Quote: "The current circumstances are distracting. But they will pass" unquote, by the Group Chief Executive, Barclays plc, in his remarks introducing the Barclays Sustainability Review for 2008. We may be forgiven for being sceptical, but in general, this report does not shy away from reviewing the diverse consequences of the credit crunch – providing a crunch by crunch account of events in the "Year in Review”, a good contextual backdrop for the report, and referring to the issue of trust and confidence in the banking industry, the role of banks in the global economy, supporting customers in difficulty and more. Barclays are one of the more stable financial institutions which have appeared to have weathered the storm to date, seeing an increase in income and profits in all of their worldwide operations through 2008.
2008 highlights show an impressive array of sustainabilty deliverables including financial inclusion and share of low-income accounts (1.77 million accounts opened), £52 million in community investment, 80% of suppliers ethically screened and more. Looks good enough to keep on reading. Indeed, Barclays, with £2 trillion of assets under its control, 156,000 people worldwide and 48 million customers, has developed a pretty good track record in the sustainability league table, and is highly regarded as a leading player and reporter. They commit to the Equator Principles, Carbon Disclosure Project, UN Global Compact, UN Principles for Responsible Investment, the Wolfsberg Principles and other sector specific policies. More than this, though, Barclay's is one of the few reporters which appears to have grasped the concept of direct and indirect impacts, and treats us to a tour of their Responsible Global Citizenship impacts – including a declaration of intent to measure their indirect economic impacts. This is quite advanced thinking. All this is in line with our expectation of this banking leader.
Barclays publish a nice materiality list based on a stakeholder survey at the end of 2008. This shows that key concerns are responsible products and customer support. I couldn’t find a materiality matrix in last year's report so this is clear progress. However, there are two areas I have picked out for highlighting, where I feel Barclays’ performance and reporting falls short:
GHG emissions reporting: Barclays spare no ink in reporting on the Barclays Climate Action Program designed to reduce negative impacts on climate change and of course CO2 emissions. Barclays are focusing on carbon offsets to achieve carbon neutral status. However, performance data 2008 vs 2007 shows a 19% increase in the absolute level of carbon emissions. There are a couple of explanations for this such as the Lehman US operations acquisition (though we are not told the amount of CO2 emissions resulting specifically from this) and a few tons of travel not previously included, but all in all, the focused strategic approach and constant climate change activities do not appear to have resulted in any material direct reduction of CO2 emissions. And there is no explanation as to why not. I find this rather troublesome. How can so much be done and so little delivered?
Diversity and gender: This is a b-i-g disappointment. Reporting is weak, probably because it seems to me that the underlying action and strategic approach are weak. Advancement of women is repeatedly stated as a core diversity objective. I notice the fact that there is one woman on a 15-member Board (6.7%), and zero women members on the global Executive Committee. Barclays report increased numbers of female execs from 13% to 15% and female senior managers from 21% to 25% in 2008. How many women is this? A hundred or two? There are 82,000 women employed by Barclays (53% of total workforce). The diversity / gender disclosure refers to a "thriving" women's international network, mentoring programs, a new (2009! just in time ...) women's leadership program for 5 women from Asia / Africa on a development secondment, and more women assessors in the recruiting process. This is placing gender balance squarely in the camp of a "women's" problem ( "fix" the women), not a business problem ("fix" business culture, systems, processes and rewards), and it doesn’t surprise me that the reporting in this area is flimsy, all the more conspicuously so given its stated core strategic focus.
Barclays’ sustainability themes are focused around 5 priorities: customers, inclusive banking, environment, diversity and global citizenship (supply chain and communities). The report is built around these themes and discusses each. It’s a good structure, clearly written. Barclays pack a great deal of information into their 25 page summary report and it does offer a comprehensive view of what's happening at Barclays. More data is available on line, though navigation jumps between reporting site and main website, which is irritating. Performance Indicator data is given for 2008 and the prior year only. Given that Barclays has been reporting for some years now, I would feel it more appropriate to include rolling sets of data covering 3 or 4 prior years, to provide the perspective of performance over time.
Barclay's sleek, well-structured and professional presentation makes for an impressive and credible report. However, in addition to issues on GHG and gender reporting, there are some areas I felt Barclays could have elaborated on, for example, Barclays include a one-liner mentioning 5 strategic acquisitions (including the US Lehman business). It would be interesting to understand how these acquisitions are aligned with the bank's sustainability strategy and contribute to its objectives, for example in the area of carbon emissions mentioned above, and implications the acquisitions carry for stakeholders including employees (layoffs?), customers (changes in services provided) etc. Also, Barclays report strongly on the positives – no discussion of the challenges faced or presentation of dilemmas which continue to stretch their top teams.
Finally, I have to wonder about the value of the verification statement of carbon emissions – the verification is qualified as: 63% to a reasonable level of assurance and 37% to a limited level where there is 100% or near 100% data presented. In a word, is the data correct or not?
All in all, Barclays earn my great respect, though fall a little short of the level of transparency I might have expected from this leading financial institution.
1. Report rolling data over a number of years
2. Increase transparency related to issues where performance is not outstanding
3. Deliver on the indirect economic impact assessment
Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.biz, a leading CSR reporting and consulting firm in Israel, specializing in a wide range of consulting services for the development of social and environmental responsibility of businesses. Elaine Cohen is an independent reviewer and has no relationship with the reporting company.