Has Uob Implemented Csr and Can More Be Done?

Corporate social responsibility (CSR) refers to a corporation's accountability for its actions towards its people, the communities it interacts with, and the environment it is situated in. By implementing CSR as part of its corporate strategy, a firm seeks to align its economic interests with its legal and social responsibilities to its employees, its community and the rest of its stakeholders.

In Singapore, though CSR is still a relatively new notion when compared to the Western countries, it is increasingly shaping up to be a critical corporate strategy that is synonymous with a firm's reliability and success. This is because Singapore is situated in the rapidly-developing Asia-Pacific region where more and more businesses are inevitably drawn to the trend of globalisation. Now, firms operating in this region have to compete on a global stage for economic viability. They are no longer bound by local norms and regulations, but are instead subjected to the perspectives and standards of the vastly mature international community. Firms have to adapt responsibly to global concerns like climate change, human rights issues and the evolving financial landscape. Furthermore, in today's economic climate, following the many scandals and irresponsible practices that have contributed to the financial meltdown of 2008/09, it is especially pertinent for firms, especially financial institutions, to implement sound CSR practices and be responsible in dealing with their stakeholders. After all, the essence of CSR is instilling "trust" - trust in a company to make the responsible decisions. This ultimately enhances brand value and reputation.

United Overseas Bank (UOB) is one such institution. A leading bank in Asia with a network of over 500 offices in 18 countries and territories in Asia Pacific, Western Europe and North America, UOB provides a diverse range of financial services including personal financial services, investment banking and asset management, amongst many others. In 2008, the total Customer Deposits at UOB amounted to S$118,171 million, a 10.5% increase from 2007. UOB is rated amongst the world's top banks by Moody's Investors Services, receiving B for financial strength, and Aa1 and Prime-1 for long-term and short-term bank deposits respectively. More importantly, in accordance with its mission to be a premier bank in the Asia-Pacific region, UOB has proactively integrated CSR into its corporate strategy, largely focusing on children, education and the arts. For all its efforts in providing excellence, it received key awards in 2008 like 'Best Domestic Bank in Singapore' by Asiamoney, 'The Best of Asia - UOB Group' by Corporate Governance Asia, 'Distinguished Patron of the Arts Award' by National Arts Council and 'Best Domestic Bank (Singapore)' by The Asset.

There is no doubt that UOB has implemented CSR. However, given the extent of the influences it has as a leading regional bank, the issue that seeks clarification is whether enough is being done to balance its huge corporate power with its social responsibility. For all the communities in which UOB has a presence, is there sufficient effort being put into building stakeholder partnerships, uncovering opportunities in serving society and facilitating the integration between financial and social performance? Has UOB sufficiently satisfied all the principles of corporate citizenship? What more can UOB do?

In analyzing these, the most pressing issues that CSR aims to tackle will first have to be identified. Once identified, the CSR strategies of UOB can then be put to the test to find out if these strategies are succinctly and sufficiently tackling the issues raised. To add depth to the analysis, the CSR strategies of Citigroup will also be put to the test. Citigroup has more than 200million customer accounts in over 100 countries. It has extensive presence in the Asia-Pacific region and undertakes a very wide range of CSR initiatives to help the communities it operates in. By comparing the breadth and depth of the CSR strategies of both banks, recommendations and analysis can then be made.

Currently, corporate governance would be ranked among the top CSR concerns, especially for financial institutions like UOB and Citi. The financial crisis has brought about increased scrutiny over the way banks are internally governed. Touchy issues like the ethical values of the bank, integrity of the released financial statements, the bank's debt structure, its dividend policies, thoroughness in monitoring of financial performance and rigorousness of the risk management structure have been put on the table in a bid to better protect the interests of the stakeholders. Increased transparency with regards to these issues and greater accountability are being expected of banks. In this aspect of CSR, UOB has always performed satisfactorily. Its corporate governance is guided by the provisions of the Singapore Code of Corporate Governance 2005, the Banking (Corporate Governance) Regulations 2005 and the Guidelines on Corporate Governance issued by the Monetary Authority of Singapore (MAS). It has a well-established Board of Directors comprising the Executive Committee, Nominating Committee, Remuneration Committee, Audit Committee and Senior Management. The above-mentioned issues are meticulously processed by these committees and systematically reported in UOB's annual reports and quarterly financial reports. In particular relevance to today's economic climate, UOB's risk management structure is explicitly expounded under its 'Pillar 3 Disclosure' in compliance with requirements under Basel II Pillar 3 and MAS' Notice 637 Public Disclosure to ensure that stakeholders understand the degree of risk they are being put through.

However, in contrast with Citi, the system of corporate governance that UOB possesses is less robust and extensive. The main difference lies in the standards adopted and the degree of transparency. Citi adopts the Global Reporting Initiative (GRI) G3 Sustainability Guidelines in the disclosure of its Corporate Governance. This translates to a well-established process of benchmarking Citi's corporate governance, in accordance with international standards. In addition, Citi issues Corporate Governance Guidelines which explicitly lists down the roles, responsibilities and authority of the Board and its committees. These guidelines also spell out the process by which the Board's performance is evaluated. Furthermore, auditing reports of Citi's financial health by public accounting firms like KPMG are also expressly included in the Annual Report. The transparency in these guidelines and reporting are unambiguous to the public and they bring confidence to stakeholders. Certainly, with regards to corporate governance as a key concern of CSR,