A REVIEW OF THE BUSINESS CASE FOR CORPORATE SOCIAL RESPONSIBILITY IN THE UK FINANCIAL SERVICES SECTOR

In a period of increased shareholder activism, customers dissatisfaction, institutional investor disquiet, and distrust arising from a number of highly visible scandals in the financial services sector, CSR has remained a means for relating effectively with stakeholders and managing the public perceptions. The aim of this study is to establish the business case for CSR in the financial services sector in the UK with particular reference to the banking sector. The research seeks to identify the key issues that drive CSR by reviewing the business model, industry structure and stakeholder dynamics. Citibank, Lloyds TSB and Barclays Bank participated in the research. To provide added validity on the issues driving CSR in the industry, members of two major organisations namely Business in the Community (BITC) and FORGE group were also interviewed. It was established that the key issues that the banks consider in embarking on their CSR programmes include reputation, competitive advantage, risk management, employee performance and retention, government and regulatory impact and community involvement. These issues, which constitute the business case for CSR with the sector, were confirmed by the industry experts as valid factors driving CSR within the sector. Burke et al (1996) five strategy dimensions and Baron (1995) Integrated Strategy Framework, were employed for the purpose of the further analysis to establish the sustainability of the CSR practice. It was found out that although banks were eager to engage in CSR, they are not proactive about addressing the relevant issues; thus merely reacting as issues arise. Unfortunately, this suggests that they may not derive adequate value for themselves or the stakeholders