Barclays cynical appropriation of the ‘citizenship’ agenda proves that the shift towards responsible capitalism will not come from the boardroom. But neither should we look to shareholders or politicians to bring about meaningful change. It is a new breed of consumer and the SME’s that serve them who are drawing up the battle lines in the struggle to find a better way of doing business.
Today Barclays is holding a ‘citizenship day’ to underline the banks commitment to being a good citizen. Bob Diamond even made citizenship one of the banks ‘execution priorities’ when he took over as chief executive, but what do they actually mean by citizenship?
Unsurprisingly the ‘what does citizenship mean to us’ section of their annual report is pretty vague. But the long and short of it is that Barclays subscribes to a very traditional conception of Corporate Social Responsibility.
“Our role is to help improve the lives of our customers. We must provide mortgages, allow businesses to invest and create jobs, protect savings, pay tax, be a good neighbour in the community while also generating positive economic returns for our investors.”
Bob Diamond, Chief Executive, Barclays Bank
In other words, they believe, that as a bank, fulfilling their core business activities, hiring some staff, paying some tax, providing a few grants to community organisations and running the odd volunteer day makes them a good citizen.
There is a longstanding debate about the merits of CSR. But the zeitgeist is shifting away from CSR towards the idea of socially responsible business. Increasingly we expect companies to not just ‘give a bit back’ but to internalise the claims of society and the environment by embedding values in governance structures, supply chains, HR and operations. Socially responsible business breaks down the distinction between business, and social and environmental aims.
Indeed, Barclays has attempted to tap into this value shift by emphasising how its lending activities stimulate ‘growth’. But surely making loans is just what banks do? The same goes for conducting environmental impact assessments, treating customers fairly, or most the activities Barclays are celebrating today. It’s hard to avoid the conclusion that Barclay’s newfound enthusiasm for citizenship is nothing more than a cynical PR push.
Clearly its not boardrooms who are going to be the driving force creating a more responsible capitalism. But who will?
Much has been made in the media of “shareholder spring”. The though is that newly reinvigorated and emboldened shareholders will act as a restraint on corporate excess and encourage large corporations to act more responsibly.
But shareholders main interest is maximising their returns. The current spate of shareholder revolts basically boil down to the complaint that senior staff in large corporations, and in particular in financial institutions like Barclays, have been creaming off too much of the revenues in pay and bonuses and not paying enough in dividends to shareholders.
Although shareholder activism may succeed in ensuring a fairer deal for owners by tying executive remuneration closer to return on equity, the reality is that shareholders have no incentive to fundamentally change the way big business operates. If we want to see meaningful change in the way big PLCs, and in particular big banks, behave we cannot rely on shareholders alone.
Politicians of all stripes have also been fumbling towards a notion of ‘responsible capitalism’ in the attempt to show an electorate ground down by a stagnating economy and austerity cuts that they are not merely puppets in the grand farce of the financial markets. Ed Milliband tried to distinguish between producers and predators whilst Cameron waxed lyrical about the ‘John Lewis economy’ but both notions remains nebulous and lack credibility.
Articulating a vision for a responsible form of capitalism is an almost impossible task for our political elite who has spent the last 20 years purging themselves of any such ideological impulses. Moreover responsible capitalism cannot be defined a-priori by policy makers. It is taking shape and growing on the ground. The role of politicians is to respond to what’s already out there and create an environment in which best practice can flourish.
It is a new breed of consumers and the SME’s that serve them who are on the frontline of the struggle to build a more responsible form of capitalism. For consumers, companies offer one choice in a market in which they have to balance a range of competing concerns about the world they live in.
Consumers are not just concerned the particular product or service they purchase but the quality of the air they breathe when they walk down the street, the size of their grandchild’s future tax bill, how happy the people who serve them are to name a few. These consumers are relating their consumption choices to wider macro level concerns and so inadvertently breaking down the distinction between being good consumers and being a good citizens.
New business models and vehicles for collaborative consumption, often facilitated by the social power of the internet, are developing to serve the needs of these consumers. They range from highly commercial bulk buying schemes like Groupon, to consumer cooperatives, through to peer-to-peer platforms and movements like move your money which harness consumer power to achieve broader social aims.
Barclays lecturing us on citizenship is more than a bad joke. If they were serious about citizenship and social benefit they should start by properly consulting with the people already making it happen.
The UK has already slipped back into recession and with the looming banking crisis in the Eurozone we have more economic woes in store. We urgently need our banks to be better citizens. And if you don’t think Bob Diamond is the right person to make that happen then maybe its time to take matters into your own hands and move your money?