Abstract
This paper looks at analysing Barclays plc. on its key markets and products, business and corporate level strategies that have been employed, key resources and capabilities, strategically important functional areas and value chain relationships. From a given policies, a key policy and action will be analysed to outline its basic functions and explain the reason why it is undertaken and its benefits produced for the firm and to its stakeholders.
Why Corporate Social Responsibility?
“Good business and strong values go hand in hand. For our long term future, and that of all our stakeholders, it is in our mutual interests that we create a world in which our business will grow and thrive”
(Cadbury Schweppes plc, http://www.cadburyschweppes.com/EN/EnvironmentSociety/Overview/)
The mantra of any business is profit making. But it has a responsibility towards the society in which it operates. CSR, in recent years has gained importance through public scandals and miss-management of business. It is a form of strategic management that covers all aspects of corporate governance. Managers frequently face demands from stake holder groups to allocate resources to CSR. We can interpret CSR as something which is taken up by the business to bear fruit to some social good beyond the interests of the firm and that which is required by the law. And often CSR is seen by companies as an obligation that goes beyond the legal compulsion. CSR is not seen as an action that will benefit the present but also the future generations; for example preserving the environment for the generations to come. Proactively practicing CSR will provide the business with a competitive edge. If successful, it brings the company credibility and trust, protect employer brand among its various stake holders and also engagement and retention of employees.
Introduction
With over 300 years of banking experience, founded in 1690, Barclays has its international presence in over 50 countries: Europe, the Americas, Africa and Asia. It serves more than 48 million customers and clients worldwide. Being a major global finance services provider Barclays is into retail banking, credit cards (the first bank to introduce one in UK), corporate banking, investment banking, wealth management and investment management. Broadly speaking, Barclays is made up of two ‘clusters’: Global Retail Banking and Corporate & Investment Banking and Wealth Management also with a third major business area: Group Centre, which consists of all the essential support functions.
Products
1. Personal Banking:
The bank offers personal banking assistance to customers in 20 main countries also along with credit card facilities to many more. The products and services include: bank accounts from entry level up to premier level, credit cards through Barclaycard, savings accounts, loans, financial advice, insurance, online banking and mortgages.
2. Corporate and Business Banking:
To meet their diverse demands, Barclays offers a number of financial services in the form of products and advice. Some of which are: support for business from microenterprise to multinationals, online banking, savings & investments, card services, risk management, leveraged finance, international trading business loans and so on.
3. Investment Banking:
Barclays Capital, the investment banking division of Barclays having its office around the world, provides comprehensive set of solutions for the strategic advisory, financing and risk management needs for its large corporate, government and institutional clients.
4. Wealth Management:
UK’s largest wealth manager, Barclays Wealth focuses on private and intermediary clients worldwide, providing international and private banking, investment management, fiduciary services and brokerage.
Strategy
In product differentiation, Barclays strategy works well with urban and niche or corporate customers along with their quick and efficient service. This attracts a lot of customers. India and Africa are emerging markets, which are highly regulated by governments and also central banks. These central banks control decisions regarding regularization of interests on loans and deposits and money supply. Also entry barriers pose a road block for the bank to successfully enter these markets. As the brand identity is not wide spread for Barclays, people prefer to invest in government or public sector banks rather than in private banks. However, Barclays has had its success in Africa, by acquiring major stakes in Absa there by gaining entry into an untapped market and along with brand visibility. Absa has been voted the best Islamic bank in Africa two years in a row by Islamic Finance News magazine.
The major source of funds comes from the customers or depositors who have high bargaining power in the market, who in turn becomes the bank’s suppliers, since Barclays is a non listed company in most of the markets. The bank attracts funds from customer by offering competitive rate of interest and also attractions offered through the BarclayCard.
The bargaining power of customers is very high. Barclays is able to retain and attract more customers because of the high quality of services provided. Something which scores high on the customer satisfaction list is their speedy service and facilities like free credit cards along with e-banking. Talking in terms of buyer information only, the urban customer is aware of the services provided by Barclays.
Barclays is showing continuous efforts to plunge into new markets like Western Europe, Africa (through Absa), and India in spite of facing high competition from financial companies and micro finance institutions in these markets. Increasing the economies of scale by tapping markets which are still unsaturated and expanding its reach to a vast number of customers which leads to higher net profit margins through volumes.
Value chain relationship
Primary Activities
v Inbound Logistics:
Investors in shares, commercial papers and the foreign investors are the suppliers who fund the activities of the bank. Barclays is in process of identifying potential issues and take steps to address them, by working closely with its medium and high risk suppliers. These suppliers are to complete a Corporate Responsibility Supplier Questionnaire that the bank has issued which helps in assessing the supplier’s suitability. This helps the bank to ensure that it is engaging with the right suppliers and that their corporate responsibility policies are suitable and in line with the bank’s standards.
v Operations:
The operations of the bank include the following:
UK retail banking: personal customers, home finance, local business, consumer lending, Barclays financial planning.
Barclays commercial bank: larger business, medium business asset and sales finance.
Barclaycard: UK cards and loans, Barclaycard business, Barclay International.
International retail and commercial banking: Absa, Western Europe, Emerging markets.
Barclays Capital: rates, credit, private equity, Absa capital.
Barclays Global Investors: Index asset management, Active asset management, iShares.
Barclays Wealth: private banking, offshore banking, brokerage, wealth structuring, closed life assurance.
v Outbound Logistics:
The bank reaches out to its customers in the following ways:
Consumer loans, cards, mortgages, personal loans, branch banking, e-banking.
v Market and Sales:
Operating in over 50 countries, with an employee base of 135,000 people and a strong customer base of 48 million customers and clients worldwide, Barclays is a major financial service provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management.
v Margins:
Being a financial company, rather than a bank the main margins come from charges such as interest charged or the brokerage or fee charges for the financial service rendered minus the operating costs.
Secondary Activities
Firm Infrastructure:
The bank faces high operating costs, as the bank is investing heavily in infrastructure for better client service and better reach.
Human Resource Management:
A Remuneration Committee has been set up to provide governance and strategic oversight of remuneration, Barclays Human Resource activities and senior management development. This helps in excellence in business and personal performance and enables the bank to attract and retain employees. It also looks at ensuring that the human resource are managed to maximise business performance for the long-term success and growth of the business.
Technological Development:
The banking sector in today’s world is depending upon technology like never before, with new branches opening everywhere and operations going international. This calls for a lot of cost and Barclays is investing prudently in it so as to reach out to its operations which are spread across continents. The bank uses e-banking, mobile banking etc. This calls for high quality technological support.
The Barclays Human Rights Policy
Introduced in 2004, the Barclays Human Rights defines the approach towards human rights programme and puts together a range of policies, practices and aspirations which fall in line with this approach. It covers the company’s role as an employer, provider of financial services, and as a purchaser of goods and services. It has to go in accordance with the Universal Declaration of Human Rights (UDHR) and the International Labour Organisation (ILO).
The policy aims at successfully upholding human rights across the company by providing guidance to the employees on the degree of the company’s responsibilities, comply with human rights legislation and standards, and uphold the idea of Barclays being the leading company in terms of corporate social responsibility, to educate the stakeholders on how the company manages the human rights impacts, risks and opportunities effectively and successfully.
The company has a wide spread global presence and it has clear responsibilities to support governments and civil society organisations in upholding the human rights principles where it operates. The company wishes to operate in accordance with the UDHR and ILO, and the company makes sure that it does not get involved in human rights violations, directly or indirectly. The company also is of the view that there is no definite agreement on the boundaries of corporate social responsibility.
The company promotes human rights through its business activities, which forms the border objective to be a pioneer in CSR. Barclays does this through promoting CSR through its employment policies and practices, through the supply chain and through the responsible use of its products and services.
The statement holds good for all the Business Units and Group Functions. The policy will go hand in hand with any government legislature on human rights in any market, and where the local legislation is more stringent, the local requirements will come into play in addition to this policy. And where the policy has a conflict with the local legislation, the company will comply but will try its best to generate awareness on human rights and portray it through its own good business conduct. This policy remains as a reference point while assessing and managing business relationships employees, customers, suppliers etc.
The following principles show the company’s desire to promote and uphold human rights:
v Creation of universal employment environment which looks at promoting and protecting the rights of the individual. The company looks at reflecting human rights in its employment policies and practices.
v The company shall not be a part of violation of human rights directly or indirectly. And should it happen, the company will be informed by the United Nations Security Council Resolutions.
v The company looks at being a positive corporate role model by way of conducting business in every area it operates in an ethical manner. It also looks at promoting human rights by investing in accessible and reliable financial and economic infrastructure.
v And in case there has been a breach in the policy which the company is made aware to, necessary actions will be take to remedy the situation in consideration of those whose rights are being violated.
Barclays’ responsibility as an employer: as an employer, human rights are monitored and maintained through these policies and practices.
Barclays’ responsibility as a financial services provider: this part of the principle is relevant with the following Group policies-money laundering prevention/Know Your Customer policies, Group Sanctions Policy, Group Policy on Bribery and Corruption, Group Policy on the Defence Sector, Group Environment Policy, Environmental and social risk management policies, which include environmental and social impact assessment criteria and adherence to the Equator Principles, Raising concerns policy (“whistle blowing”)
Barclays’ responsibility for purchasing and sourcing: this is relevant with the following principle-Group sourcing policy, Group policy on bribery and corruption, Group policy on gifts and entertainment, Group outsourcing policy, Group security policy.
Barclays’ responsibilities towards communities: the company will take the required steps to understand the impacts that the business may have on the communities in which it interacts, which includes human rights impacts. Necessary actions will be taken to remedy any problems, should there be a violation in human rights. High standards of business conduct will be followed. Agreement to work hand-in-hand with other organisations that uphold human rights.
Barclays goes sticky on the Equator Principles:
In 2004, Barclays committed to finance a controversial multimillion dollar gas pipeline between Thailand and Malaysia which fell prey to human rights abuses.
The pipeline poses a great threat to the delicate ecosystem which is the support to the livelihood of local fishermen and their way of life. The construction of the pipeline has gone ahead despite protests from many areas like, the villagers, the Thai Senate, the National Human Rights Commission (NHRC) and over 1300 academics.
It is worried that due to the effects of effluents and emissions, it will bring in damage to the local community. The villagers living in the project area are mainly farmers, fishermen who are directly dependent on clean air and natural resources. This project not only threatens the important area of wetland forest but also poses a major threat to the food security on the surrounding areas.
In June 2004, Barclays agreed to be the major financier for the project by granting US$257.1 million, which is nearly half of the total loan fund required for the project. This gives the bank significant leverage over the project. Carrying out the satisfactory risk assessment is the key aspect of Barclays’ role, which should consider the major problems associated with the project especially environmental and social harm.
Barclays is the major bank that led the way in creating a set of environmental and social guidelines, known as the Equator Principles (EP). This was for private banks involves in project finance. The EP forms a voluntary framework that banks can use to manage the environmental and social aspects of project financing. And hence Barclays is expected to make sure that Thai-Malaysia gas project complies with the given guidelines in the EP.
It has been stated that, despite protests and major incidents against the project, Barclays continues its association with the project which has lead to a potential human rights abuse. It also states that Barclays has gone against its own principles stated in its Human Rights Policy and by putting the bank’s reputation at stake.
REFERENCE
BOOKS (electronic):
HAY, B.L., R.N. STAVINS. 2005. Environmental Protection and the Social Responsibility of Firms [online]. Washington: RFF Press book. [Accessed 07 May 2010]. Available from: http://books.google.co.uk/books?
hl=en&lr=&id=41CnPHlbJPMC&oi=fnd&pg=PA107&dq=corporate+social+responsibility&ots=hrLFQTgBdt&sig=
4kQtGfNYKZqAwbEB7ebfW7jxr4c#v=onepage&q=corporate%20social%20responsibility&f=false
JOURNAL (electronic):
MCWILLIAMS, A., D. SIEGEL. 2001. Corporate Social Responsibility: A Theory of the Firm Perspective. Academy of Management Review [online]. 26(1), [Accessed 06 May 2010], pp.117-127. Available from: http://www.jstor.org/stable/259398?seq=1
WEBSITE:
HEMSCOTT. 2010. FTSE 100 Index Share Prices [online]. [Accessed 06 May 2010]. Available from: http://www.hemscott.com/prices/index-prices.do
FORBES.COM. 2010. Forbes 2000 [online]. [Accessed 06 May 2010]. Available from: http://www.forbes.com/finance/lists/setters/keywordSearchSetter.jhtml?passYear=2003&passListId=18&passListType=Company&passKeyword=barclays
BARCLAYS. 2010. Barclays website [online]. [Accessed 06 May 2010]. Available from: http://group.barclays.com/Home
CIPD. 2010. Corporate Social Responsibility [online]. [Accessed 06 May 2010]. Available from: http://www.cipd.co.uk/subjects/corpstrtgy/corpsocres/csrfact.htm
SCRIBD. 2010. Barclays analysis and profit centre [online]. [Accessed 07 May 2010]. Available from: http://www.scribd.com/doc/5022319/Barclays-analysis-and-profit-center#fullscreen:off
FRIENDS OF THE EARTH. 2005. Barclays, Human Rights and the Trans Thai-Malaysia Gas Pipeline [online]. [Accessed 07 May 2010]. Available from: http://www.foe.co.uk/resource/briefings/barclays_thai_malaysia.pdf
ETHICAL CORPORATION. 2009. Barclays targeted by Thai and Indian activists over investments [online]. [Accessed 07 May 2010]. Available from: http://www.ethicalcorp.com/content.asp?ContentID=3303
ETHICAL CORPORATION. 2009. Barclays getting sticky at the equator [online]. [Accessed 07 May 2010]. Available from: http://www.ethicalcorp.com/content.asp?ContentID=3016
BARCLAYS. 2010. Human Rights [online]. [Accessed 07 May 2010]. Available from: http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=articleFWsocial&value=12603&target=_self&site=pfs
AUSTRALIAN HUMAN RIGHTS COMMISSION. 2008. Corporate Social Responsibility & Human Rights (2008) [online]. [Accessed 08 May 2010]. Available from: http://www.hreoc.gov.au/human_rights/corporate_social_responsibility/corporate_social_responsibility.html
TSSA. 2010. Corporate Social Responsibility [online]. [Accessed 08 May 2010]. Available from: http://www.tssa.org.uk/article-46.php3?id_article=2045
BARCLAYS. 2006. Barclays Group Statement on Human Rights [online]. [Accessed 08 May 2010]. Available from: http://www.personal.barclays.co.uk/PFS/A/Content/Files/barclays_group_statement_on_human_rights.pdf
BARCLAYS. 2010. Equator Principles [online]. [Accessed 08 May 2010]. Available from: http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=articleFWsocial&value=12594&target=_self&site=pfs
An Essay on Corporate Social Responsibility: The Case of Barclays plc.5