Profile: Standard Chartered – towards sustainability

January 30, 2007

Standard Chartered is one of the world’s largest international banking groups, with operations spanning Asia, Africa and the Middle East. Established in 1853, the bank employs almost 60,000 people, representing over 90 nationalities worldwide, in both its wholesale and consumer banking operations.

With this global footprint comes a distinct set of challenges, not least the dilemma of conducting sustainable business in what are undoubtedly some of the fastest growing and challenging economies in the world. Standard Chartered takes a long-term view of this, to ensure it builds a sustainable business through social inclusion, environmental protection and good governance.

As Briefing meets the head of sustainability, Chris Smith, and head of community affairs, Emma Schmitt, at the bank’s London headquarters late January, it is preparing to publish a brand new sustainability strategy, Building a sustainable business.

This business-aligned approach is the product of a year’s intensive stakeholder engagement and represents the next step in what Smith sees as an evolutionary process. “Sustainability is much more about understanding the long-term consequences of our actions. It’s about understanding our core impacts, understanding where the risks lie and understanding where there are real opportunities to create growth and ultimately create shareholder value,” Smith says.

Managing sustainability

Smith joined Standard Chartered’s corporate responsibility team in 2004, alongside Chris Sykes, the then head of CR, shortly followed by Schmitt. Corporate responsibility and community lie within a 15-strong public affairs function that coordinates efforts on sustainability, community, government relations and reputational risk. Ultimately, newly appointed company chairman Mervyn Davies is responsible for sustainability as part of the board-level Corporate Responsibility and Community Partnership Committee.

Standard Chartered’s modus operandi means that it is naturally an integral part of the communities that it serves. ”In terms of benchmarking, we are truly an international bank operating in 56 markets, but are genuinely a local bank in many of the markets in which we operate in. We think our success is interlinked with success in the communities and economies around us,” Smith says.

In 2003 – Standard Chartered’s 150th anniversary – the bank started to take a more rigorous and strategic approach to corporate responsibility, developing what Smith calls the “language” of corporate responsibility. “We understood that corporate responsibility in a bank was not just about community investment dollars,” Smith says. The bank had policies covering social and environmental risks dating back to 1995, and an environmental protection policy dating back to the late eighties, but the overarching strategy was not yet in place.

Standard Chartered is now taking the next step, following a year’s hard work. “From a pure business perspective, and looking at our markets, the whole notion of sustainable development and building a sustainable business is actually a far more effective way of working out our contribution to society around us,” Smith says.

Stakeholder engagement

Throughout 2006, Standard Chartered conducted an extensive stakeholder engagement exercise. Stakeholders consistently highlighted a number of key themes as the most important: sustainable lending, tackling financial crime, increasing access to financial services, responsible selling and marketing and its approach to protecting the environment.

“These are our core issues – driven by stakeholder work – arriving at what matters – where is the biggest opportunity for managing reputation and risk, but also where is there the biggest opportunity for driving profit – aligning our core business with sustainability,” Smith explains.

As with many multinational companies operating in diverse, fast-growing markets, stakeholder engagement presents enormous challenges for Standard Chartered: how does the bank engage at the local level without excluding expertise that is traditionally based in the Western hemisphere?

“Forums that matter the most to us are in markets, from the theoretical perspective, which usually have the least understanding of sustainability,” Smith notes,“ but they are the ones at the sharp-end of many of the issues.” Engaging stakeholders on sustainability is about identifying which groups are important.

Standard Chartered used a group of about 60 key opinion formers – plucked from NGOs, the socially responsible investment community, government, academic researchers and consultants.

Using core competencies

Standard Chartered’s sustainability strategy is very much designed around its core business skills and knowledge. Smith highlights the importance of self-sustaining initiatives: “What’s the first thing that goes in an economic downturn? Something philanthropic. If you demonstrate value for shareholders, as you can with carbon trading, or renewables financing, or microfinance, the bank is likely to think twice about cutting the revenue stream [in a downturn].”

One of the three commitments the bank made at the Clinton Global Initiative in September was to establish $500m microfinance facility. The bank estimates the facility will benefit 4 million people who are currently excluded from participation in the financial sector, over a five-year period.

Likewise, it is crucial that environmental and social issues are embedded in all of its business activities, including its loan book. In 2003, the bank adopted the Equator Principles, a voluntary commitment to fund only those projects that can be developed in a way that is socially responsible and reflects sound environmental management practice.

The bank believes that key to achieving sustainability in its lending is the use of its core skills and services “to make the right sort of change happen”. “We recognise that a great opportunity exists to promote awareness of sustainable development. There are often no clear solutions. Knowledge and experience remains the key to influencing and shaping transactions into a more sustainable structure,” the bank says on its website.

In 2005, Standard Chartered instigated a review of its approach and aligned policies and business strategy with its corporate responsibility strategy. The bank wants to ensure its approach is consistent, considers stakeholder views and takes on board emerging practices such as reporting recommendations from the UNEP Financial Institutions/Global Reporting Initiative Task Force.

Local community

The recurring theme of inclusiveness is reflected in Standard Chartered’s community programmes, run from a central function by Schmitt, but with a distinct, local approach in each region. “All countries participate in our Living with HIV and Seeing is Believing programmes. Our HIV/AIDS initiative is focused on employee wellbeing and awareness-raising, and Seeing is Believing, fundraising for blindness prevention projects,” she explains. Then there are projects that are specific to certain regions, for instance Net for Life across Africa (a malaria prevention strategy)…”

Both programmes have been hugely successful in engaging their employees. Seeing is Believing is the traditional philanthropic community activity, while Living with HIV was born out of commercial imperative. “HIV/AIDS was having a direct impact on our business and so we developed a workplace programme: the community aspect of Living with HIV has only come about after we’ve had a workplace programme,” Schmitt explains.

She believes that looking at community investment as an element of building a sustainable business gives “a much easier framework to hang things on”. Through community involvement there are areas where the business can contribute to social inclusion, areas where it can contribute to the environment, and in turn, help economies grow, and business thrive.

Standard Chartered is now moving away from defining philanthropic activities, separately from business activities, says Schmitt, giving the example of the bank’s microfinance projects.

Impact measurement

Standard Chartered has recently joined the London Benchmarking Group ( www.lbg-online.net) to help plan and articulate its global community strategy. “A well functioning financial services company can be what a developing economy depends upon. Through our taxes, through trade finance, through taking money and lending it out, we are helping develop economies. But you can’t do that in isolation anymore. If we can articulate how we are contributing to economies… what an interesting story,” says Smith.

LBG has also helped Standard Chartered look at more than just its community expenditure from the ‘percent standard’ angle, Schmitt says. This is invaluable when looking at activities such as the seven marathons the bank backs around the world – in cities such as Mumbai, Hong Kong and Nairobi. Schmitt says: “There is a huge amount of fundraising around them, they bring communities together, they promote wellness … there are numerous benefits…. we have to ask what’s our impact here?”

“Measuring inputs is hugely valuable in that it gives you guidance. Given the exponential growth of Standard Chartered over the past three years if we hadn’t thought bigger we could have been at risk. But we must focus more on our outputs.” Schmitt says.

Challenging times

Undoubtedly the bank faces many challenges in implementing its global sustainability programmes. “Working in developing markets that have many social issues which we could help on means we have to remain very focused,” Schmitt observes. Standard Chartered has to ensure it remains culturally sensitive at all times. For example, there is much sensitivity around HIV/AIDS. “If we were to overly promote Standard Chartered as a thought-leader in HIV/AIDS in a Muslim market, it could be detrimental to our brand and ultimately our reputation.”

Schmitt points to the challenge of communicating with such a large, diverse set of employees, with the bank’s workforce more than doubling in the last three years to about 60,000. The bank has made several significant acquisitions over the past three years, in countries such as Korea, Pakistan and Taiwan. “All of a sudden we’ve many new employees, trying to engage them within the culture of Standard Chartered – clearly, community activity is a great way we can do that. It could be a very foreign activity for the new employees,” Schmitt says.

“Sustainability is about cultural change, about behavioural change. When you’re doing that across 50-60 different markets and you have varying understanding there is no ‘one size fits all’. You need a globally appropriate strategy that will enable you to respond to local needs and local issues and then you communicate it externally,” Smith says.

The board certainly has some grand ambitions for Standard Chartered over the next several years. But for now they would be happy if, in Smith’s words, by the end of the year every one of the bank’s 60,000 employees “understands what sustainability is, why they are doing it and what it means to them”.

Standard Chartered’s programmes explained

Seeing is Believing

In 2003, Standard Chartered launched Seeing is Believing, in collaboration with eye care agencies. The programme aimed to restore the sight of 28,000 people across the world, representing a sight restoration for every member of staff at that time. Seeing is Believing has reached its fundraising target of $6m a year ahead of schedule and will deliver one million sight restorations by the target date of World Sight Day 2007. The next phase will help 10 million people across 20 countries, focusing on prevention and education as well as sight restoration. The programme will continue to help people with cataracts as well as broadening its approach to help tackle other causes of preventable blindness including glaucoma, trachoma and river blindness. www.seeingisbelieving.org.uk

Living with HIV

Living with HIV is a key global programme for Standard Chartered. The bank’s commitment to tackling HIV/AIDS has developed from a desire to protect basic human rights, promote the wellbeing of employees, minimise the costs to the business associated with HIV/AIDS, and responds to what it sees as a global challenge.

Standard Chartered’s HIV/AIDS programme focuses on training all of its employees on the facts about HIV/AIDS, how it spreads, can be prevented and how to care for those who are affected. The bank has also engaged its key stakeholders by raising awareness in their organisations and assisting them to roll out their own HIV/AIDS programmes. One of the main goals is to eliminate the stigma attached to HIV/AIDS in the hope that more people will come forward for testing and treatment, which Standard Chartered offers to its staff and four of their family members. In Botswana the bank is working with youth organisations and in Malaysia it is working with the student organisation, AIESEC, and has trained young people who are in turn training a further 20,000 students. www.standardchartered.com/corporateresponsibility

Chris Smith is head of sustainability and develops Standard Chartered’s global sustainability strategy. chris.smith@uk.standardchartered.co.uk

Emma Schmitt is head of community affairs and leads Standard Chartered’s global community investment strategy. emma.schmitt@uk.standardchartered.co.uk

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