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Bank Sarasin: The Transparency Performance Disconnect

By elaine cohen (BeyondBusiness) on June 14, 2012 at 5:22pm.

Company: 

Founded in 1841, Bank Sarasin & Co. Ltd is a Swiss private bank offering investment advisor and asset management services for private and institutional clients. The Bank has its head offices in Basel and operates out of several other locations in Switzerland and more than 20 locations in Europe, the Middle East, and Asia.  In April 2007, the Dutch Rabobank acquired the majority shareholding in Bank Sarasin, which is listed on the SIX Swiss Exchange.  At the end of 2011, Bank Sarasin managed total client assets of CHF 96.4 billion and employed more than 1,700 staff.

Content: 

Bank Sarasin is not content with one report, a target to which many companies aspire these days. The Bank presents a suite of no less than four reports for 2011: a GRI Report at Application Level A+ (40 pages), a Sustainability Report called "Our Future" (59 pages), an Annual Report called "Our Results" (190 pages) and a current Portrait of the Company called "Our Bank" (59 pages).  As far as transparency goes, apparently, at Bank Sarasin, less is not more.  Where materiality is concerned, however, less takes precedence, as, among the many pages of Bank Sarasin's reporting, an identification, prioritization and disclosure of material issues is strikingly absent.  Instead, the section on "Relationship with our Stakeholders" is mainly about how much praise the Bank receives from its stakeholders and how much the Bank contributes to the community.  As far as performance is concerned, the Bank's reported sustainability impacts seem to be somewhat disconnected from this glowing rhetoric. 

The "Our Future" Sustainability Report is an interesting, creatively inspired document, resembling a sort of intellectual Sustainability Journal for the more discerning among Bank Sarasin's stakeholders.  It is a tasteful collection of literary-style pieces penned by independent journalists and editors, addressing global issues which are on the Bank's sustainability radar, discussing fundamental and even existential questions about sustainable society, and closing with a short review of Bank Sarasin's contribution to same.  "Our Future" starts with a review of Fritjof Capra’s “The Turning Point”, dubbed "one of the most influential books in recent decades", analyzing whether we have actually achieved the sustainability shift that Capra advocated.  Another piece reviews the arguments for and against the energy consumption reduction aspiration in Switzerland toward a 2,000 watt society (17,520 kilowatt-hours per year), from a current reality of 6000-watts per person per year, and the energy debate continues in another piece which compares home insulation to renewable energy as the preferred method for householders to reduce non-sustainable consumption, showcasing the role of Minergie, the Swiss sustainable building standard.  Remaining articles address global water scarcity, manufacturing in China, "the workbench of the world", and Swiss society's dependence on Chinese output, the development of urban agriculture and the promise of organic food cultivation in Asia.  So far, all references to Bank Sarasin's sustainability have been incidental, but the final section makes Bank Sarasin's interest clear: "The Sarasin Group is committed to sustainability. The number of prestigious awards and repeatedly good ratings from well-known sustainability analysts testify to the genuine nature of this commitment."  A high-level review of Bank Sarasin's sustainability commitment and examples of practice follows, but for a deeper view, we must now turn to the "GRI Report" (profiled separately on CorporateRegister.com). 

In the introduction to this document, Bank Sarasin states: "In this report, Sarasin documents how forward-looking decisions help to guarantee commercial success."  This seems accurate. Despite the lack of materiality analysis, a central theme of Bank Sarasin's reporting is the core material issue of tax-compliant assets and the way the Bank ensures that all its investments are geared towards those which demonstrate a compliant tax profile, especially with regard to cross-border business.  In 2010, the Bank announced its intention of no longer managing untaxed assets by 2012 and in 2011, developed a new process to validate the tax situation of clients regarding their deposits held with the bank.  Bank Sarasin calls this a "ground-breaking process" as it sets a standard ahead of regulatory developments. In addition, Bank Sarasin places emphasis on its sustainable investment policies (Bank Sarasin leads the market with a 27% market share of sustainable investing in Switzerland), using a proprietary Sarasin Sustainability-Matrix® (shown in the "Sustainability Report" but not in the "GRI Report") which identifies sectors and countries with higher sustainability risk which are excluded from investment considerations.  Specific investment themes at Sarasin include the Sustainable Water Fund and a new Real Estate Fund.  What is not so clear from the Bank's Sustainability Reporting is whether the Bank's sustainable investments are delivering an equal or better return for clients versus traditional investment instruments.

Communication: 

The "GRI Report" contains a GRI Index which enables fast navigation to key topics and through the report, short paragraphs with clear headlines make it easy to locate the information required.  The GRI Report narrative is factual with few frills, and data is provided in detailed tables, mostly offering a five year data history, which is positive.  However, the rationale behind the publication of two reports – a "Sustainability Report" and a "GRI Report", with overlap between the two, is not clear.  Bank Sarasin does not clarify whether these reports are intended for different audiences or serve different purposes.  The link between sustainability performance in the "GRI Report" and the literary perspectives in the "Sustainability Report" is not clearly defined.  In this case, more is not more transparent, is it more complicated. 

Credibility: 

One can perhaps understand Bank Sarasin's somewhat self-congratulatory reporting style, as the Bank was founded in 1841 and has sustained a leading position in Switzerland for over 150 years, based on rigorous controls and minimal risk, while upholding the beyond-compliance aspects of banking in relation to ethical investment and protection of human rights. Perhaps this is the essence of sustainability? The sustainability of the core business should be at the heart of any sustainability strategy and report. On this level, Bank Sarasin does a credible job of presenting a professional, risk-averse, long-term oriented, stable and successful business. 

However, despite a "commitment to sustainability since 1841", and a "sustainability strategy driven by clear goals", and even, "The Sarasin Group’s aim is to achieve commercial success with an acceptable ecological footprint. It therefore seeks to contain energy consumption and use resources carefully", in 2011, every environmental key indicator (GHG emissions, electricity, water and paper consumption per employee and overall proportion of renewable energy) worsened (with the exception of proportion of recycled paper, which remained the same) versus 2010 performance. While the rise in GHG emissions is partially explained by the fact that energy conversion factors are higher outside Switzerland, where most of the consumption increases have occurred, no explanation is provided for this performance downturn, and, more importantly, no explicit approaches for the achievement of the more ambitious 2015 environmental targets are described. While Bank Sarasin may be carbon neutral, due to retroactive offsetting of carbon emissions though mother company Rabobank's wind energy project in China, the dissonance between healthy self-praise and actual performance results does not support the credibility of this report. 

Similarly, social indicators offer no relief: absenteeism increased, employee turnover increased, and women in management remained at 13% as in 2010. Even in the 2011 employee survey, despite an increased response rate, every single indicator of employee satisfaction was worse in 2011 than in 2009 (overall satisfaction dropped from 4.2/5 in 2009 to 3.7/5 in 2011), and yet, the commentary states only "the survey shows a good result for satisfaction among the employees."

I cannot complete this section on credibility without mentioning the Assurance Statement, which earned Bank Sarasin a "+" in the GRI system.  The Assurance is a "limited review" (Type 2) assurance of the extent to which certain KPI's (core business, personnel and environment) were generated in alignment with the reporting principles.  In other words, as is consistent with Type 2 Assurance, data processes have been reviewed but data has not been verified. For me, this type of Assurance does nothing to add credibility to the Bank's report – in fact, it's rather a waste of time – and the Statement is rather empty of substance.

Recommendations:

1. Provide an explanation of sustainability metrics, especially those which show a downturn in performance and clarify expected actions to achieve future targets.
2. Opt for verification of key data, not just Type 2 Assurance.
3. Clarify the reason for publishing two Sustainability Reports and the differentiation between them.


elaine cohen is the CEO of Beyond Business Ltd, www.b-yond.biz , a CSR consulting and Sustainability Reporting firm, working with global clients.