Considering that CSR (Corporate Social Responsibility) is, to some extent, an abstract notion, no one has been able to precisely define its boundaries as of yet.
There is no agreed-upon definition of it. This is due to the fact that firms are acting on their own volition, motivated by their own ideals or hopes for financial gain. The users can easily differentiate between corporate and industrial banking system easily.
This type of socially responsible action is not mandated by law. The concept of corporate social responsibility (CSR) takes on different shapes for each organization based on the needs of those who have a stake in the business.
Classon and Dahlstrm (2006) define corporate social responsibility (CSR) as “the sum of the economic, legal, ethical, and charitable demands of society placed on business.”
Rendtorff and Mattson (2012) argue that businesses are best understood as human communities that engage in social practices to advance their shared objectives. Trust and genuine connections with clients are the means by which these goals are achieved.
The primary presupposition for fair access to customers is that they will be treated with respect for their autonomy, dignity, honesty, and vulnerability.
Yeung (2011) identifies several factors essential to CSR in the banking industry, including an appreciation for the complexities of financial services, the management of risks, and the reinforcement of ethics in the banking business, the implementation of a strategy to deal with a financial crisis, the protection of customers’ rights, and the configuration of channels for customer complaints.
Macdonald and Rundle-Thiele (2008) looked into the connection between CSR and happy banking clients. Their research showed that pro-client oriented events had a greater impact on consumer satisfaction than CSR efforts. And if the bank does decide to build CSR initiatives, it must select the right areas to concentrate on.
The objectives and procedures involved in CSR
Through the use of a CSR index and subsequent submission of the data to a cluster analysis, the purpose of this study was to determine the degree of CSR practiced by a selection of Czech banks. The KOPR method, which was developed by the Association of Fair Business (Pláková, 2009), has emerged as the resulting framework for the measurement and evaluation of social responsibility in commercial banking in the Czech Republic.
However, this method has been significantly modified by techniques of objective estimation. Within the context of this evaluation, the fundamental tenets of social responsibility economic, social, and environmental have been segmented into eight categories, with a total of twenty-six criteria that are scored on a scale ranging from zero to one hundred.
The grading applies specifically to provide information about a certain area and criterion, to an evidence of engagement in a particular area of CSR, to the amount of involvement of banks in comparison to other banks, and to results that were managed to report by socially responsible activities.
Evaluation of CSR Practices at Selected Financial Institutions and Discussion
The core aspects of corporate social responsibility, such as the economy, the environment, and social responsibility, were each subjected to their own evaluation and then categorized into one of eight primary categories, including Management of CSR, Direct Economic Effects on a Community, Indirect Economic Effects on a Community, Human Rights, Social Policy, Employment, Consumer Protection, and Environmental Policy.
The Czech Savings Bank is head and shoulders above other financial institutions when it comes to the Management of CSR because its CSR strategy is woven throughout the entire Corporate Social Responsibility Report and offers the greatest amount of information regarding the socially responsible endeavors of the bank.
SOB has a somewhat better ranking with regard to the criterion “Appointment of CSR representatives,” and its Policy of Sustainable Development outlines a procedure wherein complaints regarding CSR are directed to the General Director, who is accountable for the social responsibility of the bank.
Direct economic effects on a community
The bank’s economic performance is inversely proportional to the amount of money it invests in CSR. As a result, it is desirable to attain financially satisfactory results in order to facilitate the development of CSR and charitable endeavors.
One component of direct economic consequences is how hiring practices and business relationships with suppliers and employees are affected. These facets unquestionably need to be included in the strategic reevaluation of corporate social responsibility (CSR) and a sustainable expansion of commercial banks.
Despite the financial crisis, banks in the Czech environment are quite prosperous. It is reflective of results such as a net profit in recent years as well as a high level of the capital adequacy, both of which prove the stability of the Czech banking sector.
The Czech Journal of Competitiveness spoitelna was the most successful bank in recent years, as evidenced by its achievement of an average annual profit of CZK 14.1 billion in those years. The second most successful bank in the Czech Republic was SOB, with a total of 13.3 billion CZK in assets, followed by Komerna bank with 12.2 billion and GE Money Bank with 4.2 billion.
Indirect economic effects on a community:
Investing in public welfare and the expansion of public services is an example of something that can have indirect economic impacts on a community.
The purpose of these charitable endeavors is to provide assistance for public initiatives and services on a purely altruistic basis, without the prospect of generating any profits.
The responsibility to the community People’s rights:
The ethical standards that are established by individual banks and the communications that those banks have with their most important stakeholders are the aspects of the criteria that are the most linked with regard to the third pillar of social responsibility.
When discussing human rights in the context of an organizational setting, the primary focus should be on employment legal connections as well as working circumstances.
In this particular setting, the most important document is a code of ethics, and all of the selected banks utilize it with the exception of one.
The social policy is heavily linked with the criteria that have already been considered. Banks are frequently involved in the public life of their communities through the efforts of their staff members and the volunteer work that they perform.
The public has a generally favorable impression of financial institutions, and banks recognize the need of maintaining this image through participating in philanthropic projects and activities. An organization’s acceptance of socially responsible principles, including anti-corruption policies and processes, should be considered an intrinsic element of those principles.
For financial institutions, having a reputation as a trustworthy employer is critical to the success of their business. In the banking industry, a properly motivated and content employee is one that is highly valued and appreciated to a very high degree.
All of the shortlisted banks make extensive use of different kinds of motivation and development programs. Only in the specific specialization of individual programs can differences be established as a basis for comparison. Also worthy of notice is the outplacement assistance provided to employees who are leaving the company.
In this scenario, the monitoring and evaluation of the level of satisfaction experienced by clients is the single most significant criterion. As has been stated on multiple occasions in the past, the level of satisfaction that customers have with their bank has the greatest influence on the bank’s bottom line, but the results of this criterion are devoid of any exact data because banks only monitor and measure customer satisfaction for their own internal needs.
Although the ideas of corporate social responsibility and ethical behavior in the business sector are not new, the recent financial crisis has brought the need for moral principles to be incorporated into banking businesses into the spotlight in a significant way.
This has resulted in the concepts becoming extremely topical. Knowledge of business practices points to the fact that the acceptance of moral principles in business is not integrated into the management decisions of companies, and it is not reasonable to anticipate that self-regulatory ethical instruments of companies (such as CSR) will be effective. This is due to the fact that moral principles in business are not universally accepted.