RBS Sustainability Review 2013: building trust & developing integrated thinking

written by Carol Adams

The Royal Bank of Scotland Group’s RBS Sustainability Review 2013 begins with the words, in a Foreword jointly signed by the Chairman and Chief Executive, “In 2013, we were the least trusted company in the least trusted sector of the economy. That must change”.

This report is a significant step change from the 2012 report clearly integrating serving customers and society with the bank’s core purpose and focusing in on material environmental sustainability issues relevant to the sector including the financing of energy and environmental, social and ethical risk.

The RBS Group’s 2013 Sustainability Review has, as a natural evolution of its reporting, an increased focus on elements and principles of integrated reporting including: strategy and reporting against prior strategic plans; articulation of the business model with recognition of the link between financial success and serving customers and society; expanded materiality approach (in both scope and breadth of engagement); description of the role of the Board level Group Sustainability Committee and its involvement in the materiality process; a more conciseness and focused writing style.

The presentation of the report has improved with better and increased visuals and a better structure, clearly setting sustainability in the context of the bank’s overall purpose and values.

Source: RBS Sustainability Review 2013

Source: RBS Sustainability Review 2013

Right up front the report provides a clear visual summary of the key geographical areas, its key brands and proportion of income by division.  This is followed by a statement of the bank’s overall purpose – to serve its customers – and its values which include thinking long term and doing the right thing, both of which have encouraged a focus on sustainability.

In its first three pages, the bank builds on the defining features of its 2012 report: its desire to be accountable, its focus on customers and its commitment to sustainability.  The 2013 report reflects the bank’s continued work to integrate these themes into its approach to business.

The report goes on to discuss the business model and strategy with a particular focus on rebuilding trust in the bank and the sector.

Whilst in 2012 the bank reported against its five sustainability themes, in 2013 it has extended its stakeholder engagement, broadened the scope of its materiality approach (discussed here) and focused on how the bank serves customers and society.  There is a clear recognition of the link between doing so and business success.

At the same time the 2013 report increases the focus on material impacts of banking such as lending policies, inclusion (for example, new lending to SMEs and first time mortgages), diversity and equality at work and cultural change towards enhanced ethical behaviour. Striking in this regard are the photographs of people on the stairway at RBS headquarters with posters saying ‘Our future is not about us, it’s about our customers’.

The page dedicated to ‘performance at a glance’ (page 6) includes both financial and non-financial performance measures including £6.4 billion new lending to SMEs, 65% of energy project finance committed to wind and solar, 6.2 % reduction from 2012 in scope 1 and 2 emissions.  Chief Executive, Ross McEwan, acknowledges the link between financial and non-financial performance, and value creation for investors and society: “The success of a bank depends on a strong financial position, and a reputation for great customer service based on a deep connectivity with the society the bank supports, and is in turn supported by.” (page 7)  To support this, the 2013 report includes, for the first time, quantified information on customer satisfaction.

A distinguishing feature of the 2012 report was the breadth of issues included in the materiality approach.  In 2013 a wider range of stakeholders were consulted (page 9), including the Board level Group Sustainability Committee.  Notably the Board level Group Sustainability Committee met with 26 advocacy groups during 2013.  The scope of issues raised by them was again broad including customer trust, governance and accountability, regulatory reform and compliance alongside the usual issues which arise in a sustainability report stakeholder engagement process such as human rights, diversity and inclusion.

As “a representation of what our key stakeholders have highlighted as having considerable financial, operational, and/or reputational impacts on our company”, the materiality matrix on page 10 provides useful input to the strategic review and the development of reporting in light of the International <IR> Framework. It is consistent with the expanded role of the Group Sustainability Committee (page 11).

Importantly, the report sets out in some detail how the bank manages environmental, social and ethical (ESE) risk. Two percent of cases assessed against the bank’s ESE policies were prohibited (including a case involving mountain top removal coal mining) and a further 12% escalated to the reputation risk committee.

The gender breakdown on page 37, consistent with the table in the 2012 report, is one of the most comprehensive I’ve seen showing a steady increase in the proportion of women at senior manager and executive level.

There are links to additional information on the website, including: information about the banks’ material issuesenergy sector financing; and, new for 2013, a separate GRI report and  GRI index, using G4.

The bank’s report ‘Our financing of the energy sector in 2013’ is the most comprehensive I’ve seen on what is a critical issue given the role of banks in determining future sources of energy through their funding patterns.

Overall the report demonstrates considerable progress in integrated thinking and a continued commitment to accountability.

Press coverage of report release

RBS aims to lead from font on ethical banking

Disclosure statement and Update

Carol Adams has provided advice to the RBS Group on corporate reporting strategy.

Following release of this report RBS was ranked as the leading UK company in Transparency International’s latest report on transparency in corporate reporting. Read more here. 

Related articles on this website:

The banking sector and integrated reporting: focus on HSBC

Ten steps to integrated reporting

Five essentials to embedding sustainability

Integrated reporting – what it is – and is not: an interview with Paul Druckman

Integrated Reporting and the Six Capitals: What does it all mean?

Integrated Reporting: the Guiding Principle of ‘Connectivity of Information’ made simple

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