18 September 2012
Five years on from the start of the financial crisis, being a socially responsible
corporate citizen is still not a top priority for many business leaders in
financial services, new research from the Economist Intelligence Unit shows.
In a global survey conducted for Society, shareholders and self-interest: Accountability
of business leaders in financial services, an EIU report sponsored by SAS, an
overwhelming majority (84%) of C-level banking and insurance executives say
meeting short-term performance targets is their main priority.
A considerably smaller proportion (62%) thinks being
socially responsible is also important.
The C-suite in finance considers itself most accountable to the board (90%), followed
by regulators (79%) and investors (74%). Only 54% of finance leaders see
themselves as accountable to society.
When asked who or what they should become more accountable
to, the most popular choices for these executives are CEO, investors and the
board. The least popular choices are society, employees and the government or
state.
Nonetheless, the high level of public scrutiny since the crisis has had a perceptible
impact at the top of the sector. Nearly three-quarters (73%) of the executives
in the survey say that their companies are making conscious efforts to improve
the transparency and accuracy of the information they share with external
stakeholders.
Just under two-thirds (65%) also say that they encourage
stakeholders to ask questions and scrutinise their performance.
Among those interviewed for this report are Royal Bank of Scotland Chairman Sir
Philip Hampton and ING Bank Vice-Chairman Koos Timmermans.
"There are both worrying and hopeful signs that the
financial services sector has learnt its lessons from the crash," says
Abhik Sen, editor of the report.
"By and large the sector still does not consider itself
very accountable to somewhat nebulous stakeholders such as society. On the
other hand, there seems to be a growing awareness at the C-level that the
crisis has changed the rules of the game forever."
Other key findings from the report include:
• Top managers in finance do not think their remuneration is excessive, and public
criticism is having little impact on pay policies. Nearly two-thirds (65%) of
senior finance executives surveyed believe they are simply paid what they are
worth. Only a minority of them (29%) think that factors such as a tarnished
public image or investor criticism have a greater influence on C-level
remuneration today.
• Investment banking is becoming more sensitive to public perception, but accountability
to society is still not a top priority. Over one-half (53%) of respondents from
investment banking agree that factors such as public opinion have more of an
influence on risk appetite and pay. However, only 34% see themselves as highly
accountable to society at large, compared to nearly 70% of retail or commercial
bankers who do.
• Attitudes to accountability and risk management vary markedly between finance
CEOs and CFOs. Only 16% of banking and insurance CEOs – compared to 33% of CFOs
– think business leaders should be more accountable to society in general. And
when asked what kind of impact public opinion is having on the
"willingness of C-level executives to take responsibility for failure or misdemeanours",
only 13% of CEOs said that it was having more influence than
a few years ago, compared to 41% of CFOs who said the same.
The Economist Intelligence Unit conducted an online global survey of 387 executives
in April/May 2012. All of the respondents were C-level executives, and
two-thirds were from companies with global annual revenue in excess of US$500m.
Nearly one-third of the respondents were from companies in
western Europe; 28% were based in Asia-Pacific and 27% were headquartered in
North America. Over three-quarters of the respondents (78%) were from the financial
services sector, including 21% from insurance and reinsurance, 20% from
investment banking and capital markets, and 19% from retail banking and
commercial banking, respectively.
To place the views of senior finance executives in some
context, the remaining respondents in the survey (22%) were drawn from the
C-level in the energy and utilities industries. To
complement the survey results, the Economist Intelligence Unit conducted in-depth
interviews with several independent experts and senior business executives.
(The Economist Intelligence Unit (EIU)
is the world's leading resource for economic and business research, forecasting
and analysis. It provides accurate and impartial intelligence for companies,
government agencies, financial institutions and academic organisations around
the globe, inspiring business leaders to act with confidence since 1946.)
