"Essentially it is an element of good corporate citizenship that, combined with other behaviors, helps to maintain and enhance an industry’s social license to operate."
San Diego, CA (PRWEB) October 31, 2011
In a recent Harris Poll, banks ranked low (just ahead of airlines) among industries "doing a good job". With the Occupy Wall Street protests gaining momentum, it is clear that the now months-long demonstrations illustrate the exasperation among some in the US with the perceived influence that financial institutions have over government. Chaotic, misplaced whining of pampered, unemployable middle class youth or justified expression of outrage at a political system that has favored its corporate citizens for far too long? Outside the masses huddled in Zucotti Park, it is generally acknowledged that the financial services sector has a reputation problem. So why should banks worry about how they are viewed by the average American? This is an especially valid question if a majority of a firm's lending is to large corporate clients and institutions rather than “mom and pop” small business loans or mortgages. Even if individual consumers detest banks (and can’t distinguish investment banks from other parts of the financial services sector), they too need access to credit and other financial services to function.
Malk Sustainability Partners, a San Diego corporate sustainability firm that partners with businesses worldwide, reminds all financial services companies about the social license to operate. Andrew Malk, Managing Partner of Malk SP, discusses the social license, “For an industry and individual companies within it to survive and flourish, the markets and societies in which they operate have to approve, or at least condone, their activities. When this ‘social license’ is restricted or revoked, the industry becomes less profitable and more difficult to operate or survive within.” Malk cites Altria, formerly Phillip Morris, as an example of a company that had to rethink its business model and corporate identity, as its social license to operate grew more restricted in recent decades.
“There is already substantial frustration in the United States with banks, their fee structures, and their perceived influence over the federal government. Movements such as 'Occupy Wall Street' only add additional oomph to the reputational headwinds blowing against the financial services sector. Should these winds grow strong enough, they may eventually sway regulators to rethink policies and result in outcomes that are unfavorable to the banking industry,” adds Malk.
One may ask where does sustainability come in? Zach Goldman, Partner at Malk SP, explains, “Essentially it is an element of good corporate citizenship that, combined with other behaviors, helps to maintain and enhance an industry’s social license to operate. We’ve often had financial services clients remark that regulators on both sides of the political aisle will ask them about green lending activities in meetings not specifically tied to energy or other environmentally-intensive subjects. We’ve also seen this in our direct experience with public sectors leaders, both in the US and in Asia. Regardless of party ideology or agenda, no leader wants to be seen directly as anti-environment.” Goldman mentions that BP now considers itself “Beyond Petroleum” and not even Sarah Palin wants to completely disband the US EPA.
To summarize, Malk Sustainability Partners reminds all financial institutions that a demonstrable contribution toward a more sustainable future can help banks and other organizations to cultivate a more favorable environment in which to operate. As Goldman concludes, “Of course there are other important elements to consider (like usurious fees), but building a better future certainly helps to maintain the social license to operate; a license which Occupy Wall Street reminds us is necessary.”
About Malk Sustainability Partners
Malk Sustainability Partners (MSP), a management consultancy focused on environmental sustainability, guides forward-thinking businesses around the world to profit from operating in better balance with the environment.