It seems every day there’s another big corporation in the news for flagrantly violating the public’s trust—whether it’s failing to protect consumers’ health, safety or privacy, putting bogus transactions or accounts on the books, or neglecting environmental hazards in favor of the heedless pursuit of profits and shareholder returns.
Of recent, some of the most flagrant violations of consumer trust have come from within the financial industry. This is unfortunate as these episodes drastically reduce public confidence in our entire sector. At Amalgamated, we believe banks can be a force for good and we view finance as a means to broad economic empowerment. When isolated rogue actors rip off consumers, it precludes the public perception that financial institutions can provide opportunities, especially to the “unbanked” and “underbanked,” by extending credit and promoting financial health and education.
Worst of all, when trust is violated, it often hurts smaller, more earnest companies more than the violators themselves, as large corporations can often get away with paying a relatively insignificant fine—even a billion dollars is “chump change” to many of the mega-banks. They can chalk it up to the cost of doing business, and just move on, while the rest of the industry is left to deal with the collateral reputational damage.
Of course, whether businesses have any responsibility to the general public is still an open question. And, if they do, what should the consequences be if businesses don’t live up to those responsibilities?
Until relatively recently, conventional thinking went that a business that was profitable and didn’t violate the law was basically fulfilling its responsibilities. Now, however, a growing international corporate social responsibility (“CSR”) movement has turned that conventional thinking on its head. Profit is only one of three or four “bottom lines” that responsible companies need to consider; the other “bottom lines” are social, environmental, and intergenerational or future-oriented. A business that isn’t focused on these three or four bottom lines simply may not be a responsible corporation.
At Amalgamated, when we evaluate our own performance, we do so against these multiple, intertwined bottom lines. (See our Impact Report to learn more.) More and more, companies are feeling pressure from partners, peers, stakeholders and consumers to meet and exceed higher standards of responsible governance. And recognition and affirmation from independent watchdogs and industry groups certainly helps. If our bank did not uphold quadruple bottom line standards of corporate governance, we would not qualify for our membership in the Global Alliance for Banking on Values (GABV) or certification as a B Corporation.
It is important to remember that there is a difference between corporate social responsibility and basic good governance. Not every corporation has to have a stated social or environmental mission, but every organization should have a social and environmental policy. Not every company must be a B Corp. or even take a triple bottom line approach to accounting, but companies should not be destructive or detrimental to human health or welfare, or the ecosystem. A real movement towards social responsibility in business should not just be moving a handful of “good” businesses over to the right side of history, but rather shift the entire paradigm of doing business. In other words, you don’t necessarily have to be good, but you must not be bad.
Real, transformational change may require pressure being exerted from consumers and industry leaders. Today, when a company misbehaves, it gets a slap on the wrist, often in the form of a relatively minor fine or penalty, or a temporary hit to its reputation or stock price. As a business community and as a society, it is time to hold bad actors’ feet to the fire, both as entities and as individuals. It is time for consumers to speak with their wallets, and for industry leaders to finally throw down the gauntlet and hold peer institutions and competitors accountable through words and example-setting deeds. With the geopolitical and environmental stakes so high, it is time to stop giving the biggest companies a pass. If a company acts irresponsibly, they should not get the business. Period. It is up to all of us to raise the bar and create a world in which we encourage CSR, but, perhaps more importantly, not tolerate destructive enterprise at the expense of future generations.