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Mary Mazzoni headshot

Five Years Later: Has There Been Sustainable Change in the Financial Services Sector?


The 2014 BSR conference in New York City last week attracted thought leaders from all industries, who gathered to commiserate on timely topics like climate change, sustainability reporting and the circular economy. Of course, a substantial portion of attendees represented BSR member companies -- a list that includes more than 250 multinationals that have pledged to "improve their sustainability performance."

It may come as a surprise to you, but 15 percent of BSR members are part of the financial services industry. Less of a shock: This figure has grown significantly since the financial crisis of 2007-2008 (and continues to climb), as banks and investment firms struggle to rebuild from within and regain consumer trust.

As John Hodges, director of financial services for BSR, put it while moderating a panel discussion at the conference: The financial crisis marked "the only time in [BSR's] 20-year history that an entire industry was going through a corporate responsibility crisis at the same time."

After the dust settled, governments, advocacy groups and other stakeholders began to focus intensely on creating a more responsible financial services industry. But how much has really changed in the past five years? Do these companies interact differently with their clients on sustainability issues? Are they really modifying their core business practices in the interest of corporate social responsibility (CSR), or is this just another marketing game? These are only a few of the questions asked last Thursday in New York.

To kick off the panel, Hodges asked three thought leaders to introduce topics they viewed as crucial to achieving sustainable change within the industry. Andrew Plepler with Bank of America and David Wheldon of Barclays Bank were on-hand to offer their perspectives. There to counterbalance representatives of two large banks was business journalist Sheelah Kolhatkar, features editor and national correspondent for Bloomberg Businessweek, perhaps known best for her 2010 New York Magazine article, "What if Women Ran Wall Street?"

I was intrigued to hear what these three prominent figures had to say about a topic so fraught with controversy and an event that ignited skepticism, resentment and even downright hatred among consumers. It was clear I wasn't the only one: Although you'll always notice a working traveler or two scrolling through emails at a panel such as this one, the crowd last week was unusually attentive and seemed to lend an open, albeit cautious, ear.

"The time for remorse is still not over"

In the first few minutes of the panel, David Wheldon got everyone's attention by reminding the crowd of the infamous remarks made by his company's former CEO. In the wake of the financial crisis, ex-CEO Bob Diamond declared, "the time for remorse is over," with a predictable response from the media and already-outraged consumers.

Wheldon, managing director of brand, reputation, citizenship and marketing for Barclays, bluntly rebuffed Diamond's flippant and ultimately disastrous statement, saying simply: "The time for remorse is still not over."

Later in the discussion, Wheldon doubled down on his position of accountability by saying, "Looking beyond the apparent financial crisis: For about 30 years the financial sector has not done a good job of putting the best interests of its customers at the center of its business."

Of course, putting on a pretty face for the public is nothing new for big-money companies -- in any industry. As Sheelah Kolhatkar of Bloomberg Businessweek pointed out, the tobacco industry boasts notoriously lavish corporate giving programs -- but these programs don't do much for company reputations, especially among the sustainability and CSR set. What's necessary for substantial change, the panelists insisted, is a top-down, middle-out strategy that engrains CSR not only in the board room, but also in the day-to-day practices of financial services companies.

Added Andrew Plepler, global corporate social responsibility executive for Bank of America: "I think that one of the silver linings of the financial crisis -- if there is such a thing -- is that CSR evolved … So, what pre-financial crisis had been largely a philanthropy and volunteerism program is now very much integrated into the way the company is governed and the way the company is run.

"When you think about the non-negotiables: To have an effective and credible CSR practice, you have to get business practices right coming out of the financial crisis. You can do all the philanthropy and all the volunteerism in the world, but if you're in the headlines day in and day out about business practices which people don't think are ethical or trustworthy, you're going to be in trouble."

Addressing the skepticism

Seeming to address the skeptics in the room, Plepler remarked: "We convince ourselves that we're doing pretty well at this -- we've made changes, we've made a commitment, there's this overarching philosophy that is engrained in the culture of the company -- but there's enormous skepticism, some of it very justified."

Kolhatkar naturally chimed in. (Who better to speak on skepticism than a member of the media? Of course, questions came up about whether or not the financial media was skeptical enough leading up to the crisis, but that's a conversation for another day.) Commenting on public uncertainty, Kolhatkar said: "I think there is a real lack of trust in the financial sector ... People are very frustrated and have a tendency to doubt anything that comes out of financial services marketing because many of them have personal experiences that are really not good or they know someone who lost their house.

"Then there are the press and the financial media, and journalists by nature are really skeptical people. For many years there was a sense that corporate philanthropy was something that was often undertaken for PR reasons, and it wasn't necessarily a heartfelt [effort]," she continued. "I think there are things that can be done to help that -- certainly creating more dialogue between members of the press and people at companies who are involved in this is extremely helpful."

Plepler agreed, adding: "People always say, 'We don't get enough credit for the good things we do.' Well, it's going to take a while for that to happen. You're not going to run a 60-second [ad] spot that's going to automatically transform the way people think about financial institutions.

"But when you're able to sit down and have a dialogue with [Kolhatkar] or other influencers and you're able to tell the narrative ... people are at least willing to hear us talk about that," he continued. "I think three or four years ago, we couldn't even have that conversation. It was just an immediate shut-down."

Bringing the goods

Whether or not you believe banks are making a heartfelt effort to change after the crisis, the fact remains that it will only get tougher for them to ignore corporate responsibility. A recent study conducted by PwC found that one-third of investors with more than $100 billion under management are saying that they need more on sustainability to be able to make high-quality, long-term investment decisions. This year, companies have seen a record-breaking number of environmental and social shareholder resolutions filed. It has been said that money talks, and the big money is hoisting the megaphone when it comes to ensuring a sustainable future.

"Three years ago one of our researchers in the investment bank told me that our clients were not interested in what I was talking about," Wheldon recalled. "If he were here now, he would tell you that they are very interested ... There are massive changes underway that all companies need to be aware of."

In response to internal changes within the company in the wake of the financial crisis, Bank of America has assembled a CSR governance committee for the first time, made up of business leaders from across the company. "Now we have quarterly meetings with people from commercial banking, global corporate banking, wealth management — all in a meeting with an agenda exclusively focused on CSR issues," Plepler said in an exclusive interview with TriplePundit. "That’s a big shift, and it allows us to penetrate where the real decisions for the company are being made … and it allows CSR to play a bigger role in a company of our size."

Barclays has whittled what was once more than 30 'core principles' -- good luck following those -- down to five that it has committed to engrain into its core business practices. When it comes time for year-end bonus and contract extension meetings, whether it's C-suite executives or first-year analysts, the company evaluates employees against these five elements. The bank has already dismissed several employees and changed numerous policies due to departure from these principles, Wheldon said.

The conversation also touched on employee engagement, another key component to any sustainability conversation. For big banks, the question becomes: Can you engage employees in the right way? Can you engage them around the greater good -- not just high salaries? Wheldon seemed optimistic, saying the company’s millennial employees are indeed more interested in values than earning money, and millennial surveys support that assertion. Another issue for big banks, of course, is diversity. While panelists say diversity and inclusion have improved, there is still a long way to go in that area. (Kolhatkar may have to wonder for a while what would happen if women -- or people of color -- ran Wall Street.)

Getting it right this time

As panelists pointed out, the road is sure to be long and rocky. But one thing is for certain: The financial crisis served as a resounding wake-up call for large financial firms. Both customers and big-money investors are asking tough questions about sustainability and CSR. As Wheldon put it in the conclusion of the panel, "If we don't have that dialogue with our clients, one of our competitors will."

For folks like Wheldon and Plepler, who have been working in CSR at their respective companies since long before the crisis, this means their departments are moving from afterthoughts to center stage. This is not to say that big banks will never make another mistake -- or even that they'll stop handing out exorbitant bonuses and give the money out as grants for low-income families or indebted college grads. But the fact that a conversation like this took place in the middle of Midtown Manhattan -- "the heart of the beast," so to speak -- is a significant change in and of itself. We'll have our eyes peeled for developments in this area, and we hope you do too.

Image credit: Vincent Breton

Based in Philadelphia, Mary Mazzoni is a senior editor at TriplePundit. She is also a freelance journalist who frequently writes about sustainability, corporate social responsibility and clean tech. Her work has appeared in the Philadelphia Daily News, the Huffington Post, Sustainable Brands, Earth911 and the Daily Meal. You can follow her on Twitter @mary_mazzoni.

Mary Mazzoni headshotMary Mazzoni

Mary Mazzoni is the senior editor of TriplePundit and director of TriplePundit's Brand Studio. She is based in Philadelphia and loves to travel, spend time outdoors and experiment with vegetarian recipes in the kitchen. Along with TriplePundit, her recent work can be found in Conscious Company and VICE’s Motherboard.

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