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As a major financial institution, we take corporate social responsibility (CSR) seriously and are committed to integrating it as a fundamental element into all aspects of our businesses.
We have established processes and systems to ensure that we can be responsive to our shareholders, regulators, customers, employees and communities.
Our CSR strategy is to pursue a balanced approach with all our stakeholders as we build trusted relationships with them. We aspire to ensure that the impact of business decisions on all stakeholders is a factor that is considered from the outset.
In 2004, we have undertaken many community, environment and business initiatives consistent with delivering our CSR strategy.
CSR governance framework
To successfully embed CSR within our organisation, we have established a CSR Global Council that consists of nominees of senior executives and meets every quarter. Its role is to:
- facilitate agreement on the National’s CSR strategy and policies;
- set and align Group priorities in regard to implementing the National’s Balanced Stakeholder Management strategy;
- discuss key risks affecting the organisation’s reputation and management of social and environmental issues and the ways in which these risks may be mitigated;
- be informed of contentious and controversial issues, especially those that will affect the organisation’s reputation as a corporate citizen; and
- determine the content and facilitate delivery of the National’s Corporate Social Responsibility Report.
The CSR Global Council is responsible to the Group Executive Committee and the Board. In Australia there is a Regional Council, and the Region’s Executive Leadership Teams in Europe and New Zealand determine regional CSR priorities and implementation of initiatives.
The CSR Global Council has sponsored internal advisory committees on specific issues to develop, implement or review policies and programs, as required. The following committees addressed some high priority issues.
- Business ethics – examined existing ethical and values processes and facilitated the development of the behaviours for the Corporate Principles.
- Environment – developed, and in the process of embedding, the National’s environment management system globally, consistent with ISO 14001. Introduced a green procurement policy applying standards to our supply chain that will be more fully implemented in 2005.
- Assessment of global standards – these include the OECD Guidelines for Multinational Enterprises, the World Bank and International Finance Corporation (IFC) Safeguard policies.
Responsible transnational behaviour
As a major global financial institution, we are responsive to emerging standards for corporate conduct. In 2004, we made a public statement of support for the OECD Guidelines for Multinational Enterprises. The OECD Guidelines articulate good corporate practice for companies operating in different jurisdictions and are supported by the governments in each of the countries in which we operate. Our statement can be found on our website*.
When considering financing proposals, an assessment of country risk is conducted.
Anti-money laundering
Our operations are required to comply with laws and regulations directed at preventing money laundering and terrorist financing in all countries in which it operates. These laws and regulations were strengthened after the 11 September 2001 terrorist attacks on the USA, and in some countries (United Kingdom and Hong Kong), the laws have just undergone further amendment. The Australian Government plans to enact new laws during 2005. Our business procedures have been upgraded whenever the laws have changed and will continue to be upgraded where required in each country as the laws and regulations undergo more change.
Managing sensitive issues
Since July 2003, there have been several issues we have responded to where past or current business practice has not met regulatory or community standards. In response, we are working with regulators and other stakeholders to make fundamental changes to our culture, processes and business practices. That process will continue throughout 2005.
Unauthorised foreign currency options trading losses
In January 2004, we discovered unauthorised foreign currency options trading by four traders. This resulted in a loss of $360 million. This matter was investigated by the National’s own internal audit team and external reviews were undertaken by accounting firm PricewaterhouseCoopers and the Australian Prudential Regulation Authority (APRA). The findings of these external reviews and our response to the issues that were raised are available on our website.
At all times we sought to keep all stakeholders advised of actions being taken to rectify the issues raised. Our Corporate Principles commit us to continued transparency.
Board
Following the release of the PricewaterhouseCoopers and APRA reports, the Chairman, Graham Kraehe, and the Board committed to fundamental Board renewal. In April 2004, Graham Kraehe announced a program to revitalise the Board and help drive major cultural change within the organisation. The review examined the composition of the Board and resulted in the appointment of nonexecutive and executive directors withlocal and international banking, finance, regulatory, governance and broad community expertise. There have also been significant changes to our senior management team.
Details of director appointments and retirements, the independence of directors and the membership and responsibilities of Board committees can be found in the Corporate Governance sections of the 2004 Annual Financial Report and the 2004 Concise Annual Report.
Detailed protocols have also been established to ensure that matters raised by regulators are promptly acknowledged and responded to and that the matters are brought to the attention of the Board and its committees. In December 2004, the Board will participate in an externally facilitated workshop to understand the Corporate Principles.
National Irish Bank
In July 2004, the Irish High Court Inspector’s Report into the activities of a subsidiary, National Irish Bank Limited, was released following a six-year investigation that examined allegations first raised in 1998 of improper charging of interest and fees and selling offshore insurance.
Over the last six years, the National Irish Bank has cooperated with inspectors and has introduced processes to prevent a recurrence of these activities. Our full response to this issue and a link to the full High Court Inspector’s Report can be found at www.nib.ie
Northern Bank
In August 2003, Northern Bank was fined £1.25 million by the UK Financial Services Authority for deficiencies in accountopening procedures. Northern Bank admitted shortcomings in implementing account-opening regulations. No actual instances of money laundering occurred as a result of these shortcomings. Northern Bank has subsequently put in place a program of remedial action and worked cooperatively with the UK Financial Services Authority to ensure compliance.
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Political donations
The National’s policy is to not make donations to any political party, as we believe that our commitment to a balanced approach to stakeholders can best be fulfilled by supporting the community directly. However, representatives of the National may attend political functions, where the price charged is not in excess of the commercial value to the organisation of attendance at the function. This policy can be viewed on our website and was adhered to during 2004. |
Confidential Alert Line
In August 2004, we undertook a review of our Confidential Alert Line, also known as the ‘whistleblowers’ policy, to ensure that our people can report issues of concern, including unacceptable or undesirable conduct.
This review sought to examine where there were recent changes to legislation and to gain feedback and identify areas for improvement. This is part of our commitment to continual improvement.
Changes to the policy are currently being implemented to take account of legislative differences in the Asian region, to enable the policy to be extended to that region.
Click here to download a PDF of the Corporate Social Reponsibility Report 2004 (388KB)
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