Corporate social responsibility (CSR) refers to a corporation’s accountability for its actions towards its people, the communities it interacts with, and the environment it is situated in. By implementing CSR as part of its corporate strategy, a firm seeks to align its economic interests with its legal and social responsibilities to its employees, its community and the rest of its stakeholders. In Singapore, though CSR is still a relatively new notion when compared to the Western countries, it is increasingly shaping up to be a critical corporate strategy that is synonymous with a firm’s reliability and success. This is because Singapore is situated in the rapidly-developing Asia-Pacific region where more and more businesses are inevitably drawn to the trend of globalisation. Now, firms operating in this region have to compete on a global stage for economic viability. They are no longer bound by local norms and regulations, but are instead subjected to the perspectives and standards of the vastly mature international community. Firms have to adapt responsibly to global concerns like climate change, human rights issues and the evolving financial landscape.

Furthermore, in today’s economic climate, following the many scandals and irresponsible practices that have contributed to the financial meltdown of 2008/09, it is especially pertinent for firms, especially financial institutions, to implement sound CSR practices and be responsible in dealing with their stakeholders. After all, the essence of CSR is instilling “trust” – trust in a company to make the responsible decisions. This ultimately enhances brand value and reputation. United Overseas Bank (UOB) is one such institution. A leading bank in Asia with a network of over 500 offices in 18 countries and territories in Asia Pacific, Western Europe and North America, UOB provides a diverse range of financial services including personal financial services, investment banking and asset management, amongst many others. In 2008, the total Customer Deposits at UOB amounted to S$118,171 million, a 10.5% increase from 2007. UOB is rated amongst the world’s top banks by Moody’s Investors Services, receiving B for financial strength, and Aa1 and Prime-1 for long-term and short-term bank deposits respectively.

More importantly, in accordance with its mission to be a premier bank in the Asia-Pacific region, UOB has proactively integrated CSR into its corporate strategy, largely focusing on children, education and the arts. For all its efforts in providing excellence, it received key awards in 2008 like ‘Best Domestic Bank in Singapore’ by Asiamoney, ‘The Best of Asia – UOB Group’ by Corporate Governance Asia, ‘Distinguished Patron of the Arts Award’ by National Arts Council and ‘Best Domestic Bank (Singapore)’ by The Asset. There is no doubt that UOB has implemented CSR. However, given the extent of the influences it has as a leading regional bank, the issue that seeks clarification is whether enough is being done to balance its huge corporate power with its social responsibility.

For all the communities in which UOB has a presence, is there sufficient effort being put into building stakeholder partnerships, uncovering opportunities in serving society and facilitating the integration between financial and social performance? Has UOB sufficiently satisfied all the principles of corporate citizenship? What more can UOB do? In analyzing these, the most pressing issues that CSR aims to tackle will first have to be identified. Once identified, the CSR strategies of UOB can then be put to the test to find out if these strategies are succinctly and sufficiently tackling the issues raised. To add depth to the analysis, the CSR strategies of Citigroup will also be put to the test. Citigroup has more than 200million customer accounts in over 100 countries. It has extensive presence in the Asia-Pacific region and undertakes a very wide range of CSR initiatives to help the communities it operates in. By comparing the breadth and depth of the CSR strategies of both banks, recommendations and analysis can then be made. Currently, corporate governance would be ranked among the top CSR concerns, especially for financial institutions like UOB and Citi. The financial crisis has brought about increased scrutiny over the way banks are internally governed.

Touchy issues like the ethical values of the bank, integrity of the released financial statements, the bank’s debt structure, its dividend policies, thoroughness in monitoring of financial performance and rigorousness of the risk management structure have been put on the table in a bid to better protect the interests of the stakeholders. Increased transparency with regards to these issues and greater accountability are being expected of banks. In this aspect of CSR, UOB has always performed satisfactorily. Its corporate governance is guided by the provisions of the Singapore Code of Corporate Governance 2005, the Banking (Corporate Governance) Regulations 2005 and the Guidelines on Corporate Governance issued by the Monetary Authority of Singapore (MAS). It has a well-established Board of Directors comprising the Executive Committee, Nominating Committee, Remuneration Committee, Audit Committee and Senior Management. The above-mentioned issues are meticulously processed by these committees and systematically reported in UOB’s annual reports and quarterly financial reports.

In particular relevance to today’s economic climate, UOB’s risk management structure is explicitly expounded under its ‘Pillar 3 Disclosure’ in compliance with requirements under Basel II Pillar 3 and MAS’ Notice 637 Public Disclosure to ensure that stakeholders understand the degree of risk they are being put through. However, in contrast with Citi, the system of corporate governance that UOB possesses is less robust and extensive. The main difference lies in the standards adopted and the degree of transparency. Citi adopts the Global Reporting Initiative (GRI) G3 Sustainability Guidelines in the disclosure of its Corporate Governance. This translates to a well-established process of benchmarking Citi’s corporate governance, in accordance with international standards. In addition, Citi issues Corporate Governance Guidelines which explicitly lists down the roles, responsibilities and authority of the Board and its committees.

These guidelines also spell out the process by which the Board’s performance is evaluated. Furthermore, auditing reports of Citi’s financial health by public accounting firms like KPMG are also expressly included in the Annual Report. The transparency in these guidelines and reporting are unambiguous to the public and they bring confidence to stakeholders. Certainly, with regards to corporate governance as a key concern of CSR, UOB has in place sound governance measures and a satisfactory degree of transparency in reporting. However, a possible avenue to explore would be the adoption of a global standard like the GRI and an even greater degree of transparency in its reporting. As UOB looks to further cement its position as the leading regional bank, these would allow UOB to gain the trust of the increasingly-globalised regional community and gain a foothold on the global stage. The next key concern of CSR would be tackling climate change and the environmental concerns.

Global warming is a worldwide concern and it is one that should rightfully take ascendency in all CSR strategies, especially in firms operating in developing countries. This is because the contribution of greenhouse gases will inevitably escalate in the developing nations, especially those of the Asia-Pacific region, together with economic growth. In the face of the reluctance of China and India to set binding targets on carbon emission in the short to medium term due to their current low per capita emissions, it is even more pertinent for firms operating in these regions to incorporate CSR strategies to battle climate change in order to be responsible corporate citizens. Though UOB is a leading regional bank with key markets in developing economies like Malaysia, Indonesia, Thailand and Greater China, its main CSR strategies do not cover climate change or environmental concerns. In stark contrast, though primarily a provider of financial services like UOB, Citi has taken environmental management upon itself.

It has in place an Environmental and Social Risk Management (ESRM) policy which seeks to integrate environmental responsibility with its economic goals. Citi uses the Equator Principles, the International Finance Corporation (IFC) Performance Standards, the IFC Environmental, Health and Safety (EHS) Guidelines and the Carbon Principles in formulating its ESRM policy. The ESRM unit supports Citi by providing environmental and social advice on the transactions that Citi undertakes. In addition, the ESRM unit trains Citi’s employees on the relevant ESRM guidelines and acts as Citi’s point of contact with stakeholder groups on environmental and social issues. In 2008, 380 of Citi’s transactions received ESRM review, of which 91 were carried out in the Asia-Pacific region. Of these 91, 12 transactions were deemed to have potential for significant social and/or environmental impact. This goes to show the critical importance of environmental management.

With ESRM as a basis for its corporate strategy, Citi has also undertaken a wide array of environmentally-friendly initiatives like the $50 Billion Climate Initiative and the greening of its real estate portfolio. What is of particular relevance to UOB would be Citi’s Sustainable Information Technology (IT) Program which seeks to harness technology in creating a more environmentally-friendly workplace. This program targets power management, paper substitution, sustainable supply chains and employee engagement in reducing Citi’s environmental impact. For a start, such an initiative would be highly implementable and effective for UOB. By incorporating such internal energy-efficiency changes as part of a CSR strategy in battling climate change, UOB’s environmental footprint could be significantly reduced.

Not only would it fight climate change, it would enhance UOB’s reputation and give it a competitive edge by appealing to the enlightened investors of today. Another initiative that is of particular relevance to UOB would be Citi’s engagement with financial institutions in China on green issues. Citi has actively sought to share its ESRM policy with the Chinese. For UOB, an avenue in tackling climate change through CSR would be to adopt global standards like the Equator Principles to eventually develop an environmental policy of its own. This process could be facilitated through engagement with institutions like Citi, similar to what the Chinese are doing. Given UOB’s wide influence in this rapidly-developing region that is likely to be plagued by environmental issues in the years to come, it would make environmental, social and economic sense for UOB to develop such a policy. Furthermore, business strategies could be built on these environmental policies. Another key concern of CSR would be stakeholder engagement. This refers to the quality of a firm’s interaction with its human resources and its community.

The way a firm engages its employees, suppliers, distributors and customers will determine the quality of its CSR strategies. It is important for this engagement to be strategic such that their concerns will chart the direction for the firm’s development, thus promoting loyalty and reputation. In this region, it is also important to be discerning when engaging stakeholders, especially with rampant issues like bribery and corruption. In addition, engagement with the community can provide a firm with sustainable benefits as well. Though philanthropy is still an important component of CSR, it alone will not suffice; what is critical is the investment of resources in a community to target ventures that can benefit both the community and the firm itself . By strategically engaging stakeholders and integrating their interests with the firm’s through CSR, a firm can establish itself as a responsible global corporate citizen.

UOB has consistently engaged its stakeholders. In developing its human resources, UOB seeks to grow its talents through initiatives like the Management Associate Program and the Organisation And People Review where employees of high potential are groomed. It has established ties with the business schools of the 3 Universities of Singapore to customize special programs that will meet its needs in talent development. Outside of training and development, UOB seeks to instil in its employees a sense of belonging through ‘Be Engaged at UOB’, an initiative that sees participation from 96% of all employees, as well as Leadership Plenary sessions where the CEO shares the bank’s plans with managers. Through these, UOB obtains valuable feedback and market research. In reaching out to the community, UOB has gone beyond philanthropy and fund-raising. It has developed a Staff Volunteerism Program which has seen more than 2,400 volunteers contributed by close to 420 staff.

Also, UOB has traditionally been a strong supporter of the Arts and has organized the annual ‘UOB Painting Of The Year Competition’ since 1982. In addition to these, as a leading regional institution, UOB has actively participated in relief efforts for disasters in the region like the Sichuan earthquake and Cyclone Nargis in Myanmar. No doubt, UOB has been actively engaging its stakeholders as part of its CSR strategy. However, when compared to the efforts of Citi, more can definitely be done, especially in two areas – establishment of an employee network and the economic empowerment of communities. Citi has developed a ‘Citi Employee Network’ program which spans 44 networks representing 13,400 employees. This employee-led initiative goes a long way in representing the rights of employees in Citi, ranging from women to homosexuals. By having such a network, Citi accords a voice, as well as a sense of identity, to its employees.

Similarly, UOB could look to develop such an employee network as part of its stakeholder engagement efforts in CSR. With regards to the economic empowerment of communities, Citi focuses on Microfinance and Microenterprise, Small and Growing Businesses, Financial Education and Asset Building and Education of low-income students. These are initiatives that empower the poor by giving them the opportunity, tools and funds for economic sustainability. With these initiatives, Citi goes beyond the short-term alleviation of problems; it provides a viable economic solution to the poor through social entrepreneurship and this goes a long way in fighting poverty around the world. UOB can do likewise in serving its regional community. As the Asia-Pacific region undergoes rapid economic development, the income inequality is expected to worsen. By committing its resources to fight poverty through such social-entrepreneurial initiatives, UOB could then build valuable sustainable business strategies upon these CSR initiatives.

Finally, in answering the question, it is undeniable that UOB has implemented CSR as part of its corporate strategy, especially in areas like corporate governance and stakeholder engagement. Yet, when compared to transnational institutions like Citi, UOB’s strategies are clearly lacking in some areas, especially in tackling climate change. This lag could be attributed to the inherent differences between the Asian and the Western countries. Countries like Singapore are relatively conservative – there is a lack of political activism amongst social groups in pushing for major reforms. Instead, most of the pressure for the adoption of good CSR practices comes from the government and other business competitors. In contrast, Western countries have vocal social groups which actively push for issues like climate change and human rights. This difference inevitably affects the breadth and depth of CSR that is being practiced in UOB.

However, at the end of the day, UOB is a financial service provider located in a region that is poised for monumental economic growth. Taking into consideration this unique circumstance, UOB definitely has to establish for itself a sound, well-rounded long-term CSR strategy if it wants to remain sustainable and competitive. With the increasingly integrated regional economies, small and medium enterprises will be operating on an escalating international scale and be influenced by the global CSR trends and concerns. As they expand, they will eventually require the financial services of institutions like UOB. By establishing for itself a more robust CSR strategy, UOB can become the regional role model for expanding businesses to look to. Such is the competitive advantage that UOB can create for itself by integrating its social concerns with its economic interests – that is, CSR.

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