In a year dominated by discussions of a royal commission into their bad behaviour, each of Australia’s biggest four banks spent millions marketing their social good deeds.
Westpac’s 100-page Social Impact Report features the image of a farmer whose cyclone ravaged business relied on finance from the bank to recover. “Helping people in times of need” is the Westpac tag line.
NAB’s Sustainability Report tells Australians the bank is “more than money” with prominent pictures of NAB-branded Sherrins promoting the bank’s sponsorship of children’s and women’s Australian Rules Football.
ANZ wants the public to know that the bank employs 250 people from under-represented groups.
CBA says it invests $272 million, or more than 2 per cent, of its profit in community projects. Like the other banks, the overwhelming bulk of that money (80 per cent in CBA’s case) is revealed as “foregone revenue”. “Foregone revenue” is shorthand for fees the bank doesn’t charge welfare recipients, low-income earners and charities.
CSR reports ‘not meant to be glossy brochures’
Set against a royal commission that’s heard countless examples of the banks charging fees where they shouldn’t, Dr Stephanie Schleimer from the Griffith Business School reckons claiming foregone revenue as your biggest community investment amounts to “greenwashing”.
“It just shows you that the banks have it all upside down and inside out and wrong. Reaching vulnerable members of your society and assisting them and helping them should just be part of your normal duty.
“CSR reports are not meant to be glossy brochures that look like advertising.”
A Commonwealth Bank spokesperson said CBA is fully transparent in reporting the breakdown of its community investment, with foregone revenue as a separate line item.
“We are proud to support a wide variety of community organisations with donations, time and pro-bono services,” the bank noted.
“Offering fee-free or discounted banking accounts for vulnerable customers and not-for-profit organisations is an important means of in-kind support for our communities in addition to our range of other initiatives.”
The Australia Institute’s chief economist Richard Denniss says the banks continue to demonstrate a collective tin ear when it comes to helping the communities they operate in.
“You don’t help a charity by failing to gouge it,” he argues.
“Big cheques to charity are great, but to suggest they’re making a contribution to the community only to find out they’re just not charging exaggerated fees, I think that’s wrong.”
‘Disconnect’ between what banks say and what they do
The glossy 2017 CBA Corporate Responsibility Report sits uncomfortably alongside the prudential regulator’s assessment of the bank’s conduct, published just months later.
APRA specifically examined governance, culture and accountability at the Commonwealth Bank.
With regard to the damning revelations about its insurance business exposed by the ABC, the bank sought to reassure staff, customers and shareholders that it had “not engaged in widespread or wilful misconduct”.
The prudential regulator found otherwise, concluding that the bank had put profits ahead of positive customer outcomes.
After a forensic review, APRA reported “widespread complacency” at CBA. It recommended that, in future, the bank recognise that just because it “could” (legally) behave in a certain way towards customers didn’t mean it “should”.
It was a sentiment echoed by banking royal commissioner Kenneth Hayne just weeks later when he asked, “Is there a disconnect between what the banks are saying in their advertising, their annual reports, their other public documents, and their conduct?”
In a speech earlier this year, former treasury secretary, and now chairman of NAB, Ken Henry said Commissioner Hayne, a former High Court judge, was right to question whether banks had promoted shareholder interests above customer interests.
Westpac coming to your rescue … or is it?
Economist Richard Denniss recently commissioned a poll to test perceptions about Westpac’s claims about the Westpac Rescue Helicopter Service.
The Australia Institute poll, the results of which have been provided exclusively to the ABC, asked the public how much they thought Westpac invested in the service. Almost 80 per cent of those polled thought the bank funded at least half the running costs of the rescue service.
Yet information on the website of the northern New South Wales branch of the Westpac Rescue Helicopter Service reveals that private donations and sponsorship only account for $12 million out of its $40 million, four-helicopter operation.
The bulk of the money for the northern NSW Rescue Service comes from NSW taxpayers, channelled through the NSW Health Department and Ambulance Service, while sponsors and donors other than Westpac also account for a significant part of the $12 million.
This isn’t a surprise, as Westpac’s total community partnerships spend in 2017 was $13 million. Even if all this money went to rescue helicopters, it would only fund a third of the northern NSW service.
Westpac says it supports 17 rescue helicopters and two boats around the nation, spreading that $13 million even more thinly.
Westpac supports 17 rescue helicopters and two rescue boats. (Twitter: Westpac Life Saver Rescue Helicopters)
The websites of the “Westpac” rescue chopper services in southern NSW, Queensland, Western Australia, South Australia and Tasmania all acknowledge they receive state government financial support in addition to any sponsorships or donations.
Westpac told the ABC it cannot disclose its financial contribution to the rescue helicopter services because the sponsorship agreements are commercial in-confidence, but did add that it organised fundraising events that contributed a further $3 million.
“In some states Westpac contributes 100 per cent of funding and there is no government contribution,” the bank responded to questions from the ABC.
“In other places, a state government will contribute funding due to the type of services offered, e.g. air ambulance services.”
However, the numbers in its own report demonstrate that Westpac must be a minority supporter for the majority of the rescue operations.
While Westpac’s support for the rescue services is no doubt extremely valuable to them, only 8 per cent of those surveyed by the Australia Institute got closer to the more likely figure when they said that Westpac’s contribution to the rescue helicopters was probably less than a quarter.
Westpac’s helicopter marketing spend also a mystery
Westpac supports the television series Air Rescue, which highlights the work of the helicopter service, featuring the bank’s prominent branding on the choppers.
Last year, as criticism of the banks reached fever pitch and debate raged around the value of a royal commission, Westpac ramped up its helicopter marketing. An elaborate new TV ad featuring workers repairing the Harbour Bridge was set to a cover version of David Bowie’s song Heroes.
The campaign, including digital media and outdoor advertising, as well as school curriculum material, is estimated by industry experts to have cost several million dollars.
Westpac’s television advertising goes as far as to say the bank is so charitable it will even rescue customers who don’t bank with Westpac!
Dr Schleimer says the misdeeds against the banks’ own customers exposed by the royal commission have overshadowed the banks’ good deeds.
“Usually our community forgives you for spending a lot of money if you help others save lives even if they’re not your customers, as Westpac likes to say, but the problem here is that the banks, including Westpac, seem to fail in alleviating the misery and saving the livelihoods of their own vulnerable customers and then advertise very bluntly and openly that they save the lives of people who are not their customers.”
Westpac told the ABC it meets all its obligations around naming rights and says in most instances publicity activity is about acknowledging the work of the service.
However, the bank did not answer a question as to whether marketing campaigns (including its contribution to Air Rescue) involving these helicopters cost more than the helicopter rescue services receive from Westpac in funding.
Simon Longstaff from The Ethics Centre says people reading about the banks’ community investments will be understandably cynical.
“You could make the point that all of the effort that goes around brand and reputation would have been better spent internally to ensure that you weren’t trying to build trust by external facing activity but instead by being trustworthy across the board.”
Dr Longstaff has been an adviser to Westpac’s senior executives via its Stakeholder Advisory Council. He’d prefer the banks were humble about their community contributions. In his view, it’s more powerful to surprise people with your philanthropy than boast loudly about it.
Why doing good might make you more likely to act badly
A leading American researcher has linked misconduct within Australia’s big banks to their widely trumpeted commitment to corporate social responsibility.
A pioneering field study completed last year by University of Chicago economics professor John List found that the more a company advertised their corporate benevolence the more likely their staff were to misbehave.
For the purposes of his CSR research, Professor List set up a company that engaged in translation services. It’s the kind of routine work that made it simple for his team to observe changes in staff behaviour.
The front company employed 3,000 people. Using CSR as a recruitment tool, employees were more productive and were prepared to accept a lower salary.
The downside was that staff working for a CSR company were 20 per cent more likely to act detrimentally toward the firm by shirking on their primary duty. The experiment suggested that “moral licensing” was at work.
“If a firm advertises itself as doing something really good in one area, it’s very possible that the firm itself or its workers will believe, ‘well since I’m doing well over there I can short shrift morality in some way over here and actually cheat’.”
While his research didn’t look specifically at banks, Professor List has been observing the hearings at Australia’s banking royal commission.
He’s been astonished by the revelations of fees for no service, charging dead people bank fees, exploiting Indigenous Australians, fraud and breaching responsible lending laws. It all appears to validate his research.
“And, in a way, it allows the human brain to trick itself in to saying, you know, now you’re kind of even because you’re doing well you’ve got a license to do poorly in another area.
“When I look at what’s happening in Australia it feels like that’s exactly what’s happening among these very large banks.”