Here for good?

Standard Chartered launched a new brand promise of “here for good” in 2010. At the time I thought it a clever tagline that differentiated the bank from global peers. Positioning Stan Chart as a ‘force for good’ set it apart from rivals whose fixation on profits had caused the global financial crisis. It also said Stan Chart would be around for the long-run, again, unlike some banks that collapsed during the crisis or were hobbled by it and retreated.

Stan Chart’s adverts at the time asked “can a bank really stand for something, can it balance its ambition with its conscience?” Although meant to be rhetorical, it is debatable how well Stan Chart actually performed on social responsibility. For instance, two years later it was accused of consistently violating sanctions in Iran. And when Bill Winters took over as CEO in 2015, he found Stan Chart had “some good businesses” that were “covered in fertilizer”, before spending years trying to improve compliance, risk management and culture.

Looking at some rankings, Stan Chart’s CDP climate change score dropped from A in 2015 to a B in 2017. Although still above the global average for banks, this score certainly doesn’t make it a leader. In addition, its C- rating on both coal mining and coal power from Banking on Climate Change in 2018 were slightly behind those of HSBC, the other large international bank focused on Asia. Perhaps Stan Chart’s announcement last September that it will no longer finance ‘new coal-fired power plants’ will improve these ratings. One area where Stan Chart has excelled is its Seeing is Believing (seeingisbelieving.org) community investment, which has raised $100m and reached 167m people in poor communities since staff started it in 2003.

It’s clear that Stan Chart’s share price and operational performance have lagged peers noticeably for many years. For instance, its 5% return on equity is low, particularly for an emerging market bank. Meanwhile, its share price has dropped about 40% in the past four years, well below the global bank index’s 20% rise (according to Bloomberg).

Thinking about Stan Chart and “here for good” raises the broader question of whether companies that ‘do good’ perform better, either operationally or their share performance. Most academic work finds a small positive relationship (e.g. the meta-analysis by Margolis et al 2007), but determining causality is difficult.

In any event, Stan Chart refreshed their brand campaign last April to “Good enough will never change the world”. It will be interesting to see whether the bank can live up to this even more ambitious brand promise over the next decade.  

2 thoughts on “Here for good?

  1. Hi
    I enjoyed your post on StanChart’s ‘Here For Good’ campaign. As I write this, they are back again in the headlines with an eye watering USD1.2bn possible charge covering possible sanction violation issues you mention, amongst other problems. But I’ve seen at first hand the good they can do in local communities in Sierra Leone, when I was posted there as a diplomat many years ago. Years later when Ebola broke out, they played an incredible role in the response, exemplifying the very best behaviour and approach to the local communities in which they operated.

    The question I guess is can banks truly be for ‘good’ (beyond the glossy campaign) when they are accountable to so many stakeholders, shareholders and investors to provide a return to? This is a generic issue, well beyond any one bank.

    Arguably, the purpose of any bank or on-going business concern for that matter is to be successful. That’s the only way it can satisfy its wider social corporate responsibilities. Investors, shareholders, regulators and customers need to provide the challenge to ensure there is a purpose beyond simply profit. But are we kidding ourselves by taking slogans like ‘Here for Good’ at face value?

    My own experience of building teams and businesses for a large multinational bank in a number of developing markets came at a time when the bank unified under one logo and strapline globally. We were all supposed to ‘live the brand’. In practice does nothing instill or drive the right behaviours and values. What is needed, and perhaps what StanChart needs is to go back to basics and to introduce mandatory training on ethics and personal responsibility and integrity across all business lines and function- especially the trading floors and investment bank. Then, and only then, can they consider whether they have the culture to be able to truly say as a brand that they are ‘here for good’.

    Like

  2. Yes, you do sometimes wonder whether the empress has no clothes! It is unfortunate that the seeming PR campaign does not always seem to resonate with the business activities.

    You also raise the possibility that good corporate citizenship is connected to underlying financial performance, although as you point out causality is difficult to pin down. I wonder how much data – an time – must elapse before believable trends emerge that hopefully support your view that a sustainable corporate ethos and behaviour is integral to generating financial performance?

    It is interesting that a notable success for Stan Chart is in community investing. I can bear this out with some of our impact investments, where a more tailored and client-centric approach, like the Gramien bank model, produces a return premium over time. Moreover, due to the tailoring of risk mitigation strategies, the overall default rates on loans can be lower than the more traditional ‘one-size-fits-all’ approach we can find in some of the larger banks!

    Good luck with your role in your orgnisation’s sustainability journey!

    Like

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