin and end?’. Factory gate or people’s home? Perhaps too often in the corporate responsibility departments, next door to the communications and marketing teams.
Corporate responsibility has always been at the risk of becoming a metanarrative – one that speaks to itself about itself and as loud as possible! But these recent stories can be a reminder for everyone – corporate responsibility is not fluffy decoration on top of everything else, but a different way of thinking about risk management, innovation, business feasibility.
Otherwise, just spend money in a façade and pretend the entire building is steady and honest until the first wind comes and shows that in fact it’s all weak and squalid.
What’s the cost of rebuilding?
Miguel is a Consultant with ACCSR, mainly focused on reporting and strategy – aiming for sustainability beyond buzzwords.
Too right, Miguel! One of the most concerning consequences for CSR professionals are the consequences for the reputations of the standards we have worked so hard to establish to measure and demonstrate CSR. Barclay’s released their Corporate Responsibility Report (assured by the very reputable Ernst & Young) only weeks before the scandal broke. And indices like DJSI and FTSE4GOOD also face reputational damage.
It will be interesting to see the next review of DJSI and FTSE4Good – will they remove Barclays and GSK as they did with BP in 2010 (http://bit.ly/MdVBWu, http://bit.ly/MdVEl6)? And perfect timing, SustainAbility will launch Rate the Raters V next fall, on the credibility and use of sustainability indices (http://bit.ly/MdVRom). So much to learn and improve. *Crises are a terrible thing to waste*.
This is why it’s so important to understand capabilities for CSR, not just performance. capabilities rely on the culture of an organisation as well as the policies and actions. The problem with too many ratings approaches is that they rely on visible evidence, such as policies and programs for CSR. To really get under the skin of an organisation you need to understand the things that are not visible to ratings approaches. The beliefs and attitudes. There is a mind set that is required to lead truly responsible and sustainable companies, that was obviously missing in some key areas at Barclays.
I completely agree – while important, ratings alone are just not enough. As Jo Confino put it: “the breakdown of trust is always the responsibility of the culture and leadership of an organisation, which allows individuals to believe that their actions are acceptable” (http://bit.ly/LTPGGf). The focus of ESG research tends to be only on the most obvious outputs (i.e., reports), with little or no attention to the inputs (i.e., beliefs and attitudes, and leadership and culture!). Are ratings overrated?