"People want to see the businesses they are engaging with accepting their social responsibility and being creative in their efforts to address pressing issues."
When a broker is faced with a particular case, it is their responsibility to source a range of financial products and services best suited to meet the needs of their client. The broker must rely on their knowledge, experience and network, engage with relevant financial institutions, and provide a list of potentially suitable options.
Up until recently, brokers have traditionally allowed their research to be informed by hard statistics. These include the rates and fees of different products, as well as the track record of banks and lenders when dealing with clients in different situations.
While I do not see these considerations changing anytime soon, a shift in social attitude means that these factors will soon be complemented by another. By this, I am referring to the reputation of a bank or lender and their approach to corporate social responsibility (CSR) strategy.
CSR can no longer be considered a token gesture
CSR is a somewhat ambiguous concept. As a principle, it refers to the process of a business implementing a self-regulation model that ensures it is socially responsible and socially accountable to itself, its stakeholders and the wider community. In practice, CSR refers to the strategy and initiatives that a business has put in place to enhance society and its surrounding environment.
Public awareness of CSR has grown immensely in recent years, and this can be attributed to growing community movements to promote sustainable development and protect our ecosystems. A study by consultancy firm Fleishman Hillard Fishburn in 2019 revealed that 59% of consumers expect companies to undertake action to address climate and environmental issues. Yet a separate survey by Brother UK and Telegraph Spark showed that less than a fifth (16%) of business leaders have identified CSR as one of their top three business concerns in 2020.
These separate studies reveal the different emphasis placed on CSR by the private business leaders and the wider community. Nonetheless, the rise of millennials could exacerbate this gap. A recent global survey by deVere Group, found that over three in four (77%) millennial investors identify environmental, social and governance issues are their top priority when assessing investment opportunities.
Of course, CSR does not mean simply donating to a charity every year or treating it as a simple Key Performance Indicator (‘KPI’) to be fulfilled. Effective CSR actually requires creative thinking. Business leaders must identify causes that not only resonate with their stakeholders but also have a connection to their service proposition. Doing so will ensure the initiatives they are backing, or undertaking are fully appreciated by their customers, stakeholders and employees.
Brokers and CSR
Some might feel the above discussion is hardly relevant to brokers and intermediaries. This could not be further from the truth. As social values change, so too will the needs and desires of their clients. People want to see the businesses they are engaging with accepting their social responsibility and being creative in their efforts to address pressing issues.
CSR is an area of growing importance and will appear on the radars of more brokers and intermediaries over the coming years. That’s why there is a need for intermediaries to identify what CSR strategies are currently in place when engaging with lenders and financial institutions. This is becoming an increasingly important issue and should not be overlooked.