Growing importance of CSR is making the industry, governments, policy makers and international associations seriously view the issue of corporate social responsibility (CSR) with an aim to link sustainability for the organizations, sector and economy. Hence, more and more of them are entering the arena of setting guidelines on reporting CSR initiatives. Banking is no exception. Through in-depth literature review and grounded theory approach, this article delves into the CSR initiatives by Bank Windhoek, and the multi-pronged approach adopted in developing sustainable strategy in its pursuit and endurance to be a frontrunner in the Namibian banking sector.
TopIntroduction
An important component of the economic system is represented by the financial institutions. They have an important role owing to their function of attracting financial resources from the economy and their redistribution to businesses that are looking for financial resources to finance new projects or projects in development. In addition, financial institutions are able to catalyse the introduction of rules on sustainable development. Similar to other companies, banking and financial institutions have a certain conduct in dealing with the local community, labour and the environment, and their relationships can be used as key tools in imposing principles of sustainability to the borrowers (Eftimie, 2006). According to Hopkins (2003), CSR is concerned with treating the internal and external stakeholders of the firm ethically or in a socially responsible manner and the wider aim of corporate social responsibility is to create better standards of living, while preserving the profitability of the corporation, for its stakeholders (Chaudhury, Das, & Sahoo, 2011). Businesses nowadays are expected to operate ethically and in a way, fulfill social obligations. Thus, CSR aims to embrace responsibility for corporate actions so as to encourage a positive impact to the environment and stakeholders. Proponents suggest that companies can increase long-term profit by operating with a CSR perspective, while critics argue that CSR distracts business from economic consideration.
Further, in recent years the concept of Corporate Social Responsibility (CSR) is spreading rapidly and all the sectors including banking (Chaudhury et al., 2011; Das, 2012). This is due to globalization and societal demands to all organizations, to take their CSR into account for improving the social and environmental performance. Besides, due to negative impacts of the global financial crisis and severe competitiveness in the financial market, banking sector, plays a crucial role in facilitating the economy and leading the nation to discharge CSR (Singh et al., 2013). CSR differs from place to place, from industry to industry and over time (Welford et al., 2007). Moreover, CSR in banks has become a worldwide demand. Now a days, by recognizing CSR, banks from all over the world endorse programs of educational, cultural, and environmental, as well as health initiatives. Besides, they implement sponsorship actions towards vulnerable groups and charitable non-profit organizations (Polychronidou et al., 2013). The most important aspect is to enhance banks reputation and financial performance because, for bank, its reputation is a determining factor to retain old clients and attract new ones, which eventually enhances bank’s financial status. Besides, if a bank pays attention to social responsibilities, the bank can get profits for themselves through better risk management, employee loyalty and higher reputation. Therefore, when banks try to maximize their profit, they are now all aware that their profit earned is decided by their customers. Indeed, they are parts of society. As a result, they are supposed to become a social plank that fulfils their responsibility for the society and it is obvious that CSR ‘provides that and also can bring many advantages for the banking sector.
Statement of the Problem
In Namibia, banks have shown incremental growth in terms assets, deposits, capital and liquidity levels, but the literature shows that very little has been done around CSR activities. Although some isolated and unstructured sponsorship activities are carried out, this falls short of formal CSR policies and activities. Literature review reveals that CSR hardly exist in Namibian commercial banks since there is “no commendable progress made in the banking sector to re-invest in the social infrastructure of the Namibian people” (IMF, 2007). Therefore, through in-depth literature review and grounded theory approach this paper delves on the CSR initiatives by Bank Windhoek, the multi-pronged approach adopted to develop a sustainable strategy so that it can endure the competition and be frontrunner in the Namibian banking sector.