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.