CSR and Public Bank Bhd. (Malaysia).

1.1 Introduction

Corporate Social Responsibility is defined as "Open and Transparent business practices that are based on ethical values and respect for the community, employees, the environment, shareholders and other stakeholders" (Public Bank).

Being one of the leading financial institutions of Malaysia, Public Bank Bhd. Understands the need for the CSR (Corporate Social Responsibility) and creates value for all its stakeholders. The key or the prime areas in which Public Bank Bhd. Is involved in terms of CSR are:

a) Nation Building

b) Enhancement of the Market Place

c) Promotion of the Workplace

d) Building the future through education

e) Support of the Community

f) Greening the Environment

In this project we analyze and understand the CSR approach and activities undertaken by Public Bank Bhd. Public Bank was established in 1966 by its Founder and Chairman, Tan Sri Dato' Sri Dr. Teh Hong Piow. The Public Bank employees more than 14000 people with over 90% in Malaysia and the rest disseminated across Hong Kong and China, Vietnam, Cambodia, Laos and Sri Lanka.

1.1.1 Corporate Mission

"To sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia".

[ILLUSTRATION OMITTED]

(http://ww2.publicbank.com.my/Corporate%20Structure.pdf)

1.1.2 Objectives of the Project

The Project is aimed at identifying and understanding the concept of CSR at Public Bank, Malaysia and analyzing its impact on the society and environment and other stakeholders.

This project will look into the various aspects of the CSR at Public Bank and try to relate them with the existing models or theories. Also it tries to analyze the CSR reporting and CSR performance using the MAW framework.

1.1.3 Research Methodology

The research methods in the project consist of Searching articles, compiling the documents from Public Bank Bhd. Official website. Also collating the various articles relating to the CSR practices, theories and Models.

At Public Bank's official webpage Various documents like Press Release, Annual Reports from 2005 till 2007, Economic Reviews were collected to understand in more deep the CSR approach.

University search engines are used to obtain literature on CSR carried out by Financial Institutions in Malaysia and other regions.

2.1 Literature Review

The Review tries to get the maximum information in regards to the CSR and the activities practiced by Financial Institutions. Like other organizations, the CSR of Financial Institutions is concerned about its actions affecting both the internal and external stakeholders. The term stakeholder was introduced and prioritized to understand the concept of the CSR impact (Mitchell, Age, Wood, 1997). CSR is being defined by many in many various forms. Some of the famous definitions of CSR are:

"The degree of moral obligation that may be ascribed to corporations beyond simple obedience to the laws of the state" (Kilcullen and Kooistra, 1999).

According to the World Business Council for Sustainable Development (WBCSD), Corporate Social Responsibility is "The continuing commitment by business to behave ethically and to contribute to economic development, while improving the quality of life of the workforce and their families as well as of the local community and society at large".

"Corporate Social Responsibility means something, but not always the same thing to everybody. To some it conveys the idea of legal responsibility or liability; to others, it means socially responsible behavior in the ethical sense; to still others, the meaning transmitted is that 'responsible for' in a casual mode; many simply equate it with a charitable contribution; some take it to mean socially conscious; many of those who embrace it most fervently see it as a mere synonym for legitimacy in the context of belonging or being proper or valid; a few see a sort of fiduciary duty imposing higher standards of behavior on business men than on citizens at large" (Votaw, 1972).

2.1.1 Corporate Social Responsibility

The prime social responsibilities for the Financial Institutions will be defined by its social function, followed by the environment in which it operates (Prior and Argandona, 2007). As a Financial Institution, its main function is to provide intermediary services, which diverts the savings to investments. By doing so it has to reduce the risk of the savers' (Ghatak and Guinnane, 1999). Do FIs (Financial Institutions) operating in the society have a responsibility towards the society and environment? This can be the most debatable question. But as a FI its primary role is to safeguard the interests of its shareholders and customers. Also maintain the balance on investments and payments with other industries, FIs in the economy. Most of the times these FIs try to reach the SMEs (Small and Medium Enterprises) and the so called 'moderately poor', whereas the extreme poor are always left behind, increasing the 'have and have-not' gap (Goggin, 2006). All the FIs have the responsibility to provide access to the financial services, which is basically the money flow, with a guaranteed rate of return in risk free terms. But in reality such flow is usually provided to those who are profitable to the company. Even the FIs tend to move towards risk free investments, in order to have a sense of security, and this creates the imbalance. The banking system plays an important role in the economic development and so also may affect the sustainable development (Levine, 2004). This is because the concept of sustainable development can be defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs" (WCED, 1987). In this way banks and other financial institutions affect the sustainable development by the activities carried out by them. The products of the financial institutions, especially the banks should be in line with the needs of the society. The needs of consumers are "Security, Access, Liquidity, Interest and Social Responsibility". (Sallyanne Decker, 2004). Banks have an inherent social responsibility to know the concept of KYC, Know Your Customer. This is to have an insight into the clients' financial affairs to prevent any mishaps in regards to the policies and other investments (Hodgson, 2002 and Ogrizek, 2002). Social Responsibility plays a vital role for the banks and other financial institutions when it comes to the socially responsible investment. Which means providing money to those activities which will be under the social constraint and not against. Because such activities have an impact on the society and environment in which it is working (Sparkers and Cowton, 2004).

2.1.2 CSR Theories

There are several theories proposed by different professionals in regards to the Corporate Social Responsibility. Some of them are:

Instrumental Theories, which basically highlight on achieving the economic objectives through the achievement of social objectives. This relates to the maximization of the shareholder value and having a long-term value maximization (Friedman, 1970 and Jensen, 2000). One of the approaches of this theory is to have a competitive advantage with social investments (Porter and Kramer, 2002).

Political Theories are those which focus on the proper usage of the business power or the responsible behavior of the power. It stretches on the point that the social responsibility objectives arise from the power that the business have (Davis, 1967). This theory also incorporates that a social contract exists between the business and the society. This approach is known as Integrative Social Contract Theory (Donaldson and Dunfee, 1994, 1999).

Integrative Theories stresses on the integration of the social demands. One of the approaches of this theory is the stakeholder management, which concerns with the balance of the interests between the stakeholders and the business (Mitchell et al., 1997). Also the Public responsibility approach, deals with the Law and the public policy process, which are taken into consideration and used as references to affect the social performance (Preston and Post, 1975, 1981).

Ethical Theories are those which focuses on the right thing to achieve a good society. One of the famous approaches of Ethical theories is the Universal Rights approach, whose framework is based on the human rights, labor rights and respect for the environment (UNGC, 1999). Also the other prominent approach is that of Sustainable Development, aims to achieve human development with consideration for both present and future generations (Gladwin and Kennelly, 1995; WCED, 1987).

2.1.3 Corporate Social Responsibility Reporting

CSR reporting is gaining its presence at a rapid rate. CSR reporting can be done in various forms and is voluntary on the part of corporations. There are different approaches one can take in reporting the CSR activities. Some of them are

Global Reporting Initiative (GRI, 2002)

The GRI was established in 1997 with an objective to provide universally applicable guidelines for the preparing of CSR and Sustainability reports. The main objective is to include all the factors of sustainable development which are basically the Social, economic and Environmental aspects in the annual reports. The GRI grew out of the work of the Coalition for Environmentally Responsible Economics (CERES). A GRI report content should have three major factors which are:

a) The Categories--the combination of Social, Economical and Environmental issues which are of concern to the stakeholders.

b) Aspects, which is the common information to any particular category or aspect and the last

c) Measurement or Performance indicators. Need to have the specific measures to track the performance.

United Nations Global Compact (UNGC, 2000)

The UNGC is a strategic policy initiative for the businesses to report their CSR activities with ten universally accepted principles which fall under the category of Human Rights, Labor, Environment and Anti-Corruption.

Approximately 4700 corporates' across 130 countries accepted the UNGC's ten principles to report their sustainability and CSR activities. The main two objectives of UNGC are:

a) Mainstream the ten principles in business activities around the world and

b) Catalyze actions in support of broader UN goals, including the Millennium Development Goals (MDGs).

The organizations adopting to the UNGC will be benefitted in many ways such as, adopting an internationally accepted policy framework, pooling of interests, sharing best practices, working towards more sustainability and acting in a socially responsible manner, which gets in more stakeholders to the company.

Social Accountability International (SAI, 1997)

SAI is concerned with the labor practices worldwide. Some of the key elements of the SAI guidelines are

a) Abolishing the child labor and specifying the age limits to define

the child labor.

b) Eliminating the use of forced labor

c) Measures in terms of health and safety of workers and the environment in which they are working.

d) Freedom of Association and Right to Collective Bargaining 

e) Proper compensation to the workers and no labor exploitation.

Basically some of the guidelines were adopted from the ILO (International Labor Organization) and UN Human Rights. Organizations adapting to SAI will be accredited with certification of SA8000 and will have participation in the Corporate Involvement Program (CIP).

Eco-Management and Audit Scheme (EMAS, 1995, 2001)

EMAS is European based and initially it was formed for the improvement of environmental performance at the manufacturing firms. But latter on it went broad and any company can voluntarily adopt to the guide lines of EMAS. Any public or private entity operating in the EU or the EEA (European Economic Area) is allowed to participate with EMAS.

EMAS provides continual improvement through the implementation of the policies, programs and management systems through systematic and periodic evaluation of the performance. Some of the key environmental issues concerning with the guidelines of EMAS are emissions, waste generation, consumption of raw materials, energy and water, noise and other aspects which are highly related to environment.

2.1.4 Stakeholder

The term stakeholder is very broad in terms of CSR. It has been stated as a meaning for all those individuals and groups with a 'critical eye' on corporate actors (Bowmann-Larsen and Wiggen, 2004). One of the main tasks for the organizations is to identify to whom they are responsible and how far that responsibility extends.

According to the Clarkson Center for Business Ethics "Stakeholders are constituencies that are affected, either favorably or unfavorably, by the operations of the corporation" (Clarkson, 1995). Clarkson defined Primary stakeholder group to those, upon whom the corporate depends for its survival. These are the people with economic stake in the company and who are exposed to risk. He also includes the government and the communities in the primary stakeholder list. The Secondary stakeholders are those, not directly associated with the organization but who are affected either positively or negatively by the existence of the organization.

Mitchell, Agle and Wood proposed a model to identify stakeholders in to three different categories. They are Legitimacy, Power and Urgency. According to them the three factors keep changing and they determine who the current stakeholders to the organization now (Mitchell et al., 1997).

Legitimacy refers to the socially accepted and expected behaviors. Power is the ability to control resources and Urgency is when there is a pressing call for attention. One of the key attributes of this framework is that, none of the variables are fixed in time. They are determined by the activities and operations of the organization.

A stakeholder is "any group or individual who can affect or is affected by the achievement of the organization's objectives" (Freeman, 1984). Freeman's work helped in re-assessing the nature of the firm to encourage the consideration of new external stakeholders, beyond the shareholders, customers, employees and suppliers. Most of the companies adopt to the CSR as way of promoting socially responsible actions and policies and effectively respond to stakeholder demands (Maignan and Farrell, 2004).

According to Heath (1997) 'harmony with stakeholders' is a reduction of 'unwanted intrusion into strategic business planning'. The stakeholder theory encourages the firms to broaden their objectives to include many other goals in addition to the profit maximization. Stakeholders are identified and categorized by their "interest, right, claim or ownership in an organization" (Coombs, 1998). Any business organization irrespective of small or large, stakeholders' perceptions will have high impact on the interactions between the firm, those who have interest in it and those who are affected by it. Hence stakeholders' should be a matter of significant managerial interest.

A stakeholder dialogue can give the opportunity to the firms to identify, what each of them regard as "appropriate business behavior" in regards to the Economic, Social and Environmental matters (Fairbass and Linda, 2008).

3.1 CSR at Public Bank Bhd.

Public Bank is the second largest non-government linked corporation, and the second largest bank in Malaysia, in terms of market capitalization. With a 41-year unbroken track record of profits, it plays a key role in the progress of the economic development of Malaysia and in contributing to Nation Building. (PB Group, 2007a, pp.137).

Being a business deeply rooted in the domestic community, Public Bank group have always been committed to operate in an economically, socially and environmentally sustainable manner. (PB Group, 2005a, pp.166). In discharging its CSR activities the PB group in 2005 focused on healthcare, education, professional development, contribution to charity and conservation of the environment.

The Public Bank Group, with over 14000 employees across Malaysia and its regional operations, governs its philosophy for caring its employees by providing fair and equitable remuneration, enhancing growth and progression opportunities, providing safe, secure and healthy conducive work environment and taking care of the employees' well-being (PG Group, 2007a, pp. 138).

The group has contributed to the underprivileged within the community with both direct financial contributions as well as organization of festival celebrations for the underprivileged (PB Group, 2007a, pp.141).

3.1.1 Triple Bottom Line analysis of CSR activities at Public Bank

The term Triple Bottom Line (TBL) has been coined by John Elkington, combining Economic, Social and Environmental reports (Elkington, 1997). It consists of the three Ps: Profit, People and Planet (Economic, Social and Environment). The Triple Bottom Line provides the framework for measuring and reporting the Corporate Social Responsibility performance in terms of economic, social and environmental benchmarks. Abiding by the guidelines of TBL or reporting on TBL makes organizations more transparent and the organization's decisions that take into consideration impact or effects on the environment and people, as well as on financial capital. It highlights a number of key issues, important to the sustainable development agenda.

Below is the gist of data of the CSR activities taken by Public Bank. If we closely look into the details of the activities, one can say that the most of the activities carried out by Public Bank are philanthropic in nature, i.e. charity or can be precisely said as donations.

In regards to the Social front, all the activities carried in the years stated below are donation activities to various sections of the society. Like donations for children education, community building, donation for social events, donations for educational institutions and others. With respect to the Economic line, the bank has been performing good in the given three years period. Profits and EPS (Earnings per Share) were on a constant increase over this time period and also the lending was increased by the bank over this time period. Environmental aspect usually consists lot so many things in its purview. When comes to PB group initiatives in this respect, it had given away many donations to the foundations like, WWF (World Wildlife Federation), promotion of such gifts which represents the beauty of nature, encouraging everyone to be environmentally friendly, took up a project for tree plantation, took up a paper recycling initiative, donating for Malaysian Nature society and other activities and donations.

Though Public bank has always been involved with the CSR activities, most of them come under the donations or even some can be termed as sponsoring. Further we go down we will discuss on what other similar financial institutions are doing when comes to CSR. We will try to compare with some Malaysian financial institutions and some others from different locations. Source: Public Bank Group, Annual Reports for the years 2005, 2006 and 2007. (http://ww2.publicbank.com.my/cnt_pastfinancial.html).

3.1.2 The MAW Approach

Lets us analyze the stakeholder concept for Public Bank Group with the help of MAW (Mitchell, Agle and Wood) framework. As discussed above in the stakeholder concept, MAW deals with three factors in determining the stakeholders and also in prioritizing the factors. They are Legitimacy, Power and Urgency. Before we go on with analyzing the PB Group, let us look into deep the three factors of MAW framework.

Power--Mitchell et al defines Power as "a relationship among social factors in which one social factor, A, can get another social factor, B, to do something that B would not have otherwise done". Though this definition sounds very bold, but in simple terms we can interpret this as, in general organizations depend upon certain factors to run its business and these factors have the power to influence the organizations activities and decision making. In fact in some cases it can be termed as those groups without whom the organization would cease to exist or on whom the organization depends for its survival.

Legitimacy--Legitimacy is being defined as "a generalized perception or assumption that the actions of an entity are desirable, proper or appropriate within some socially constructed system of norms, values, beliefs, and definitions". (Suchman, 1995). In short for many Legitimacy simply means socially accepted and expected behaviours.

Urgency--Mitchell et al states Urgency as "the degree to which stakeholder claims call for immediate attention". Urgency factors differs to a large extent than compared to the other two within different organizations. It can be sensitive issue required to take an immediate call or a critical issue with an immediate action or both. And this factor is not constant and is volatile in nature with directly related to the firms activities and operations. So also the other aspects of this framework do change according to different situations.

The concept of the stakeholders or the CSR details at the PBB (Public Bank Bhd) starts with caring of stakeholders, which are, Customers, Employees, Shareholders, Community and Nation. But in general the stakeholders vary and may have more additional stakeholders. In case of a financial institutions the stakeholders can usually be identified as Government, Regulators, Employees, Owners, Customers, Shareholders, General Public, Community and Environment. The below framework identifies the stakeholders for financial institution and then it align the stakeholders according to the MAW framework.

The Power variable is associated with the Government and Regulators. Employees and Owners affect the Legitimacy factor and last but not least, the Urgency factor covers the Customers, Shareholders, General Public, Community and Environment. This framework gives an in depth analysis of the MAW framework in the context of financial institutions and this case about PBB.

Power Stakeholders

Government plays a vital role in the economic function of the society. Government indeed is one of the major players in the financial markets. They raise funds to a very large extent and spend huge amounts. It is the government which have the power to authenticate the activities of PBB and can take a corrective action in case if things are not according to the rules. Also in terms of problems with customers and shareholders, government can come to the rescue and speak on the customers' front. But one should always keep in mind that, this power factor can sometimes act as a threat to the public itself.

The main Regulators for the financial institutions and for PBB in this case in Malaysia are Malaysian Code of Corporate Governance and the guidelines issued by the Bank Negara. These two Regulators inspect the activities of PBB, which should comply by the rules and regulations mentioned. In case if PBB somehow does not meet any of the requirements, then these Regulators have the full authority to take action against PBB.

[ILLUSTRATION OMITTED]

Legitimacy Stakeholders

Employees and Owners constitute the most important aspect of the financial services industry as it is dealing in providing the intangible services. The actions of the employees and owners should be legitimate in order to be acceptable socially. Owners with the personal stake can always take the advantage of the accounting details and pull in more money. In case of Public Bank, they have to follow the Ethics, Integrity and Trust principles. Bank Negara gives the guidelines for the ethics, which is BNM Garis Panduan 7 ("BNM/GP7"). They also follow the Anti-Money Laundering Act, 2001 guidelines in order to safe guard the interests of the shareholders and customers. But still Owners of the company have all the power to mis-use things or mis-interpret things. Messrs KPMG are the external auditors for the PBB and the report is thoroughly checked by the internal audit committee too.

Urgency Stakeholders

Customers to PBB can either be the individuals or the corporations. A customer to PBB in case of corporation, can do effect to a certain extent in case if PBB is not according to the specified regulations, but individual customers are at a risk and they demand the urgency in case of any malfunctioning. Because PBB is a non-GLC corporation, there can be always a scope where customers can be put to risk.

There can be a conflict between the shareholders and the customers. Shareholders want higher profits to their investment and due to this PBB can increase the lending interest rates and reduce the deposit interest rates in order to meet the requirement of one particular stakeholder. But by looking at the financial report of PBB, there has been good deal of justice done on both the parts in the last 3 years report.

General Public do get affected by the flow of money in the economy. As many other small corporation do involve in businesses with PBB, in case if PBB withdraws the business with an existing firm, when it gets a more profitable opportunity from a new firm, then the general public also gets affected. Also socially responsible investment is an important factor for the public, environment and community. PBB involved in funding and many other philanthropic activities to help build communities, but most of them are just a form of donations. Also they involved in sponsoring of sports and other events. But still Malaysia got many SMEs (Small Scale Industries), which are lacking the capital and there are no providers for them. Most of the times these big financial institutions goes to only those SMEs which have the profit generating capacity and can bring in revenues to PBB. What PBB can do better in terms of Community and Environment, will be discussed latter. With respect to Environment, PBB was involved in contributions to WWF (World Wildlife for Nature) , paper recycling, contributing to MNS (Malaysian Nature Society), plantation of trees and circulation of greeting cards promoting beauty of nature. But there are way beyond environmental issues in Malaysia and across the globe, which require more serious thought. Though one can argue that PBB has nothing to do with environment, but as the corporate responsibility states, that an organization is responsible to all those who are either positively or negatively affected by its existence and also responsible to the environment and society in which it runs its business. There are many critical environmental issues to which PBB is not related officially, but still it becomes its responsibility to concern about them. Unethical or non socially desirable investments by PBB for personal gains can give disastrous effects to the environment and society at large, which do not have the power, but will for an immediate attention.

4.1 CSR by Others

This section will discuss about the CSR practices taken up by various other financial institutions, in order to understand the concept of CSR in the financial industry. Also to compare this with what PBB approach of CSR activities.

4.1.1 CSR at HSBC 

All the information below is taken from the HSBC CSR report of 2003 and 2004 and the Sustainability Report of 2007. HSBC started its activities of CSR way back in 1997. In the year 2000 they adopted the principles and guidelines of the UNGC (United Nations Global Compact). HSBC has public regulators on behalf of society, and it has approximately around 370 regulators across the globe to whom it is answerable, apart from the Government.

HSBC has itself aligned with the Wolfsburg Principles in 2000 and as a matter of fact it is the founder member of this committee and around a total of six banks voluntarily exercised these principles in order to combat with the AML (Anti-Money Laundering) activities. Also HSBC is the member of Institute of Business Ethics and The Anti-Corruption Organization Transparency International (UK).

HSBC is complying with the US Sarbanes-Oxley Act by implementing global disclosure procedures that will allow the employees to report suspected activities of malpractice on a confidential basis. One of the interesting facts is that a non-executive director of HSBC Holdings Plc, is among the advisory committee at the UNGC. HSBC is also inclined with the GSP (Global Sullivan Principles) dealing with economic, social and political issues.

In terms of the Environment, HSBC is working on the saving of 320 tonnes of carbon dioxide on an annual basis, does surveys on identifying potential savings. It has also involved in more of video and tele-conferencing in order to reduce the travel via r air and to reduce the gaseous emissions. In the Green House Gas area i.e. GHG aspect it is focused on reducing approx 50,000 tonnes of carbon dioxide. HSBC has started installing new water distribution systems in some of its locations in order to preserve water. It is also actively involved in recycling activities. It does the environment reporting on the guidelines of UK Government's Dept of Environment, Food & Rural Affairs and the UN Environment Program.

Critical CSR and Sustainability Factors

* United Nations

--UN Environment Programme Finance Initiative

--UN Global Compact

--UN Principles for Responsible Investment

--UN Advisor's Group on Inclusive Financial Sectors

* Sustainability

--Equator Principles

--Carbon Disclosure Project

--World Commission on Dams

--The Climate Group

* Anti-Bribery and Anti-Money laundering

--Wolfsberg Principles

--OECD Convention on Combating Bribery & Guidelines for Multinationals

* Human Rights

--Global Sullivan Principles

* HIV/AIDS

--Global Business Coalition on HIV/AIDS (Adopted from the HSBC Holdings plc, Sustainability Report, 2007).

4.1.2 CSR at CIMB, Malaysia

(http://www.cimb.com/index.php?tpt=cimb_group&tpl=group_clf_index)

Some of the activities of CSR at CIMB are similar to those which are carried out at Public Bank. It contributed around RM40,000 for the NASOM (National Autistic Society of Malaysia), which helps the physically disabled children. Under the Community Link Initiative CIMB raised approx RM42,000 for the Lovely Disabled Home group.

CIMB involved in women empowerment through a program called Semai Womenfolk Program. Also involved in sponsoring of some basic amenities for the school children. In terms of the environment factors, it introduced the United Nations Development Program, which involves introducing Organic Farming as a Wholesome Industry.

In order to protect the wildlife, CIMB contributed RM50,000 for Mangrove Conservation Project along the Janging River in Tanah Merah, Sepang. Like PBB even CIMB in involved in making contributions to the MNS (Malaysian Nature Society). It also contributed RM50,000 to improve the sanitation system in the under developed remote areas of Sabah.

Helped in raising money of RM90,000 through its Community Link Initiative, for the NSCMH Medical Center (Negeri Sembilan Chinese Maternity Hospital). Through its CLI (Community Link Initiative) program, CIMB contributed for many activities like, RM36,000 for the Community Education, RM35,000 for educational elephant conservation trips for students and also the Elephant Orphanage Sanctuary, RM50,000 to the Rotary Club of Likas Bay for the better quality of life for Kampong Pahu Residents, RM22,600 for the Penampang Junior Chamber for the Longest River Clean-Up in Malaysia, RM95,000 for the Beautiful Gates, dealing with Opening Broadcasting Opportunities to the disabled and many other contributions and philanthropic activities.

Critical CSR and Sustainability Factors

* Donations to school children

* Contributions for protecting the wildlife

* Assisting the remote areas for development

* Contributions for the enhancement of Education

* Contributions for the safeguarding of the nature (MNS)

* Increasing the standards of the communities for better quality life by contributions and philanthropic activities.

Thus most of the PBB and CIMB activities when comes to CSR are similar. And in many cases they are charities, Contributions and donations.

5.1 Discussion and Conclusion

Public Bank Bhd. has been considerate in its actions both in terms of economic and social terms. In terms of the dividend payout to shareholders it was increasing on a consistent basis and is still doing well irrespective of the downturn in the economy. It still guarantees a good package for the shareholders. The lending has increased to variety of streams within the country and also flow of money has increased gradually over a decade.

The activities are being driven by experts and also Bank Negara monitors the operations of its activities. Though there is always a scope for manipulation, yet PBB has never been convicted of any such cases and was rated as the best by many rating agencies. It also received many accolades from the Malaysian Government and also from entities outside Malaysia.

Being a part of the Malaysian country and being part of the community, it has given considerate amount of donations to the society, community for the betterment of social and economic growth. It has funded for the education, arts, nation building and many others which helped in increasing the standards of the society. PBB involved itself with the environment also and did certain contributions in order to preserve the wildlife and the environment.

Though PBB like others in Malaysia, has concerned for the societal and environmental factors, but there is always a scope to go beyond what PBB is doing. There are many other ways in which the concept of CSR and Sustainability can be achieved. Just with the mere contributions things cannot be set right. There should be something more than contributions, donations and philanthropies.

In the last three decades Malaysia has faced many Natural and Man-made disasters. These disasters wiped off many lives and also accounted for millions of dollars loss to recover from these disasters. Some of these disasters would have been avoided if actions would have been put in place either by the government or the institutions like PBB and others, basically the businesses or organizations. The below table gives the total disaster rate both man-made and natural.

Disaster                  Types of Disastrous Events

Natural      Landslides      Mudslides       Storms      Epidemics

Num                  5               1            3              3
Total %             26               5           16             16

                                           Places
Man-Made                  Technological    failures      Transport

Num                                 10            5              2
Total %                             56           28             11

Subsequent                                     Haze

Total %                                           5

Total
Disasters

Disaster           Types of         Total
               Disastrous Events

Natural         Floods    Tsunami

Num                  6         1      19
Total %             32         5      49

             Production
Man-Made     failure

Num                  1                18
Total %              5                46

Subsequent                             2

Total %                                5

Total                                 39
Disasters

Adopted from "Disaster Types in Malaysia " by Ibrahim Mohamed Shaluf
and Fakhru 'l-Razi Ahmadun, 2006.

The above data shows the contribution of each disaster to the country. Natural disasters cannot be stopped but the impact of such disasters can be minimized by having proper planning systems in place. Some of these planning requires huge investments and also long term commitment. So big corporations like that of PBB and many others can form a collaboration to fight these disasters effectively. Man-made disasters accounted for 46% of the total disasters. These disasters are fully controllable and can be avoided. So PBB can take this as one of the sustainability issues and can work on this to avoid unforeseen consequences or to minimize both damage of property and life.

According to Forum 21, the Sustainability Development Indicators deal with the various issues where immediate attention should always be there in order to maintain the sustainability. Some of the indicators are

                            FORUM 21

              Sustainability Development Indicators

Health            Federal of Family Planning Association (FFPAM)

Gender Equity     National Council for Women's Organization (NCWO)

Energy and        Centre for Environment, Technology and Development
Transportation    (CETDEM)

Water Resource    World Wide Fund for Nature Malaysia (WWF-Malaysia)
Utilization

Social Equality   Socio Economic & Environmental Research Institute
                  (SERI)

The above table shows the key sustainable areas which have to be dealt with all the times by the country. Apart from the key initiatives of investing in World Wildlife and planting of trees for the sustainability, PBB can also look in to the above factors and do equal justice on these areas. Also EIRIS (Ethical Investment Research Service) undertakes research covering over 2500 companies in the regions of UK, US, EU and Asia-Pacific. (Chris and Sirkku, 2006). As it is more towards the ethical investment, its guidelines on CSR are directly related to those of PBB. The strategies for SRI (Socially Responsible Investment) of EIRIS are

Ethical Investment Research Service
SRI (Socially Responsible Investment) Strategies

Engagement    Engagement Provides investors with an opportunity to
              influence corporate behaviour. Persuading companies via
              regular meetings to improve practices. Helping companies
              to formulate their policies.

Preference    Fund managers are guided on investment decisions and
              they make investments taking into account the Social,
              Governance and other Ethical Indicators. It helps fund
              managers to integrate ethical with financial decision
              making.

Screening     It involves a list of companies which are in the list of
              "AVAILABLE" by a combination of positive and negative
              factors. The positive or negative factors includes, the
              company conduct, employment practices, environmental and
              societal effects and others.

Source: "http://www.eiris.org/"

Apart from this, PBB can benchmark itself with the HSBC, in terms of CSR activities. It can join various institutions across the globe which provide guidelines for CSR and Sustainability activities. Alliances with these entities also gives the scope for best business practice sharing which will ultimately benefit the business, keeping the society and environment in line.

References

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Web References

http://ww2.publicbank.com.my/Corporate%20Social%20Responsibility/cnt cs r.html accessed on 26.01.2009.

http://www.cimb.com/index.php?tpt=cimb group&tpl=group clf index accessed on 06.03.09.

http://www.eiris.org/ . Accessed on 25.03.2009.

Corresponding author

Thakur Rajendar Singh can be contacted at: [e-mail]

Thakur Rajendar Singh, Sofri Yahya, Azlan Amran, Siti Nabiha

Universiti Sains Malaysia (USM), Malaysia

Year                SOCIAL                        ECONOMIC

2005   Donated RM200,000 to the           The pre-tax profit has
       Academy of Medicine                surpassed the RM2
       Malaysia(AMM) and the              billion mark. The net
       Academy of Family Physicians       grew by 14% from
       of Malaysia (AFPM)                 RM1.27 billion in 2004.

       Contributed RM10,000 to            The EPS(Earnings per
       Faculty of Communication &         Share) in 2005
       Media Studies, Mara University     improved to 44.2 sen
       of Technology for the              from 39.5 sen in 2004
       organization of a workshop in      and the net return on
       Crisis Communication               equity reached 21.4%
                                          compared to 18.2% in
                                          2004.

       Contributed RM440,000 towards      Total assets of the bank
       participation in the World         also the surpassed the
       Music Championship held in         RM100 billion mark for
       Kerkrade, in the Netherlands in    the first time.
       July 2005. Sponsored RM10,000
       to the Malaysian Institute of
       Corporate Governance (MICG).

       Distributed 'Duit Raya' of         Market share for loans
       RM100 each to children from        increased to 12% from
       Rumah Anak Yatim Peyakin and       11%, with having 17%
       the Pure Life Society in           of market share for
       conjunction with Deepavali and     savings deposits.
       Hari Raya Aidil Firtri.

2006   Employees affected due to          The Net profit grew by
       floods in various parts of the     18.3% from RM1.459
       country were provided with         billion in 2005 to
       financial assistance ranging       RM1.727 billion in
       from RM1000 to RM2500 per          2006.
       annually.

       Contributed RM100,000 to SMK       EPS improved to 52.1
       (P) Methodist, Kuantan for the     sen from 44.5 sen in
       construction of new two storey     2005 with the net return
       building to cater the growing      on equity reaching
       needs of School                    21.9% from 19.1% in
                                          2005.

       Contributed RM200,000 to the       Total assets of the bank
       MIM (Malaysian Institute of        expanded from
       Management) in support of the      RM111.689 billion in
       40th Anniversary of MIM.           2005 to RM147.790
                                          billion in 2006.

       Contributed RM47,000 to 250        Total loans grew from
       senior citizens in conjunction     RM 23.373 billion to
       with the Chinese New Year          RM84.365 billion in
       activities. Donated RM50,000 to    2006, along with an
       the KL traffic Police for the      increase of approx 13.2
       welfare of the personnel.          % in domestic industry
                                          loans.

2007   Approved a total of RM92.4         Net Profit grew by 23
       million of loans under the         % from RM1.73
       Special Relief Guarantee           billion in 2006 to
       Facility, to the flood affected    RM2.12 billion in
       businesses, accounting for one     2007. Both the Net
       fifth of the total approvals by    and Pre-Tax profits
       various banks. Contributed         surpassed the record
       RM100,000 to Institut              of RM3 billion and
       Jantung Negara to support          RM2 billion
       heart patients.                    respectively.

       In association with Lonpac         Earnings Per Share
       Insurance Berhad, paid             improved from 52.1
       RM1.5 million special relief       sen in 2006 to 63.3
       payments to residential            sen in 2007, with the
       mortgage customers of PB for       net return on equity
       flood damage, though they          growth from 21.9% in
       were not covered by the            2006 to 26.3% in
       insurance.                         2007.

       Awarded 1944 employees in          Total assets of the
       2007 with a total value of         bank grew by 17.8%
       RM1.4 million, as regard to        in 2007 and reached
       the long service. The sports       the RM174.16 billion
       club of PB raised RM48,000         as compared to
       for the flood affected staff.      RM147.79 billion in
                                          2006.

       Public bank contributed RM2        Bank's domestic loans
       million to set up the 'UTAR-       expanded by 18.8% in
       Tan Sri Dato' Sri Dr. Teh          2007, driven mainly
       Hong Piow Student Loan             by loans to SMEs and
       Fund' to support Malaysian         residential mortgages
       youth who have the intellect       which grew by 8.8%
       but lack of means to study.        and 14.7%
                                          respectively.

Year                SOCIAL                        ENVIRONMENT

2005   Donated RM200,000 to the           Contributed RM45,000 to
       Academy of Medicine                WWF Malaysia (World
       Malaysia(AMM) and the              Wildlife for Nature) in
       Academy of Family Physicians       regard to preserve the
       of Malaysia (AFPM)                 conservation of
                                          endangered species

       Contributed RM10,000 to            To promote awareness,
       Faculty of Communication &         many gifts were given,
       Media Studies, Mara University     such as calendars, diaries
       of Technology for the              with designs that promote
       organization of a workshop in      beauty of nature and also
       Crisis Communication               promoting the Flora &
                                          Fauna of Malaysia

       Contributed RM440,000 towards      Paper recycling
       participation in the World         campaign was embarked
       Music Championship held in         by the PB group in the
       Kerkrade, in the Netherlands in    Klang Valley. The paper
       July 2005. Sponsored RM10,000      was handed to the
       to the Malaysian Institute of      Malaysian Newsprint
       Corporate Governance (MICG).       Industries for recycling.

       Distributed 'Duit Raya' of
       RM100 each to children from
       Rumah Anak Yatim Peyakin and
       the Pure Life Society in
       conjunction with Deepavali and
       Hari Raya Aidil Firtri.

2006   Employees affected due to          Malaysian Nature
       floods in various parts of the     Society received
       country were provided with         RM10,000 from the bank
       financial assistance ranging       to support the activities
       from RM1000 to RM2500 per          carried out by the society.
       annually.

       Contributed RM100,000 to SMK       Contributed RM47,000 to
       (P) Methodist, Kuantan for the     the WWF (World
       construction of new two storey     Wildlife Foundation),
       building to cater the growing      Malaysia for its projects
       needs of School                    in 2006.

       Contributed RM200,000 to the       To promote awareness,
       MIM (Malaysian Institute of        many gifts were given,
       Management) in support of the      such as calendars, diaries
       40th Anniversary of MIM.           with designs that promote
                                          beauty of nature and also
                                          promoting the Flora &
                                          Fauna of Malaysia
                                          including Wildlife.

       Contributed RM47,000 to 250
       senior citizens in conjunction
       with the Chinese New Year
       activities. Donated RM50,000 to
       the KL traffic Police for the
       welfare of the personnel.

2007   Approved a total of RM92.4         The PB group along
       million of loans under the         with Malaysian Nature
       Special Relief Guarantee           Society (MNS) and the
       Facility, to the flood affected    Ministry of Natural
       businesses, accounting for one     Resources and
       fifth of the total approvals by    Environment, has
       various banks. Contributed         embarked on a two-
       RM100,000 to Institut              year tree planting
       Jantung Negara to support          project, which will
       heart patients.                    have a long lasting
                                          effect.

       In association with Lonpac         Along with the MNS
       Insurance Berhad, paid             group, will develop a
       RM1.5 million special relief       unique tree planting
       payments to residential            project of 20,000 trees
       mortgage customers of PB for       on a 45-acre site owned
       flood damage, though they          by the Drainage and
       were not covered by the            Irrigation Department.
       insurance.

       Awarded 1944 employees in          The tree planting
       2007 with a total value of         initiative is also aimed
       RM1.4 million, as regard to        at raising awareness of
       the long service. The sports       the community about
       club of PB raised RM48,000         the effects of carbon
       for the flood affected staff.      emissions and to
                                          promote planting trees
                                          as a way of life.

       Public bank contributed RM2
       million to set up the 'UTAR-
       Tan Sri Dato' Sri Dr. Teh
       Hong Piow Student Loan
       Fund' to support Malaysian
       youth who have the intellect
       but lack of means to study.