Dear Banks, You’re in the business of health, not just wealth. Yours sincerely, Society.
Every business is in the business of health, according to John Quelch, co-author with Emily C. Boudreau of Building a Culture of Health, A New Imperative for Business.
So are our banks too?
We know that our banking, finance and insurance industry remains the least trusted sector in Australia, with only 28% of people surveyed seeing it as ethical. We also know this loss of trust in banks and corporations isn’t limited to Australia.
The UK Financial Reporting Council’s The UK Corporate Governance Code, July 2018 noted that “companies do not exist in isolation” and “financial crises and high-profile examples of inadequate governance and misconduct, which have led to poor outcomes for a wide range of stakeholders.” Introducing a principle that company responsibilities extend well beyond providing value to shareholders, to also “contributing to wider society.”
This theme was repeated when Australia’s ASX Corporate Governance Council recently asked for public feedback on the next edition of their Corporate Governance Principles and Recommendations. Proposing a changed principle for listed entities, to “reinforce a culture of acting lawfully, ethically and in a socially responsible manner.”
Does contributing to wider society and being socially responsible equate to being in the business of health?
A fictional tale of The Bank of the Unhealthy
Our fictional Bank of the Unhealthy recently made headlines for all the wrong reasons, including the following revelations.
Selling financial products that their customers couldn’t afford, resulting in the loss of their homes and financial security.
TV interviews of past employees sobbing, broken by selling these un-affordable financial products to people in their own neighbourhood. Talking about the relentless pressure to meet sales targets and quotas, before walking away from their jobs.
Families forced off their farms by their bank during drought, due to loans based on inflated valuations. For generations, these families were part of the social fabric and economy of their local community, now they were gone forever.
Superannuation fund members being unaware funds were being invested in coal and other fossil fuels.
Unsurprisingly, The Bank of the Unhealthy had several billion dollars wiped off its value, due to fines and legal fees, other compliance costs, but mainly due to no longer being attractive to investors.
Looking at our fictional The Bank of the Unhealthy through a lens of health
The World Health Organisation defines
health as a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.
There is a strong relationship between physical, mental and social health. Physical health conditions can lead to depression and social isolation. People with mental health conditions often have worse physical health and are isolated.
Changing circumstances such as financial loss, loss of a job or home, creates emotional hardship and risks to mental and physical health, for individuals and their families.
For some employees, customers and the communities in the tale of our fictional The Bank of the Unhealthy, the bank’s actions undoubtedly had a significant, long-term negative impact on their health and well-being.
For the increasing number of ethical investors in Australia, our fictional The Bank of the Unhealthy also made them party to worsening the health of the environment, the fourth pillar.
Health and wealth, its not either or, its both
Banks have an important role in economies and society, supporting their development and growth, and financial stability and security.
Australia is considered the second most developed country in the world by the United Nations Development Programme, due to financial and other factors that lead to the freedom to realise the full potential of every human life, reaching a greater wellbeing for all.
Australian society benefits from successful banks.
Just as companies benefit from healthy societies.
Banks, like any business, can cause harm to the health of their employees, consumers, communities and the environment.
So our banks are in the health business, whether they like it or not.
Like John Quelch says …