Westpac sustainability seer Graham Paterson tells Risk that despite the GFC, corporate responsibility is here to stay, and serious risk managers would be wise to take note of the rising trend

It’s been said there’s no one path into the field of corporate social responsi bility (CSR), and Graham Paterson, head of sustainability and community at Westpac, is a case in point. A loyal life time employee of the group, Paterson is a self-confessed “long-term banker” – not the easiest connection to make with CSR following the financial crisis.

But for Paterson and Westpac, the links are clear. Australia’s largest bank, Westpac has been a pioneer in the field following its own singular and painful financial crisis in the early 1990s, during which the bank lost the faith of many of its stakeholders. The resulting restructure heralded a sea change in the bank’s oper ations, and a CSR focus that has blos somed from a three-person contingent in the stakeholder communications team 10 years ago to a current team of 17. “Now CSR for Westpac is not a program – it’s really just the way we do business,” Pater son says.

Part of Westpac’s woodwork

Westpac’s sustainability operation spans a broad agenda of environmental, social and governance aspects, providing advice and consultancy across the business and identi fying areas in which it can agitate for change.

Its ingrained nature is reflected in the existence of a sustainability committee that involves both board and manage ment, as well as a sustainability counsel of people from across the business. In fact, CEO Gail Kelly is a strong advocate of the approach, and the group recently combined its financial and sustainability reporting for the first time.

Paterson says a highlight is its activities in the Cape York Peninsula, where upwards of 400 employees have been able to work with remote Aboriginal communities. Other initiatives include financial donations, a “matching gifts” initiative and employee engagement.

Risk and CSR

Perhaps it’s some measure of the connection between CSR and risk management that the departments sit on the same floor in Westpac’s Sydney headquarters.

Paterson says the business has a clear set of values and prin ciples, and that “if we operate anywhere across the business that is contrary to those values, there is a risk”. He says a strong CSR commitment is crucial in identifying some of the less tan gible risks to business that can have just as much impact as direct threats. This could relate to corporate governance, or environmental, social and reputational risks.

He gives the example of financial education initiatives. “We’ve got customers that have different levels of understanding of the financial system – if they don’t understand, that gives rise to oper ational risks.

“In some ways a company having a very sound underlying sustainability approach actually takes some risks out of the way the business operates; by understanding what are some of those emerging risks,” he says.

A rising trend?

Though the financial crisis may have meant cutbacks to CSR programs in Australia, Westpac’s has survived intact.

In many ways, the CSR agenda is being driven by Westpac’s employees, with younger staff now listening to “hearts as well as minds”. As social awareness rises, employees are less likely to choose employers without CSR credentials. “We know there’s a war for talent going on for the best employees, and we know this is important to them,” he says.

The activism of shareholders and increasingly discerning cus tomers is also critical. As transparency grows through tech nology and the information explosion, Paterson says the focus on CSR will only grow.

The future then, for CSR – or bankers interested in it – is bright. “I can’t see there will be a lessening of expectations from our stakeholder groups – longer term it’s only going to get more complex.”