Katharina Gancarczyk

How could Russia’s banking sector improve its CSR

performance? A comparative analysis of the CSR

initiatives in the banking industry in Germany and Russia.

MASTER THESIS

submitted in fulfilment of the requirements of the degree of

Master of Science

Programme: Master’s programme of International Management

Branch of study: International Management

Alpen-Adria-Universität Klagenfurt

Evaluator:

B.S. M.B.A. J.D. Kurt Wagner

AAU / IFM

Klagenfurt, January 2019

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Affidavit

I hereby declare in lieu of an oath that

- the submitted academic paper is entirely my own work and that no auxiliary materials have

been used other than those indicated,

- I have fully disclosed all assistance received from third parties during the process of writing

the thesis, including any significant advice from supervisors,

- any contents taken from the works of third parties or my own works that have been included

either literally or in spirit have been appropriately marked and the respective source of the

information has been clearly identified with precise bibliographical references (e.g. in

footnotes),

- to date, I have not submitted this paper to an examining authority either in Austria or abroad

and that

- when passing on copies of the academic thesis (e.g. in bound, printed or digital form), I

will ensure that each copy is fully consistent with the submitted digital version.

I understand that the digital version of the academic thesis submitted will be used for the

purpose of conducting a plagiarism assessment.

I am aware that a declaration contrary to the facts will have legal consequences.

Gancarczyk, Katharina Anna, “e.h.” Yekaterinburg,25.01.2019

(Signature)* (Place, date)

*For reasons linked to data protection it is not necessary to sign the affidavit. Instead, the

electronic version should include the abbreviation “e.h.” after the name.

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Eidesstattliche Erklärung

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Ich bin mir bewusst, dass eine tatsachenwidrige Erklärung rechtliche Folgen haben wird.

Gancarczyk, Katharina Anna „e.h.” Jekaterinburg, 25.01.2019

(Unterschrift)* (Ort, Datum)

*Bei der elektronischen Version ist es – aus datenschutzrechtlichen Gründen – nicht

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Abstract

Background & Objective:

CSR is a concept becoming more and more important especially over the past years to be

implemented in any corporation. It creates additional value for all its stakeholder groups and

the company itself. There are many rankings measuring CSR that consider Germany being a

socially responsible country. Especially the fact that CSR in Germany is company-driven, not

state-driven like in many other countries, stands out. On the contrary, Russia is mostly being

found at the end of those rankings. This study is a comparative study focusing on the banking

sector and aiming at determining the differences between the CSR strategies in the major banks

of both countries. Starting from the differences, recommendations on how to improve the CSR

strategy in Russian banks are drawn.

Methodology:

The comparative study consists out of two parts. First, a simple country comparison according

to the PESTLE framework is conducted to determine the discrepancy in country conditions

beforehand. The focus hereby lies on the economic, social, environmental and technological

sphere as those are the closest to CSR. Second, the CSR reports of the major Russian banks are

compared according to their number and type of CSR measures. Hereby mainly reports that

comply with the GRI reporting standards are used. An exception forms the central banks of

each country due to their economic importance. Those two banks are even included without

issuing GRI reports and analysed according to other CSR reports they publish or their annual

reports.

Findings & Conclusion:

There were three main differences determined between the CSR strategies of German and

Russian banks. First, Russian banks disclose a greater number of CSR measures than German

ones. Second, Russian banks have a very strong economic focus often disregarding the

environmental and social sphere. Third, Russian banks often neglect stakeholders, which are

economically not profitable to them. Those three differences have to be changed within the

CSR measures of the Russian banks.

Table of contents

Affidavit ..................................................................................................................................... 2

Eidesstattliche Erklärung ............................................................................................................ 3

Abstract ...................................................................................................................................... 4

List of abbreviations ................................................................................................................... 7

List of Figures and Tables .......................................................................................................... 8

1. Introduction – The Russian ecological year 2017 .................................................................. 9

2. The Concept of CSR ............................................................................................................ 11

2.1. Defining CSR ................................................................................................................ 11

2.2. Challenges and Benefits of CSR ................................................................................... 13

2.3. The Interdependence of the banking sector and CSR .................................................... 15

2.4. How to measure CSR? ................................................................................................... 17

2.5. Methodology for the analysis of CSR-strategies ........................................................... 19

3. Germany and Russia – a country profile .............................................................................. 21

3.1. Germany ........................................................................................................................ 21

3.1.1. PESTLE-Analysis ................................................................................................... 21

3.1.2. The Banking Sector in Germany ............................................................................. 24

3.2. Russia ............................................................................................................................. 26

3.2.1. PESTLE-Analysis ................................................................................................... 26

3.2.2. The Banking Sector in Russia ................................................................................. 29

3.3. Summary and Country Comparison – what are the differences, and what the common

grounds of Germany and Russia? ......................................................................................... 31

4. The Greatest German Banks ................................................................................................ 33

4.1. Deutsche Bank ............................................................................................................... 33

4.1.1. General Information ................................................................................................ 33

4.1.2. The CSR Report ...................................................................................................... 35

4.2. Commerzbank ................................................................................................................ 40

4.2.1. General Information ................................................................................................ 40

4.2.2. The CSR Report ...................................................................................................... 42

4.3. The European Central Bank .......................................................................................... 47

4.3.1. General Information ................................................................................................ 47

4.3.2. The CSR Report ...................................................................................................... 50

4.3.3. The Annual Report .................................................................................................. 55

4.4. Short summary on the CSR initiatives of the German banks ........................................ 58

5. The Greatest Russian Banks ................................................................................................. 60

5.1. Sberbank ........................................................................................................................ 60

5.1.1. General Information ................................................................................................ 60

5.1.2. The CSR Report ...................................................................................................... 62

5.2. VTB Bank ...................................................................................................................... 69

5.2.1. General Information ................................................................................................ 69

5.2.2. The CSR Report ...................................................................................................... 71

5.3. The Central Bank of Russia ........................................................................................... 77

5.3.1. General Information ................................................................................................ 77

5.3.2. The Annual Report .................................................................................................. 80

5.4. Short summary on the CSR initiatives of the Russian banks ........................................ 84

6. The comparison of the CSR initiatives in German and in Russian banks ............................ 86

7. Conclusion – how to improve the CSR strategies in Russian banks .................................... 89

8. Bibliography ......................................................................................................................... 93

List of abbreviations

BiTC Business in the Community

CISO Chief Information Security Office

CSR Corporate Social Responsibility

CB Commerzbank

CBR Central Bank of Russia

DB Deutsche Bank

DJSI Dow Jones Sustainability Index

ECB European Central Bank

ECU European Currency Unit

EP Equator Principles

GDP Gross Domestic Product

GIT Global Impact Tracking

GNI Gross National Product

GRI Global Reporting Initiative

HDI Human Development Index

IFRS International Financial Reporting Standards

ISO International Standards for Business, Government and Society

MOEX Moscow Exchange

NPS Net Promoter Score

OECD Organisation for Economic Cooperation and Development

OHSAS Occupational Health- and Safety Assessment Series

PPP Purchasing Power Parity

R&D Research and Development

SB Sberbank

SME Small and Middle Enterprises

VTB VTB Bank

List of Figures and Tables

Table 1: Summary of the CSR measures of the CSR measures of the DB (cf. Deutsche Bank

Aktiengesellschaft, 2017)……………………………………………………………………..35

Table 2: Summary of the CSR measures of the CSR measures of the CB (cf. Commerzbank

AG, 2017)……………………………………………………………………………………..42

Table 3: Summary of the CSR measures of the CSR measures of the ECB (cf. Green ECB,

2016)………………………………………………………………………………………….50

Table 4: Summary of the CSR measures of the CSR measures of the ECB (cf. European

Central Bank, 2017)…………………………………………………………………………..55

Table 5: Summary of the CSR measures of the CSR measures of the SB (cf. Sberbank, 2016)

………………………………………………………………………………………………...62

Table 6: Summary of the CSR measures of the CSR measures of VTB (cf. VTB Bank, 2017)

………………………………………………………………………………………………...71

Table 7: Summary of the CSR measures of the CSR measures of the CBR (cf. Central Bank

of the Russian Federation, 2017)……………………………………………………………..80

9

1. Introduction – The Russian ecological year 2017

The year 2017 passed in Russia with regards to environmental protection and ecological

awareness. In January the president of the Russian Federation Vladimir Putin declared the year

of 2017 the ecological year and appealed to his nation to treat ecological problems with greater

caution. Many events took place to raise the people’s awareness of looking after their

environment and nature. The main goal of the ecological year was the further protection of

Russia’s ecosystem and a partly reestablishment of yet damaged natural spaces. Especially

Sergey Donskoy, the Russian minister for natural resources and ecology, stressed the

importance of economic players within those processes (cf. Ministry of Natural Resources and

Environment of the Russian Federation, 2017). “The ecological year means responsibility, not

resting on our laurels: this applies not only to our businesses but also to the federal and regional

governments and the population.” (Translated by the author)1, he stated. The consideration of

environmental issues in the business sphere is included in a concept called Corporate Social

Responsibility (CSR), which is gaining more and more importance nowadays (cf. Dahlsrud,

2006).

There are several methods and frameworks to measure CSR. One of the most renowned ones is

the Dow Jones Sustainability Index (DJSI) that measures and tracks the performance of selected

companies in the CSR sphere (cf. Hopkins, 2005) and classifies them into several indexes

according to the given region. The study is conducted by the company RobecoSAM, a specialist

within the sphere of sustainable investments. Looking through the most recent results of the

DJSI Annual Review 2017 it is easily noticeable that Germany is always at the top of the

rankings. It is listed second within the Eurozone Index and fifth within the World Developed

Diversified Index which shows that additionally to currently being the biggest economy within

Europe also a great amount of highly socially responsible companies is concentrated there. The

only European country ranked higher than Germany is France (cf. S&P Dow Jones Indices

LLC, 2018). Both countries hereby have a long history within the CSR context and developed

strong principles in this sphere. When in France CSR regulations are mainly imposed on the

companies by the government, the key drivers for CSR in Germany are the companies

themselves. Therefore, it can be said that the CSR movement in Germany is stronger related to

the corporate culture of a company (cf. Corkery, Mikalsen, & Allan, 2015). As this paper is

1 «Год экологии — это ответственность,а не почивание на лаврах: как для бизнеса, так и для федеральной

и региональной власти, и для населения.» (Ministry of Natural Resources and Environment of the Russian

Federation, 2017)

10

mainly focussing on the business point of view of CSR than on the legislative one Germany

can be considered as the leader here and, thus, a role model in this paper.

Russia is the contrary hereto. Unlike many other main European economic areas, it forms an

exception in terms of CSR. When according to its GDP the Russian Federation is one of the

leading economies in Europe and by far the biggest and promising one in Eastern Europe (cf.

Hawksworth, Audino, Clarry, & McKellar, 2017) it is not mentioned in a majority of the

indexes of the DJSI. Merely in a Country Sustainability Ranking, where Germany once more

is included within the top 20, Russia can be found on the opposite end of the ranking, amongst

the bottom least sustainable 20 (cf. RobecoSAM, Robeco, 2017). How come Russia is that far

behind within the CSR development compared to all the other major economies within Europe?

And, more important, how can Russia catch up on this deficit compared to other economies in

the west?

This paper aims at trying to show the differences between the CSR initiatives of Germany and

Russia explained exemplary on the banking industry as one of the most essential sectors within

the CSR movement. Hereby the differences within socially responsible banking in both,

Germany and Russia, shall be identified including its reasons and current stage. Thus, possible

recommendations for the further development of Russia’s banking industry should be

generated. In order to do so first of all, it is necessary to give an overview of the CSR movement

in general and figure out its main concepts. Then both countries and their banking industry

should be analysed to understand the baseline conditions prevailing in each country. Next, the

leading banks in each sphere shall be introduced and their CSR reports shall be examined

according to their actuality, volume and certain criteria regarding their performance within the

economic, environmental and social sphere. Hereby, Germany shall be represented by the

Deutsche Bank (DB) and the Commerzbank (CB) that are the greatest banking institutions in

the country in regard to their total assets (cf. WordPress, 2018). Moreover, a further, significant

comparison to the European Central Bank (ECB) can be drawn as it is also located in Frankfurt,

Germany. As central banks are some of the most powerful actors within the economic

environment, they can be seen as role models to the other banks within the same country or

economic union. Thus, the comparison between the central banks in Russia and in Germany

might give significant hints on the development and implementation of CSR in the banking

sphere of the given countries (cf. Archer , 2009). The biggest banks within the Russian

Federation in terms of their assets are named Sberbank (SB) and VTB Bank (VTB) (cf. Pariona,

2017). The Russian equivalent to the ECB is the Central Bank of Russia (CBR) which, however,

11

does not display any CSR report so far. As much as this says, any further information can

merely be given due to the facts found in the annual report and further reports issued by the

CBR. Based on this comparison between the largest banks in Germany and Russia certain

conclusions can be drawn and guidelines for further development of the CSR sphere in Russia

will be set up.

2. The Concept of CSR

2.1. Defining CSR

To understand why CSR is as important as it is in today’s business world, first it’s necessary to

understand what CSR is at all. However, there is not one single definition to narrow down the

topic but a variety of different opinions by numerous specialists. One of the first widely

accepted definitions comes from Archie B. Carroll who states, that an organisation does not

merely have economic and legal duties but also needs to fulfil the ethical as well as

philanthropic expectations of the society to be viewed as a socially responsible organisation (cf.

Carroll, 1991). Out of this definition results Carroll’s often cited Pyramid of Corporate Social

Responsibility, which states that the economic dimension of a business is based on the

company’s economic activity. Just then a firm is seeking legal compliance, followed by ethical

responsibility. The top of the pyramid is formed by the philanthropy companies should engage

in. Although this is one of the most famous models in the CSR studies, it is also broadly

criticised. One major point of criticism is the overlapping character of the domains as CSR

measures and strategies rarely happen to purely belong to one of the areas named above only.

Furthermore, the question arises whether voluntary activities can be said to be a responsibility

at all and therewith fall into the sphere of CSR (cf. Schwartz & Carroll, 2003).

Others, therefore, deny the philanthropic character of CSR and identify it as an obligation to

any company within the social, environmental and finally economic sphere (cf. Marsden, 2006).

Another classic definition by Elkington completely leaves out beneficence and explains CSR

to focus on the Triple Bottom Line. This theory implies that CSR is mainly centred around the

social, environmental and economic responsibility, whereby the social sphere means everything

concerning the people, environmental refers to the planet and economic is related to the profit

of a company (cf. Elkington, 1997).

Another well-known concept when defining CSR is the stakeholder approach. This theory states

that firms shall not only pay attention to their shareholders but also to all their stakeholders.

Consequently, the stakeholders of any business can be considered its clients, investors,

12

suppliers, the employees, the management itself etc. Hence, corporate social responsible

enterprises are obliged to meet the needs and requirements of its stakeholder (cf. Nasrullah &

Rahim, 2014).

Furthermore, also directives trying to regulate and enhance CSR behaviour do exist. The

international guideline under the name of ISO 26000 dealing with social responsibility defines

it as follows:

“social responsibility [is the] responsibility of an organization […] for the impacts […] of its

decisions and activities on society and the environment […], through transparent and ethical

behaviour […] that contributes to sustainable development […], including health and the welfare of

society; takes into account the expectations of stakeholders […]; is in compliance with applicable

law and consistent with international norms of behaviour […]; and is integrated throughout the

organization […] and practised in its relationships[.]” (International Organisation for

Standardization, 2010)

The definition mentioned above is broadly adapted in the CSR sphere and used by the European

Commission and other main international organisations for their actions (cf. European

Commission, 2011). It emphasizes CSR to be a corporate concept which is pursued within a

company. Additionally, the importance of law for social responsibility is underlined when at

the same time the voluntary sphere is added. Also, the relationship of the corporation to its

stakeholders plays a key role. Moreover, CSR is supposed to consider the social and

environmental sphere. Merely the economic sphere is not explicitly mentioned within the

definition although being profitable is fundamental for the company itself. Still, the ISO 26000

displays a wholistic approach to CSR which stresses its international relevance. It is especially

important for this paper as the official definition of CSR offered by the German authorities

complies with the ISO 26000 and the guideline itself is broadly applied in Germany.

In contrast, the Russian understanding of CSR differs from the European one mainly due to

historical reasons and people’s perception and mentality that was formed hereby. This is why

many managers in the Russian Federation put a greater emphasis on the economic part of CSR

than on the environmental or social one as they assume that the financial performance of a firm

has the greatest impact on its clients and the overall society. Often, they even include activities

in their definition of CSR which are mostly not even perceives as socially responsible in

Germany such as tax paying for example (cf. Kuznetsov, Kuznetsova, & Warren, 2009). This

tendency is also underlined by the research hub for CSR “КСО – Русский Центр” in Moscow.

They state that the stress within Russia’s CSR development lies to a large extent on its legal

aspect merely. However, it includes the stakeholder dialogue of the companies as well as social

and environmental issues such as the security and fair treatment of a firm’s employees and

13

human rights (cf. CSRJournal, 2008). Finally, the conclusion is a definition that is widely

congruent with the German one:

“Social responsibility within a Russian company is its contribution due to its economic, ecological

and social activities that are securing and supporting the sustainable development of the company

itself as well as of the region and the society.”2 (Translated by the author.)

Nevertheless, this comparison of definitions already shows the slightly shifted focus of the

comprehension of CSR in both examined countries. Additionally, the manifestation of CSR as

well depends on further factors like the company’s size, the industrial area the enterprise is

operating in, etc. (cf. Horváth, 2015). This makes it even harder to establish one specific

definition for the term CSR. As Germany is viewed as a role model in this paper the here

relevant interpretation shall mostly rely on the European point of view. Therefore, in the

following Corporate Social Responsibility shall be defined as the sum of all economic, social

and environmental activities implemented into a company’s business in order to fulfil the needs

and requirements of all its stakeholders. They can be either of voluntary or obligatory nature,

but in any case, have to be implemented into the long-term strategy of the corporation, as CSR

is not a temporary concern (cf. Rahim, 2013). Moreover, it is to be assumed that all companies

in this paper act in compliance with the law, thus the legal aspects will play a minor role in the

CSR strategy. Nevertheless, an enterprise shall not be declared bankrupt due to its investments

in various socially responsible initiatives. Yet already Bowen in 1953 asked, whether it is

“possible to maximize the profits and make the world better?” all at the same time (cf.

Ravochkin, Shchennikov, & Syrov, 2017).

2.2. Challenges and Benefits of CSR

After defining Corporate Social Responsibility, it is obvious that it aims at creating a cleaner

environment and having a positive impact on society. But what are the benefits of CSR for the

company itself and, thus, an incentive to implement it into the corporate structure? After all, for

an enterprise itself, CSR is tightly connected with several concerns. First and foremost, many

sustainable measures tend to be very costly. Sometimes there are payments that incur merely

once, but there are also donations, fees and other costs that must be settled recurringly (cf.

Hollensen, 2011). Moreover, the corporate cultures of many institutions, mainly banks, are

lacking essential traits to successfully engage in social responsible behaviour. Hereby such

characteristic as awareness, honesty and professionalism is meant, that are mainly important

2 “Социальная ответственность российской компании […] – это ее вклад в экономическую,

экологическую и социальную деятельность, обеспечивающий и поддерживающий устойчивое развитие,

как самой компании, так и региона (ов) ее присутствия и общества в целом.“ (KSO - Russkij Centr, 2004)

14

for banking institution as their clients trust them their money (cf. Burianová & Paulík, 2014).

It takes a lot of discipline and time to be able to firstly change an enterprise’s culture to be able

to introduce CSR there in a second step. Furthermore, Greenwashing is definitely another

argument against CSR. Many corporations present themselves in a much more positive light

than they are and hide any kind of harmful information as far as possible. Such actions, of

course, violate the trust of all stakeholders and makes it hard for them to differentiate what

information is in accordance to the truth and what not. This is especially a problem when it

comes to CSR reporting (cf. Wylie & Ward, 2014).

Despite some challenges connected to CSR a company must consider, it also brings along a

considerable amount of benefits. Although some CSR resolutions demand investments first, in

the long-run they can generate increased profits for the firm. On the one hand, socially

responsible corporations have a better reputation which is why they are able to increase their

circle of stakeholders. This results in an increase of sales that has a positive impact on the profit.

A rise in reputation might not only increase the demand of a certain product or service by

meeting the customer’s requirements more precisely but also improve the investment climate

and grow the attractiveness of a firm for others. An increased profit and a possibly enhanced

working environment can enhance the motivation of the employees. Additionally, many

governments give out grants and subsidies to sustainably acting companies. On the other hand,

institutions can decrease their costs due to a change in their internal structures. Thus, for

instance, collaborations can be set up with NGOs who provide the enterprise with relevant

information and know-how. In some countries, an engagement in CSR might bring tax

reduction or other incentives along from the government. In any case, Corporate Social

Responsibility is supposed to increase the profit of an economic entity. Hereby, the

management, however, needs to remember that the profitability might just grow after a certain

time. A rise in reputation might not only increase the demand of a certain product or service by

meeting the customer’s requirements more precisely but also improve the investment climate

and grow the attractiveness of a firm for others. Still, via CSR a gain in both, tangible and

intangible assets, can be recorded (cf. Hollensen, 2011).

Therefore, one can say, that the gain in revenue can definitely make up for the initial expanses

of CSR and the immense benefits of Social Responsibility make it worth restructuring the

corporate culture of a firm. The danger of greenwashing can be opposed by transparent

reporting (cf. Wylie & Ward, 2014). Consequently, the concept of Corporate Social

Responsibility can create a win-win-Situation for all stakeholders, the society and the

15

environments involved with the company as well as for the company itself. A good CSR

strategy can visibly generate competitive advantage (cf. Horváth, 2015).

This is especially important for Russian institutions, as they need to enlarge their authority on

an international level. Many have problems to attract foreign investors because they cannot live

up to their expectations. In general, many Russian entities have a bad reputation abroad. This

is partly due to the missing understanding and implementation of CSR standards within their

corporate cultures (Medvedev, 2013). Besides, well-conducted CSR could also solve some

national problems in Russia. Due to historical reasons, a deep-reaching mistrust in businessmen

and firms exists in Russia. CSR might be a possible way to change this attitude and attract more

customers. In addition, CSR could be a tool for Russian enterprises to distinguish itself from

the state and its control so that a recurrence of past patterns is prevented (cf. Kuznetsov,

Kuznetsova, & Warren, 2009). Therefore, the implementation of a good CSR structure in many

Russian corporations gains additional importance and should even be accelerated, if possible.

2.3. The Interdependence of the banking sector and CSR

At this point, it is obvious that the trend around the CSR movement is gaining more and more

importance now. Why is CSR so important after all, though? And especially in the banking

sphere? What is the relevance of the banking sphere itself? How do both factors mutually

influence each other? A rough answer to some of those questions offer the city authorities of

Barcelona back at the end of 2012:

“Banking is a sector traditionally assessed on financial indicators. But in the current crisis context,

ethical banking and CSR applied to financial institutions arise as a new business model that seeks to

value the commitment of financial institutions to the social, environmental and economic

sustainability. Ethical banking and CSR have become a means of creating value, investor’s

confidence and business excellence.” (Barcelona Treball, 2012)

Although now, seven years later, the fiscal crisis seems to belong to the past, the trend to

improve the level of CSR within the banking industry, however, is still increasing globally.

CSR is not only gaining importance exclusively within a social and sustainable context, but

also as a tool to generate economic value and attract new customers. This is enforced by the

fact that 90% of all clients would turn towards a certain brand if knowing that it is acting in a

socially responsible manner (cf. Dassel & Wang, 2016). Mainly attention has to be paid hereto

because EY identifies the factor of customer relationships as crucial for the future development

of the banking sector. This means that during the upcoming years banks must focus more on

their clients in order to satisfy them and generate shared value (cf. Ernst & Young Global

16

Limited, 2013). To do so Corporate Social Responsibility and Ethical Banking might be just

one instrument aside of technical innovations and strategic changes within the future banking

industry; possibly CSR might be one of the most important ones, though.

Additionally, the yet explained pluses and minuses of the CSR strategy on a bank’s economic

performs play a massive role in their mutual relationship. While CSR can be costly on the one

hand it also can generate huge profits on the other one. Aside of enlarged customer satisfaction

due to successful CSR, especially the fact that financial aid from investors as well as CSR-

related grants and subsidies from the government, show the positive impact of CSR on banking

institutions. Thus, a well-thought-out CSR-strategy can increase a bank’s profit in several ways.

Conversely, the banking industry is one of the most important industries within the CSR

movement. This can be explained by their stakeholders’ relationships. Every actor within an

economic environment is obliged to interact with one or several banks as a financial institution

(cf. Matei & Voica, 2013). Hereby also the concept of green banking must be mentioned. The

idea is to only accept environmentally friendly and sustainably customers as clients by so-called

green banks (cf. Dr. Brockmann, 2017). This shows the power of banks as stakeholders for

businesses and business projects. The financial institution can limit the possibilities of

interaction with them and narrow down their circle of clients on all economic levels. Hence,

certain financial institutions promote and favour special clients. Particularly if a certain bank is

offering financial services to good conditions, their corporate restriction might become relevant

to many firms and institutions. In any case, every unit within the economic sphere has to interact

with one or more banks. Thus, the reach of banks is one of the greatest ones and they have the

power to affect all economic spheres within a country. Therefore, banks all over the world

should consider strengthening their bonds towards a social responsibility as a crucial

determinant within their long-term business strategy.

Consequently, the interdependence of CSR and the banking industry becomes visible. While a

well-elaborated CSR-strategy can help banks gain a greater circle of customers and other

financial benefits, vice versa the banking industry also has the power to promote CSR and even

impose it on certain clients in some cases. Hence both parties can profit from such

circumstances, a mutual win-win-situation can be created. This underlines the importance for

both, the banking sector as well as CSR as a concept to grow and further develop. As especially

CSR still seems to be rather impalpable and abstract, a new question arises: How can good CSR

be measurable, though? This will be explained in the following.

17

2.4. How to measure CSR?

Different institutions exist that tried to set up a framework to measure Corporate Social

Responsibility including the UK-based Business in the Community (BiTC), the already

mentioned, European-based DJSI and others. Many of those schemes, however, are inconsistent

regarding their data and sources as well as in their presentation. Every methodology has their

pros and cons, still a concise review of the most relevant groundworks can give important

insights of how to measure CSR (cf. Hopkins, 2005).

Especially the World Bank as well as the International Finance Corporation prepared the ground

well to promote good practises within companies. Thus, they have set up a set of principles how

to act in a socially responsible manner. Therefrom finally resulted the Equator Principles (EP)

as well as the Global Reporting Initiative (GRI), which both have the greatest relevance for

banks and other financing institutions amongst all the approaches measuring CSR (cf. Matei &

Voica, 2013). While the EP are important for the assessment of the banks and the projects they

might invest in, the GRI Guidelines evaluate the financial entities itself (cf. Drăgan

(Sântămarian), 2013). Thus, the EP are voluntary guidelines to estimate and determine

environmental as well as social risks when choosing major projects to invest in. Those are

supposed to help the sustainable development of the banking industry by guiding them when

choosing the right clients and propositions. The EPs can be applied for projects in all sectors

concerning the advisory services, the financing, corporate and bridge loans (cf. The Equator

Principles Association, 2018). An engagement with the right partners will not only bring

benefits for the financial institution itself, but also for the stakeholders as the investment risk of

the bank then decreases (cf. Drăgan (Sântămarian), 2013). While those guidelines might be

highly beneficial for the CSR strategy of the banking institution itself, to really evaluate the yet

implemented measures taken in this field the GRI standards are of greater use.

The GRI is an initiative that enables companies to report their sustainable development on a

global scale. The aim of the framework is it to set up certain standards and guidelines that

encourage social responsible behaviour and via which the whole sphere of CSR can be

harmonised. They also want to enhance effective sustainability reporting and, thus, support the

improvement of a company’s performance. Still, GRI is a voluntary initiative being

implemented mainly by major corporations. The provided framework is currently in its 4th

generation called “G4”. The main global alliances of the GRI framework consists of the

Organisation for Economic Cooperation and Development (OECD), the United Nations

Environment Programme, the United Nations Global Compact and the International Standards

18

for Business, Government and Society (ISO), which stresses its international importance. The

GRI standards are split into universal standards applying to the company itself and its

organisation as well as management and topic-specific standards referring to the economic,

environmental and social sphere. Hereby the GRI 101 presents the most basic standards. It deals

with the GRI in general and its reporting principles. Thus, the content of any report must respect

the stakeholders of a company, have a sustainability context and the contained information

needs to be substantial as well as complete. Moreover, a report of excellent quality needs to be

accurate, balanced, clear, comparable, reliable and timeless according to the GRI principles.

Further, the GRI 102 encourages the company to disclose detailed information on itself, its

strategy and ethics, when the GRI 103 digs deeper on the management approach of the firm.

Additionally, the content-related the GRI standards are also split into subsections. Hence, the

economic aspect of GRI is divided into six parts, the environmental into eight and the social

section differentiates between 19 different units (cf. Global Reporting Initiative, 2018).

In addition, the GRI provides a certain focus and sectorial advice for the most important

business spheres. Those shall outline a certain emphasis that the existing institutes in the given

areas mainly should pay attention to within their CSR strategies. For the financial services

sector the spotlight lies on the economic performance (GRI 201), emissions (GRI 305),

effluents and waste (GRI 306), occupational health and safety (GRI 403), investment in Human

Rights (GRI 412), local communities (GRI 413) and product responsibility including product

and service labelling, product portfolio, audit and active ownership (GRI 417) (cf. Global

Reporting Initiative, 2013). Looking at the outlined principles it becomes visible that the

banking sector mainly impacts the social part of CSR, although being present in all areas of

CSR and having a wide reach.

Therefore, the GRI principles can be said to provide a detailed overview of all spheres related

to CSR and, thus, give the perfect base to evaluate a company’s CSR strategy. Although some

criticise the GRI for its inconsistency referring to its reporting standards (cf. Hopkins, 2005)

and for its free format as it might not cover all the relevant activities (cf. Preuss & Barkemeyer,

2011), the GRI still is an globally acknowledged standard that is highly successful and makes

it possible to compare CSR strategies of companies all over the globe. Its supporters, also,

outline the uniqueness of the GRI by saying that the project manages to balance the interest of

all stakeholder groups as well as filling a gap that needed to be filled within the continuously

growing sustainability movement without questioning any of the already existing institutions.

Additionally, it can be seen as the only globally acknowledged reporting initiative focussing on

19

CSR (cf. Drăgan (Sântămarian), 2013). Many view it simply as a convenient tool for comparing

the level of CSR in various companies (cf. Preuss & Barkemeyer, 2011), which also cannot be

denied. In any case, the GRI standards are a globally used framework system elaborated in great

detailed, that to a great extent ensure credibility and relevance (cf. Drăgan (Sântămarian),

2013). As the GRI definitely is able to meet all its aspirations, the following analysis will be

based on the GRI and its reports.

2.5. Methodology for the analysis of CSR-strategies

To get a very basic understanding of the external conditions and basic cultural, political and

economic differences between the countries, as a first step Germany and Russia themselves

shall be compared by using a PESTEL framework. Thus, it is possible to provide an as exact as

possible elaborated view on the non-market drivers that influence a firm. Consequently, a

bigger picture of the political, economic, social, technological, environmental and legal sphere

of each country can be provided and compared (cf. Johnson , Whittington, Scholes, Angwin, &

Regnér, 2014).

Next, each bank will be introduced on its own. Therefore, some general information on the

financial institution shall be given such as the size and age of the bank before coming to the

actual analysis of the given CSR report and, consequently the CSR strategy. The analysis shall

consist of three parts, whereby the first will again be some fundamental information on the

report including its length according to the number of words and pages, its release date,

structure, layout and facts concerning the GRI reporting specifically.

Furthermore, a content analysis of the GRI report of each bank shall be undertaken. Therefore,

all the measures presented in the given CSR statement shall be classified according to the two

dimensions of CSR. Hereby, on the one hand, the content-related sphere is meant, which can

be either economic, environmental or social. On the other hand, the stakeholder view shall be

considered. To do so, it is first off important to define the relevant stakeholders of a bank. While

classically the main stakeholder groups are considered to be the owners, consumers, employees,

local communities, rivals, suppliers, activist groups, the society in general and others (cf. Bakša

& Danilyuk, 2013). A Bank-specific analysis shows that by consumers borrowers and

depositors are meant, as well as that the importance of managers within the employee-sphere

(cf. Horváth, 2015). Therefrom a list of 9 subjects results, namely the owners, borrowers and

depositors that will be handled all under clients to keep within reasonable bounds in the

following study, managers, employees, local communities, rivals, suppliers, groups of activists,

the society in general, external and others. Those shall be the relevant stakeholder parties in the

20

here conducted study. Every CSR record undertaken by a company shall be sorted into one

content- and one stakeholder-based dimension. In case a measure applies to several sections the

most relevant one shall be chosen. In this way, finally, it will be possible to deduct the degree

of insensitivity, which each bank is dedicating to each sphere and each stakeholder. Thus, one

can see the focus of every financial institution and the depth of each CSR strategy in general.

As Central Banks were defined to have the heaviest impact on the economic environment and,

thus, can show the trends of the development within the CSR sphere, they are an important

element of the analysis and shall be examined even when they’re not publishing a CSR report

in accordance with the GRI guidelines. In such cases, other CSR reports or the Annual statement

shall be looked at. As the latter one records a bank’s overall activities, also CSR initiatives

should be found there, if there are any (cf. Ernst & Young LLP, 2017).

There are also other kinds of CSR reports that are not in compliance with the GRI guidelines

as well as other channels of communication such as advertisements, logos and information

papers (cf. Horváth, 2015). For this paper, it will be assumed that the reports are representing

all CSR measures of a bank or company, which are then later picked up by other channels of

communication and repeatedly reinforced by them. Hence, the only medium of communication

illustrating the CSR strategies of the German and Russian banks in the following paper will be

their CSR reports or their replenishments.

A final comparison of all banks that have been the object of the here conducted research shall

form the conclusion of this paper. Hereby mainly the results found in the content analysis shall

be compared across the different institutions. Thus, the focus of each bank within the economic,

environmental, social and stakeholders sphere can be figured out and compared. Additionally,

the number of words and pages of each CSR reports will be counted and compared one to

another. A possible change for the CSR strategy can be deducted therefrom and potential hints

for further improvement for the Russian banks can be indicated. To, initially, get an insight into

the cultural and situational background of those two very different countries, a country

comparison according to the PESTEL framework shall be conducted at the beginning of the

comparative study.

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3. Germany and Russia – a country profile

3.1. Germany

3.1.1. PESTLE-Analysis

Regarding politics, Germany is a Federal Republic with its capital being Berlin. In September

2017 the last German elections took place (cf. Slotta & Dr. Miß, 2017). Since February 2018

finally a new government is sworn in. Angela Merkel continues being the chancellor of

Germany supported by a relatively young group of ministers formed from the Grand Coalition

(cf. Abdi-Herrle & Pilath, 2018). Although the coalition was able to form after long-lasting

debates, still a difficult period of office is about to come. This is mainly due to the dominance

of the far-right party AfD during the last elections and the herewith connected anti-immigrant

movement that is rising in Germany now. (cf. Ellyatt, 2018). Moreover, Germany’s traditionally

good relationship with Russia is also experiencing a deep crisis. Especially since Russia’s

conflict with Ukraine the two countries started to part one from each other. Russia’s strong

position in Syria even enforces this shift (cf. Fix, 2018). Despite all the political difficulties and

challenges Germany is facing in the present overall, it is still considered a politically free

country as well as it is maintaining the freedom of press (cf. Export Entreprises S.A., 2018).

Economically Germany is a social market economy (cf. Slotta & Dr. Miß, 2017) and the biggest

national economy within Europe. It is also considered to be the stabilising factor within the

European Union (cf. Bozoyan, 2018). Additionally, its GDP is continuously increasing, and its

economy is booming due to its overly positive public finances, low borrowing costs and

growing income. Furthermore, the unemployment rate in Germany keeps decreasing,

additionally strengthening the German economic situation (cf. Export Entreprises S.A., 2018).

Thereto, both, export from and imports to Germany are rising and strengthening the

international focus of the country (cf. Glunz & von Prittwitz, 2017). The local currency in

Germany is the Euro, which is issued and managed by the European Central Bank. It is one of

the most powerful currencies in the world, quoted against the US-Dollar (cf. Moore Stephens

Europe Ltd, 2017). The inflation is remaining at a constant rate between 1.5 and 2.0%. On the

down side, Germany also faces several challenges within its economic development. The most

recent one might be the refugee crisis that did not only lead to huge political discussions, but

also affected Germany’s economy and fiscal household widely. Another problem is the ageing

population in the country as well as a lack of researchers and engineers in certain spheres.

Finally, the German economic sector must make several transitions in the next couple of years

22

such as a surge in the use of sustainable energy, a decline of nuclear energy and the

modernisation of most of the coal plants (cf. Export Entreprises S.A., 2018). Therefore,

although the economy of Germany is one of the strongest economies in the world, it still must

face several problems and changes.

First guidelines to compare the socio-cultural environment of different countries is classically

given by the concept of Hofstede (cf. Hofstede, 2001) who identified four factors to classify a

society’s individual’s behaviour, namely power distance, individualism, masculinity and

uncertainty avoidance. Schwartz enhanced these four factors with the two more called long

term orientation and indulgence (cf. Schwartz S. , 1994, p. 85ff.). In Germany, it is striking that

especially the power distance and indulgence are relatively low when the long-term orientation

is distinctively high compared to all the other results. The outcomes of all the other fields attain

a middle position. Thus, Germans are depicted as a hard-working population longing for long-

time securities (cf. Hofstede Insights, 2017). According to the Human Development Index

(HDI), Germany belongs to the most developed countries overall ranked 4th just behind

Norway, Australia and Switzerland. This includes, that Germany is a pioneer in the sustainable

sphere. By implementing certain environmentally friendly policies, the German Federation is

trying to impact positively on their population when, for instance, creating new jobs. Overall

Germany sets very high sustainability development goals for the upcoming years outlining it as

a main achievement within its national agenda. Negatively remarked can be the inequality in

employment. Thus, for example, there is an unwillingness to employ individuals with a mental

health issue like depression (cf. Jahan, 2016). Despite the positively low reported

unemployment rate in Germany, this also merely applies for the urban areas, whereas on the

countryside as well as in parts of the former East the unemployment rate is still far over the

average. Germany in general faces one of the highest inequality rates within the European

Union (cf. Export Entreprises S.A., 2018). All in all, it can be said that Germany is highly

developed. Germany’s living quality is above the average and the government especially tries

to engage in sustainable initiatives. However, Germany still faces several problems connected

to inequality.

Furthermore, Germany is, also, one of the most developed countries within the technological

sphere. It invests some of the greatest sums globally in Research and Development (R&D) and,

thus, turns into a global leader in innovations and technological development. It is also very

involved in new technologies. Germany is the second biggest exporter of High-Tech products

worldwide (cf. Bozoyan, 2018). Especially Germany’s manufacturing industry is very strong

23

for such a highly developed country and profiting from the ongoing digitalisation (cf. Glunz &

von Prittwitz, 2017). To keep its top position in the field of innovation and set further focusses

therein Germany’s High-Tech Strategy 2020 was established. It includes subsidies for certain

sectors and financial aid for small and middle enterprises (SME). Moreover, it puts a special

emphasis on the transition to sustainable energy which is one of Germany’s core aims overall

(cf. Witteveen, 2014). Germany is also home to a great amount of FinTechs with its number

still growing. In 2017 almost 300 FinTech businesses were active in Germany. When in many

countries the young FinTech industries rather depict a danger for traditional financial

institutions, German banks have accepted the challenge and set up numerous collaborations

with them. This results in a win-win-situation for both parties. On the one hand, banks offer

financial aid for the FinTechs, when in return the young businesses provide them with

innovative solutions and their business ideas. Further growth of the German FinTech ecosystem

is expected (cf. Ernst & Young Global Limited, 2017). Therefore, Germany can definitely be

described as a world leader within the technological segment.

Same as in the technological sphere also environmentally Germany turns out to be a leader in

innovation. As already mentioned, Germany plays a key role in the European transformation to

provide sustainable energy, the so-called ‘Energiewende’. The main aims of this agenda include

the reduction of greenhouse emissions, the usage of renewable sources of energy, increased

energy efficiency as well as an enlarged investment in R&D to reach all those aims successfully.

Hereby, Germany turned into the leading country within the European clean energy movement

(cf. Witteveen, 2014). Moreover, Germany is also trying to revive and restructure its land and

areas that have been damaged by the industry or the people themselves. In the long run,

Germany has elaborated an agenda how to protect and recover its natural environment by 2030

as well as possibly enlarge it (cf. German Advisory Council on the Environment (SRU), 2016).

Although Germany is one of the European leaders in environmental and climate policies, there

is still a lot more to work on. Thus, the German industry still has many capacities on where

energy could be saved and the rental law in Germany is implied to focus more on retrofit renting

and renovating initiatives to generate benefits for householders and society. Furthermore,

Germany is facing some challenges when managing national and EU policies (cf. OECD

Programme of Environmental Performance Reviews, 2012). All in all, Germany can still be

counted to the top countries when talking about environmental protection.

Legally everything in Germany is regulated by the constitution, also known as the Basic Law

(Grundgesetz) (cf. Janssen & Guensel, 2016). In the economic sphere there is relatively little

24

guidance for business offered by the German government. Still, a lot of restrictions and

preventions do exist in order to provide equal treatment and a fair competition. Some business

spheres such as doctors, tax advisors as well as banks and financial institutions are under extra

supervision. Hence, the German government wants to prevent money-laundering and terrorism

financing as well as control the risk management system and financial position of the entity,

especially the major banks are under special supervision by the ECB in Germany (cf. Slotta &

Dr. Miß, 2017). Apart from this Germany has a great variety of laws regarding the protection

of intellectual property, data protection, the control of mergers, the control of exports and

imports and extensive laws on consumer protection (cf. Janssen & Guensel, 2016). Shortly, one

can say, that Germany is trying to live up to the expectation of a free market economy with as

little regulations as possible when still trying to avoid unfair competition and having restrictions

to protect all parties involved.

3.1.2. The Banking Sector in Germany

After this little overview on Germany in general the following chapter shall focus on the

banking sector in Germany explicitly. The main bank in the country is the Central Bank that is

taking care of the price stability and solvency of all the other banks. Those other banks are the

commercial banks who mainly offer financial services such as loans, deposits, etc. to either

private households or businesses. Commercials banks can be further classified into public-

sector banks, credit unions and privately-owned banks (cf. Janssen & Guensel, 2016). This so-

called three-pillar structure is often said to uphold the stability of the German banking system.

Critics, however, say it is also responsible for the relatively low profitability of German banks

compared to others (cf. Oliver Wyman , 2018). It is typical for German banks to offer a wide

variety of financial services instead of specialising in only one segment (cf. Janssen & Guensel,

2016). Especially larger banks engage in a variety of business activities when still leaving

enough niches for the smaller entities to enter the business. Sometimes even cooperation is set

up (cf. Slotta & Dr. Miß, 2017). The German private banks are supervised by a Federal

Financial Supervisory Authority. Moreover, insurance system covering deposits of up to

100.000 euro per client of a bank exists in Germany (cf. Janssen & Guensel, 2016).

There are almost no rules for exchange controls within Germany. Moreover, as a part of the

European currency Union, most transaction within the Eurozone are treated almost like

domestic transaction. The only exception are statistical purposes. Further, the German capital

market is one of the most powerful and flourishing ones in the world. Its bond market is the

third-largest, when its stock market is on the fourth place worldwide. There are nine German

25

stock exchanges. All of them, however, are connected to the one in Frankfurt as it is the biggest

one in the country. Moreover, Frankfurt is considered the financial centre of Germany and the

place where all the main financial institutions that control and regulate the financial

environment in the country are located. If companies want to be listed on a German stock

market, they need to do so via a so-called listing partner. Hence almost every major bank in

Germany is recognised as a listing partner, basically all firms owning publicly traded shares

can be listed on the German stock exchange and engage in trade there. Trade can be conducted

on both, open and regulated markets, when the latter one requires a certain level of transparency

and self-control. Open markets, however, are only open to entities that are able to issue shares

worth at least 250.000 euro or more or institutions that are already quoted on another stock

exchange (cf. Slotta & Dr. Miß, 2017).

In present times there are more than 1.600 banks and 27.000 branches located in Germany. As

the times are changing fast, and not only the three-pillar model, but the complete banking

environment is evolving, experts expect the number of banks to radically drop down to 300 or

even less. This doesn’t automatically mean, that a substantial number of yet existing banks is

going to go bankrupt, but rather implies a substantial number of possible future mergers and

acquisitions. Those might be an answer to the changing business environment of banks they

must adapt to. Therefore, the changing of the corporate structure of a bank might offer new

opportunities for innovations or cultural adaption (cf. Oliver Wyman , 2018). One of the

upcoming developments within the banking sphere might be the additional measures to provide

a good CSR within the financial institutions. Although, Germany has been a pioneer in green

and ethical banking for decades, this mainly applies to smaller financial entities that especially

specialise in this sphere. Therefore, particularly large German banks should continue to develop

their corporate cultures towards social responsibility and learn from their smaller business

partners. Hereby, collaborations or even mergers might be helpful in the future (cf. Prof. Dr.

Schäfer, 2017).

Short, the German banking sphere including the banks as well as capital markets to date is one

of the biggest and most stable ones due to their three-pillar system. At the same time, this system

is also causing German banks being not as profitable as others. Additionally, new challenges

arise, and the environment is constantly changing within the banking sector and so must its

actors. Those changes include steps towards a sustainable and responsible corporate culture,

but also a change in the whole banking system and other innovations. For the ongoing paper,

however, the CSR developments are of the greatest importance. Hereby, the emphasis lies on

26

the fact, that although Germany is being considered a leader in many aspects of CSR there is

still a lot of room for development specially for many large banks. This might be the common

ground that the German and Russian banks have. To first off get a first impression of the

Russian Federation as a state, a similar country analysis for Russia shall be conducted in the

following.

3.2. Russia

3.2.1. PESTLE-Analysis

Politically Russia has faced some major political changes since 1991, when the Soviet Union

has collapsed. Now Russia is considered being a semi-presidential republic with Vladimir Putin

at its head. The overall political situation is said to be stable. Russia’s foreign politics are

relatively open and its relations with a majority of countries is visible due to the vast number

of embassies operating in the country. However, Russia cannot be said to be a politically free

country as Mr. Putin has been in power for far too long by now (cf. Niklyae, Samuseva, &

Bayar, 2013, p. 24f.). In May 2018 he was re-elected for the fourth time. Thus, at the end of his

term he will have been Russia’s longest-serving political leader since Stalin. Although the

Russian constitution only allows a president to be in office for two terms in a row, Putin avoided

this issue by changing offices with his prime minister Medvedev for one period (cf. Neuman,

2018). Moreover, corruption in the Russian Federation is very high (cf. Transparency

International 2017, 2017). In addition, the tax policies in the country used to be very oppressive

and the legislative framework comparably weak, which is why the political environment in

Russia was quite risky for foreign investors and businessmen despite the relatively stable

political situation. Therefore, the Russian government put in a huge effort to introduce and re-

examine several new rules to make the Russian economic landscape more predictable and stable

(cf. Deloitte Consulting LLC, 2017).

After a harsh time of decline, the Russian economy has returned to growth again. In 2016 it was

even recorded to be amongst the fastest growing markets by wealth (GDP by PPP) in the world

(cf. Capgemini, 2017). A great amount of Russian business is highly connected to the sale of

natural resources, especially oil and gas. Due to its rising prices as well as demand in oil, Russia

was able to record a slight rise in its GDP in 2017. Still the dynamics cannot be described as

predictable which is why many say the Russian economic environment is unstable. Especially

the banking sector is still changing strongly (cf. World Bank Group, 2017). Although the total

assets related to the GDP as well as the bank’s capital related to assets significantly increased

in the past years, the banking sector recorded a loss in 2015 (cf. PricewaterhouseCoopers,

27

2015). Moreover, two major private Russian banks bailed out in 2017 which lowered the

performance of the Russian banking system. Therefore, a new banking resolution which enables

the Central Bank of Russia to financially aid banks in trouble, was introduced. While this law

is supposed to stabilise the banking sector, also concerns had been risen to make it less

innovative and to lower the competition in the long term. In addition, the gradually sinking

unemployment rate and a low inflation led to growing real wages. Despite all the poverty rate

in Russia is still profound and specially the uneven distribution of the economically secure

population as well as level of unemployment by region remains a problem (cf. World Bank

Group, 2017). Additionally, the currency exchange rates of the Russian rouble to USD and the

Euro have recently suffered a lot of fluctuations as they’re not regulated by Russian Law but

solely driven by the economic and political situation in the country (cf.

PricewaterhouseCoopers, 2015). Taking all of this together Russia’s economic landscape still

must be considered as slightly risky due to its unpredictability. However, one must

acknowledge that Russia’s economy is on the rise right now and it is possible that the country

might keep this direction.

Same as for Germany, the cultural dimensions determined by Hofstede can be applied also to

Russia. Hereby, Russia has a much higher power distance compared to Germany. This fact is

even enforced by the centralisation of the massive country as 80% of the financial potential of

Russia lies in Moscow. The Russian culture is also described as a rather individualistic and

feminine one by Hofstede. Uncertainty avoidance is especially important for Russians.

Moreover, the populations of both countries try to plan their futures on a long-term basis,

particularly Russia scores very high in this section. Russia, also, reaches a very low level in

indulgence (cf. Hofstede Insights, 2018). According to the HDI, Russia is still ranked amongst

the very highly human developed countries with a positive tendency over the years. Hereby it’s

especially visible that a clear majority of the population of the Russian Federation enjoys

comparably profound schooling. Also, the gross national product (GNI) is quite solid, as well

as the employment rate. In contrast, the life expectancy of an individual in the Russian

Federation is comparably low, mainly for men. Additionally, the pensions for the older people

are very low, which is why a lot of people aged 65 or older are dependent on relatives or any

other kind of support. Moreover, Russia faces a high inequality within the employment of

women and disabled people. Another problem the Russian Federation struggles with is the

stagnation or even decrease of the population. By 2030 the Russian population is expected to

diminish by 4.8 million (cf. Jahan, 2016). Moreover, many Russians lost their trust in the

banking system due the past years crisis, which is why a majority of the population rather spends

28

their income than saving it. (cf. Export Entreprises SA, 2018). Thus, socially Russia is

obviously struggling with some issues, still there are many opportunities for employers due to

a well-educated working population.

Technologically just about a couple of years back Russia merely made the first few steps

towards an easier way of providing electricity (cf. International Bank for Reconstruction and

Development/The World Bank, 2013, p. 90 ff.), nowadays it is considered as one of the top

regions within Europe for FinTech Investments (cf. Skan, Dickerson, & Masood, 2015). In

2016 the Russian Federation reported the first cosmonaut paying his taxes online via an app

from space. Since the Russian authorities have been making a huge effort to modernise the

banking and payment methods all over the country (cf. International Bank for Reconstruction

and Development/The World Bank, 2013, p. 108ff. ). Although Russians are still lacking behind

compared to Western countries they’re quickly catching up in terms of digitalisation, especially

in the banking sector (cf. Keeley & Pavlov-Rusinov, 2016). Hereby it is important to know that

almost three quarters of the Russian populations own an internet access, also Russia has more

smartphone users than other countries with a comparable number of inhabitants (cf. Jahan,

2016, p. 246). About two third of the adult population are connected to a bank right now and

most of them own at least one bank card, if not more. Even though many people in the Russian

Federation still prefer to use cash the number of card transactions has more than tripled in the

past couple of years. Both, bank branches and the ATM infrastructure, are very developed

though decreasing due to the expansion of possibilities in the internet. And although internet

and mobile banking are on the rise in Russia, the Fintech sphere is still in its infancy. There are

very few Fintech start-ups in Russia and only one major online bank operating. Moreover,

Modern Technologies such as Blockchain systems or API are just about to gain a foothold in

the country (cf. Keeley & Pavlov-Rusinov, 2016). Therefore, the rising digitalisation of the

population combined with the yet underdeveloped Fintech Industry and banking system in

Russia offers many new opportunities to foreign investors.

Tying in with the technological sphere a continuous digitalisation also has a positive impact on

the environment and can reduce the ecological footprint within a country. As internet and

smartphones services don’t require any transportation and, thus, can reduce emissions.

Additionally, the demand in paper is also decreased. In general, the green movement in Russia

can still be described as underdeveloped. Not only the mentality of the people but also little

knowledge and qualifications in this sphere lead to very few projects in this segment. However,

as everywhere in the world the interest in being eco-friendly is growing rapidly. Due to their

29

huge amount of resources Russia has specially issued several programmes on sustainable

energies. Moreover, green construction building was encouraged with the Olympic city in Sochi

being one of the most famous examples (cf. Mundy, Agapova, Churikov, & Guseynova, 2014).

Still, the Russian Federation needs to excel in protecting their environment, as they’re

confronted with a lot of environmental issues that affect the population’s health and destroy the

environment. Those problems are mainly bad water quality, air pollution as well as radiation

and chemical contamination which are still leftovers from the Communist times (cf. Jablokov,

Charap, & Tysiachniouk, 2010). All in all, the green development in Russia is most likely

becoming a to-be trend and offers many possibilities also for future banks. Especially the

current environmental problems need an urgent solution like, for instance, effective CSR.

Legally the Russian Constitution and Civil Code provide basic guidelines within the economic

sphere. It includes a Russian law to protect the competition on the Russian market which is

mainly applied for events outside of Russia or to foreign citizens affecting the competition on

the Russian market. Since 2013 the Russian Federation is trying to battle corruption by law.

There are also rules against money-laundering. The consumer protection laws in Russia,

however, are formulated very weakly and merely require written information in Russian. Same

applies for third-party regulations. Still Russia is trying to live up to international standards in

the past years and implement more and more international laws such as the Basel III rules and

reporting standards according to IFRS into their national legislation. Moreover, the Russian

Federation also is a member of the World Trade Organisation (cf. Baker & McKenzie - CIS,

Limited, 2016). Thus, one can say that Russia is gradually trying to move towards

internationalisation and a fairer market economy, although there is still a long way to go.

3.2.2. The Banking Sector in Russia

Within the Russian banking system, the main body is the Central Bank of Russia (CBR). It is

responsible for the monetary policy in Russia, thus issuing the local currency, overseeing it as

well as supervising foreign currencies circulating in Russia. Moreover, the CBR is also the main

regulator in the Russian financial environment in general. Hence, it is looking after all financial

institution based or interacting on the Russian market. The Russian market itself has made some

progress in recent times. Thus, deposits, loans as well as the quality in loans has grown (cf.

PricewaterhouseCoopers, 2017). Still the Russian banking sector is going through major

changes at the moment as the CBR is about to implement some structural reforms. Those mainly

centre around centralising the supervisory process, creating a more profound financial recovery

mechanism as well as establishing a two-tier system within the Russian banking sector (cf.

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Gorchakov & Alvarez, 2017). The first topic above all led to a lot of banks losing their licenses

to further engage into banking and, thus, going bankrupt. The second point is to huge extent a

result of the financial crisis. Especially the third issue, though, has raised many controversial

voices within the Russian Federation.

It implies that from the 1st of January 2019 every Russian bank need to either hold a universal

or basic license to officially be acknowledged as a bank. In order to get a universal license

banks, need to own capital amounting to at least 300 billion roubles. For financial institution

attaining such a license nothing will change in the way they are able to operate. Any bank who

cannot afford to get a universal license will receive a basic one. Therefore merely 300 million

roubles are required. Those banks, however, have to expect certain restrictions within the

operational fields such as not being able to conduct business outside of Russia. For those

institutions who even cannot fulfil the requirements for a basic license can get a license for

financial institutions that are not banks. Then only 90 million roubles of capital are needed. Out

of the 520 banks operating in Russia right now, more than half are expected to receive a

universal license. The rest will be registered according to a basic one. The probability is very

little that organisations would voluntarily choose to be not be registered as a bank. According

to the preceding description it will be possible to categorise banks within the Russian Federation

according to their capital (cf. Buylov, 2018). Critics, however, fear that it will lead to even more

financial institutions losing their license completely and going bankrupt than already did in the

past years. Some voices even think that the number of banks able to obtain a universal license

will just reach up to around 100 only. Moreover, the isolation of the basic institutions that are

forming the system and, at the same time, the strengthening of the business sphere amongst the

banks are seen in a critical light. As the biggest banks in Russia, the ones that will most probably

be able to attain a universal license, tend to be state-owned, critics further expect the

competition in the banking sector to sink as well as the quality of their services to diminish (cf.

Koroleva, 2018). This also leads to another problem the Russian banking sector is confronted

with.

On the Russian banking market operate Russian state-owned banks, Russian private banks as

well as foreign private banks. At the moment 70% of the active Russian banks belong to the

state. The tendency is still growing. This does not only entail a loss of competition as mentioned

earlier, but also the fact that both, the regulator and the majority of the credit institutions, are

incorporated by the same player in banking sphere – the state. Therefore, one can clearly see

that a balance within the banking sector is missing. This is even enforced by the population

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itself, whose distrust towards privately-owned banks is continuously growing (cf. Flyachov,

2018). Additionally, the fact that most of the banks are state-owned and controlled by a state

institution, the Central Bank of Russia, make the banking sphere not only easy to regulate, but

also to manipulate. Hence, many predict hard times for the Russian banking sector in the

upcoming years (cf. RIA Novosti, 2018).

Apart from bank regulation and supervision, the CBR is also responsible for the financial

markets in the country including the stock exchange. The biggest stock market in Russia can be

found in Moscow (cf. Moore Stephens International Ltd, 2017). Since a merger in 2011 it is

called the Moscow Exchange (MOEX) and is open for Russian and international investors

equally. All Russian companies are permitted to issue and trade shares and bonds there (cf.

PricewaterhouseCoopers, 2017). Additionally, it is also the biggest stock exchange in Eastern

Europe in general (cf. Moore Stephens International Ltd, 2017). In the recent past the Russian

stock exchange was struggling with losses due to imposed sanctions. The unpredictability of

the situation makes it hard to handle it. Still the Russian government is trying to analyse the

situation and stabilise the market (cf. Chapman & Carroll, 2018).

In general, one can say that the Russian banking sector is undergoing a lot of major changes at

the moment. Especially the CBR is imposing and changing many regulations to avoid further

financial crises in the future and at the same time provide a solid and functioning banking

system. When critical voices claim that the state in form of the CBR is taking too much control

over the whole financial environment, only the upcoming times will be able to tell how

successful the newly introduced features will really turn out to be. All in all, the banking

environment including the Russian stock market are in a state of upheaval now with an

uncertain imminent path.

3.3. Summary and Country Comparison – what are the differences, and what the common

grounds of Germany and Russia?

Politically both countries just went through a recent election process and re-elected their former

country leaders. Germany still is considered to be a much more democratic country compared

to Russia. Especially Putin’s long-term reign as well as the oppression of the opposition classify

Russia as politically unfree. Additionally, the historically good relations between Germany and

Russia are suffering heavily since the conflicts in Russia and in Syria.

Germany’s economy is one of the strongest in the world and, hence, can overtake the Russian

one. But also, the Russian business environment is starting to recover right now after some

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harsh times. The unemployment rates in both countries are sinking, although the one and the

other country have troubles with inequalities in employment. Especially Russia offers a lot of

potential offering many well-educated professionals. Germany, on the contrary, struggles with

obsolescence and the lack of specialists.

According to Hofstede especially the power distance is much higher in Russia, which indicates

a much more traditionalistic attitude while working. On the other hand, both countries long to

avoid uncertainty, whereby Russia here reaches an extraordinarily high value. Both nations are

almost equally oriented towards the distant future. Those two components incline that German

as well as Russian individuals are ready to work hard for a secure future in the long run.

Furthermore, both states are rated as developed countries by the HDI, when Germany again is

ranked a lot higher compared to Russia.

Technologically Germany is one of the most developed countries overall and several steps

ahead of Russia. While the Germans put huge sums into the further development of this sphere,

the Russian Federation is just in the beginning, quickly moving forward though. If Russia can

keep up the pace of its technological progress, it will be possible to catch up with Germany in

the nearest future.

The ecological situation in both countries is comparable. Germany is counted towards the world

leaders in the environmentally-friendly sphere, whereas Russia has just started to get interested

in the green movement. This doesn’t mean that Germany cannot develop anymore further, but

mainly that here Russia has a long way to go to catch up with their German paragon.

The German legal system is very profound and established. The only rules applying to the

economic market are certain guidelines and restrictions to provide a good competition and a

fair business environment. In comparison, Russia has been trying to live up to the international

legal standards and was, hence, changing many regulations in the past years. Thus, now laws

to provide an equal competition for all players on the Russian market are existing, but

adjustments are still being implemented.

This also applies to the Russian banking sector, that is undergoing a lot of major revisions,

especially since the fiscal crisis a couple of years back. Although also Germany needs to follow

the spirit of time and adapt of the current developments of the environment, the banking sector

in Germany is described as one of the biggest and most stable ones in Europe. Therefore,

Germany is able to implement new innovations constantly and continuously improve their

services in this field. Russia, on the contrary, is just settling in for a definitive legal and

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classification system which are the result of the fiscal struggles of the past which also heavily

impacted on many Russian banks.

Taking all of this together, often Germany is a couple of steps ahead of the Russian Federation,

especially regarding the fields of technology, environmental protection and law. Most of them

are notably important for implementing a good CSR within a corporate culture. At the same

time Russia is in a state of recovery now and quickly catching up with the Western powers. The

importance and maybe even urgency for the implementation of a good CSR structure in Russia

is additionally stressed by many problems that are partly even hindering its quick development.

Politically, economically as well as socially the situation in Russia by now is strengthened

enough to progress towards an eco-friendly future. And due to the many radical changes going

on in the country at the moment, it would be also a good time to excel in the Russian CSR

development. How this aim could possibly be achieved shall be illustrated by a further

evaluation of the German and the Russian banking sector including their most successful banks

in the following.

4. The Greatest German Banks

4.1. Deutsche Bank

4.1.1. General Information

The DB was founded in Berlin back in 1870 when the rather traditional banking sector had to

start moving with time and reform itself. Trying to break the hegemony of the dominating

British banks at that time the DB aimed at focussing at foreign businesses. Moreover, the DB

was the first bank to accept deposits in cash. In the beginning it was expanding rapidly and

already in 1914 was cited to be the biggest bank of the world. After the First World War,

however, the DB had lost a lot of their foreign assets and could only remain on top of the

German banking industry due to a merger with the Disconto-Gesellschaft. During the Third

Reich and Hitler’s reign the DB has reached its lowest point, when starting to support the Nazi

government. Nowadays, there is a foundation to critically remember and review the bank’s past

actions as a part of its moral and ethical responsibility. After 1945 the DB was broken up into

ten different banks and about to go bankrupt. The future of the DB just began to brighten up

again at the end of the 1950s when they changed into retail banking, gained many new

customers and international trade began to strengthen up again. Since the end of the 1980s the

DB started expanding while engaging in numerous acquisition. Today it is one of the biggest

banks of the world within the retail segment maintaining its global presence (cf. Deutsche Bank

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History). It has more than 2.400 branches globally, including more than 1.500 in Germany only

as well as several offices in Russia (cf. Deutsche Bank AG, 2018).

The DB is trying to be a bank that is closer to their clients offering them more transparency and

safety on all levels. The institution’s main financial aims are making their services simpler,

when at the same time more efficient, creating an environment which is less risky, staying better

capitalised than other banks as well as maintaining discipline throughout the whole execution

process of their goals. Another main target within the DB’s agenda is CSR. They stress that

aside of financial facts many of their clients want to have a positive impact on the society and

the environment, which is why CSR is becoming a decisive element when choosing a bank.

The DB states that it is only happy to support this trend (cf. (Deutsche Bank AG, 2018) and

stress their intention by their motto: “We are here to enable economic growth and societal

progress through our positive impact.” (Deutsche Bank AG, 2018).

Within their CSR goals, the DB specially focuses on their business as well as their impact on

the society in general, the people and the environment. As mentioned in the methodology

description above some core concepts the DB is following are their aim to satisfy all their

stakeholders as well as being active in the economic, environmental and social sphere. Some

key words connected to the CSR strategy of the DB are ‘sustainable business’ and ‘business

operations’ as well as ‘corporate culture’ and ‘corporate citizenship’ (cf. Deutsche Bank AG,

2018). Tying in with the CSR concept is the corporate governance within the company.

Therefore, the DB has created a special structure which tries to transport and implement the

values of the bank in all spheres. Part of this structure is also a special Code of Ethics which

advises employees on how to react in certain situations. This code is closely related to CSR (cf.

Deutsche Bank AG, 2019). To get further in-depth insights of the CSR strategy, the analysis of

the CSR report shall be provided further down.

Generally speaking, the DB is Germany’s biggest private bank at the moment. Although

struggling a little after a harsh time following the financial crisis and a change in management

in April 2018, the DB is now again developing in a positive direction. After the second quartal

in 2018 it is reported that it is making higher profits than specialists predicted (cf. Reuters,

2018). This, however, still doesn’t mean that the DB returned to its former top form. When in

2007 the DB’s accumulated profits summed up to more than 6 billion euro, now they are not

even close. Additionally, modern and digitalised online platforms offering financial services

are overtaking the traditional form of banks. This is one of the main problems that also the DB

has to struggle with especially since the value of the payment platform Wirecard overtook them.

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Even though the new head of the DB has big plans to restructure the bank and bring it back to

its old strength this might turn out harder than it seems in the beginning (cf. Damm, 2018). One

main factor depressing the profitability of the DB might especially be its comparably low

interest margin and the discount for trade for other European banks. The advantage of the DB

might be that it is historically perceived as less risky and, thus, trustworthy (cf. International

Monetary Fund, 2017). Whether the DB can keep up with digital online payment services and

rise to its former strength again, is unclear yet. How the DB deal with CSR, which is another

current topic growing more and more important in today’s banking landscape, shall be analysed

according to their CSR report in the following.

4.1.2. The CSR Report

ECONOMIC ENVIRONMENTAL SOCIAL

CLIENTS 20,00% 11,67% 6,67% MANAGERS 8,33% - - EMPLOYEES 18,33% 5,00% 3,33% LOCAL COMMUNITIES - 1,67% - RIVALS - - - SUPPLIERS - - 1,67% ACTIVIST GROUPS - - - SOCIETY - 1,67% 8,33% OTHERS 3,33% 1,66% 8,33%

Table 1: Summary of the CSR measures of the DB (cf. Deutsche Bank Aktiengesellschaft,

2017)

The 2016 CSR report of the DB is simply entitled “Unternehmerische Verantwortung Bericht

2016” (in English “entrepreneurial responsibility report 2016”). It contains 97 pages and 32.116

words. The whole report is held in the DB’s typical blue colour and divided into several parts

visible on the table of contents on the second page. When the first chapter is supposed to give

the reader some information on the bank, in general, it is not enumerated like the other chapters

of the reports. Thus, the CSR statement consists of this part and additional four chapters named

‘behaviour’, ‘products and services’, ‘employees and the society’ and ‘numbers and facts’.

The general chapter starts with a letter of the chairman John Cryan giving the reader a little

introduction to the DB shortly describing its recent developments, the challenges it has mastered

and where it’s going to. In the following the company is described in further detail. Hereby

aside of the general information on the DB and its aims and business model, also a brief

introduction to the CSR concept of the bank is given. The DB names different topics related to

CSR and their strategy when trying to prioritise them. In a priority analysis where the bank tries

to compare the importance of different CSR-topics according to their stakeholder as well as

36

according to their own estimation, it becomes clear that most of their aims lie within the

economic sphere. The most relevant themes for both parties, therefore, are the avoidance of

financial criminality and an appropriate risk culture, data protection and information security

as well as customer satisfaction. Finally, the DB states that they want to enhance the dialogue

with all their stakeholders and why they consider it essential. In the end, there is a list of

international organisations they cooperate with and standards they follow. Thereby the GRI are

included.

Throughout the whole report all the actions of the DB are backed up with several GRI standards.

All mentions are following the 4th version of the standards. Hereby the most frequently

mentioned paragraphs are the G4-33 (cf. Deutsche Bank Aktiengesellschaft, 2017), which

refers to a company seeking external assurance for the given report (cf. Global Reporting

Initiative, 2013, p. 36), the G4-DMA (cf. Deutsche Bank Aktiengesellschaft, 2017), which

refers to the importance of a given aspect and the way the company manages it (cf. Global

Reporting Initiative, 2013, p. 46), and the G4-57 (cf. Deutsche Bank Aktiengesellschaft, 2017),

which refer to all the mechanisms to act in compliance with the law and ethics of a country (cf.

Global Reporting Initiative, 2013, p. 42). Most of the mentioned paragraphs come from the

general section of general disclosures when only less than half of the guidelines mentioned

cover specific topics. Merely according to the GRI mentions the economic aspect is the most

popular when the environmental gets the least attention.

Looking at the various CSR measures the DB is initiating, throughout the report roughly 60

different efforts can be identified. Half of them can be assigned to the economic sphere where

the bank is active. The least addressed section, again, is the environmental one. Solely a little

more than one fifth of all measures are connected to this sphere. In the stakeholder-related

dimension more than one third of the initiatives aims at the clients of the DB, which are taken

all together their owners, borrowers and depositors. The second biggest stakeholder target group

are the normal employees excluding managers and other leading positions with over a quarter

of all measures aiming at them. Other groups addressed are the managers and leading positions,

local communities, the suppliers, the society and other actors such as the state or international

organisations like the UN. When the clients are addressed in every content related sphere the

most, the employees get mentioned mostly in the economic sphere. The social sphere addresses

the society and other actors even more than the clients of the DB (cf. Deutsche Bank

Aktiengesellschaft, 2017).

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When already in the first section of the report some keywords were raised, most of them are

picked up in the economic sphere addressing the clients. This is the biggest class determined

during the analysis of the report. This section often addresses several programmes for safety

and protection. Examples here fore might be the CISO (Chief information security office) which

is a programme to prevent cyber-attacks (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 28).

However, also the customers itself should be checked deeply. Only a customer that is ethically

responsible and lawful can be accepted as a client of the DB. Thus, customers who for example

do not accept the human rights cannot collaborate with the bank. This programme is entitled

‘Know your Customer’ (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 24f.). The second big

topic in the economic-customer-sphere is customer satisfaction. As the DB is already trying to

appear as a deeply safe bank due to all their checking, this additionally also rises their

reputation. Additionally, they developed a special programme to aim at specific customer

groups and, consequently, rise their satisfaction. This includes a special system to detect and

eliminate customer complaints and an expansion of their services, for example in the digital

sector to satisfy the young customers (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 39ff.).

Another aspect also often required by customer is transparent reporting. When the DB is trying

to improve their reporting mechanisms also internally (cf. Deutsche Bank Aktiengesellschaft,

2017, p. 49), they also developed a certain system to track their CSR reporting called ‘Global

Impact Tracking (GIT)’. GIT is also aiming at increasing the trust of the stakeholders (cf.

Deutsche Bank Aktiengesellschaft, 2017, p. 67). Finally, the DB also tries to engage their

clients in their Global Citizens programme, where there are trying to implement CSR in all

stages and in all possible dimensions (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 62).

The second biggest dimension mentioned in the CSR report of the DB is the economic-

employee-section. This part partly overlaps with the preceding passage as the Corporate

Citizenship Programme as well as the GIT is also aimed at the DB’s employees. However, the

DB is also offering a lot of schoolings to help their employees to further develop themselves

personally and professionally. Thus, there are schoolings on strengthening the employee’s self-

responsibility (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 21), on how to fight financial

criminality and money laundering as well as against bribery, corruption and fraud (cf. Deutsche

Bank Aktiengesellschaft, 2017, p. 23ff.) and trainings on the estimation of reputational risk as

quick as possible (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 32). Further education is also

offered for employees in the digital sphere of banking (cf. Deutsche Bank Aktiengesellschaft,

2017, p. 60). Participating in those courses proposed by the DB can be highly beneficial for the

employees. With their newly acquired skills it is possible to climb up the career ladder and

38

reach higher managerial positions. This is also the reason why the DB is primarily trying to

occupy free job position internally, before publishing a job advertisement (cf. Deutsche Bank

Aktiengesellschaft, 2017, p. 59). The DB is also aiming at developing a strong corporate culture

and identification towards the company embodied by every single employee. Furthermore,

those schoolings are not only aiming at the development of certain skills but also to protect the

employees from illegal business (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 26).

The third biggest area in the DB’s CSR strategy is the one referring to the environment and

their clients. One of the branches that is especially worth mentioning is the one related to

investments. The DB doesn’t want to take upon new projects that are in any way harming the

environment. More precisely this mainly means that the DB is not investing in any projects

related to coal mining to prevent climate change (cf. Deutsche Bank Aktiengesellschaft, 2017,

p. 34). Moreover, the DB carried out huge investments into companies that are fulfilling their

environmental, social and governance criteria (cf. Deutsche Bank Aktiengesellschaft, 2017, p.

46) as well as those that use renewable energies (cf. Deutsche Bank Aktiengesellschaft, 2017,

p. 55). Furthermore, they are issuing also Green Bonds for young entrepreneurs and companies

who try to develop their business in a sphere connected to environmental protection (cf.

Deutsche Bank Aktiengesellschaft, 2017, p. 56). In order to only invest and support project and

clients that are not harmful for the environment there are special examination guidelines in the

DB for new clients in certain spheres. Those specially affect fields such as the chemical

industry, agriculture, the energy sector, the oil and gas industry and all areas linked strongly to

the environment. Thus, the DB wants to ensure to sponsor and support environmentally friendly

clients and ventures (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 33).

Other mentionable sections are the economic-managers section and the one that affects the

social sphere and society and others. Starting with the managers in the economic sphere, here

again, the DB is trying to help their managers and other employees in leading positions to

further develop themselves and their skills (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 60).

Therefore, there is constant training on the ongoing digitalisation to improve the understanding

of the managerial department of the technical processes and, thus, be able to work more

efficiently (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 43). Apart from that the DB also

developed a Leadership Capability Model which aims at the advancement of leadership

qualities within the management. Also, a special committee against money laundering has been

set up (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 21).

39

Looking at the social section it is especially powerful when aiming at the society or other actors

that are not directly connected with the bank’s business. Nevertheless, there are a lot of

initiatives in these sections that must be named. A great variety of programmes aiming at

different social groups are offered by the DB. This includes the ‘Born to Be’ programme, which

aims at children and adolescents to receive an equal education and discover their talents, the

support of disabled kids, woman in third world countries and other people in need and the ‘Plus

You’ programme which encourages their employees to support the deprived social strata by

voluntary work or donations (cf. Deutsche Bank Aktiengesellschaft, 2017, p. 71ff.). The bank

is also trying to support the LGBT community by various events and campaigns (cf. Deutsche

Bank Aktiengesellschaft, 2017, p. 61). Furthermore, the DB engages in diverse art, sports and

music projects and supports young talents in the given spheres (cf. Deutsche Bank

Aktiengesellschaft, 2017, p. 80). Apart from financial support the bank also engages in various

cooperation with other organisation to underline their ideals and further develop their CSR

strategy. One example there is the Thun-Group that are active in the protection of human right

in the financial sphere (cf.Deutsche Bank Aktiengesellschaft, 2017).

The last part of the DB’s CSR report ‘Numbers and facts’ is merely there to back all the

information already given and support them by financial and non-financial numbers. Thus, there

the reader can get to know how much money the DB spent roughly on certain projects as well

as the percentage of women in leading positions, number of offices and ATMs, etc. In addition,

the bank’s emissions and other usages such as paper or trash are calculated and explained.

Finally, the DB states that their report was revised by KPMG and finished the whole report with

a letter by their auditors and an imprint including their contact details and some further notices.

All in all, the DB’s financial report is worked out in great detail and names a lot of different

initiatives in all three thematic spheres and addressing a great scope of their stakeholders. As a

financial institution, the DB is, of course, more active in the economic sphere than in the other

ones. However, they also set up environmental and social projects. Stakeholder-wise the DB is

addressing their clients and employees above all other groups. As those are the actors they deal

with directly, it is consequently also the people who they have the greatest influence on. The

DB also engages in some social projects addressing certain social groupings. Stakeholders that

are not or hardly taken into account by the DB are local communities, rivals, suppliers and

groups of activists. Still, it can be said that the DB covers a wide range of various topics and

addresses.

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4.2. Commerzbank

4.2.1. General Information

The precursor of today’s CB was found in 1870 named ‘Commerz- and Discontobank’ in

Hamburg. With time the business started to move to Berlin and around 1900 it started to focus

on this area. It became one of the leading banks within the country. In 1920 a merger with the

Mitteldeutsche-Privat Bank from Magdeburg was conducted, followed by several others with

banks from Frankfurt am Main and Düsseldorf. Finally, in 1940, the bank turned into the

‘Commerzbank Aktiengesellschaft’ which is the name they kept until the present times. After

the war, the CB lost 45% of its business and was split again into the three original banks. Just

in 1958, the CB has reunited again. It moved its headquarters to Düsseldorf and started to focus

on retail banking where it set up a global network. Since 1990 the main offices of the CB were

moved to Frankfurt am Main where there are until now.

Nowadays the CB is one of the leading banking institutions not exclusively in Germany but all

over the world. They own offices in more than 50 countries around the globe and are active not

only in retail banking any more but also expanded their expertise to Small Business and

Corporate banking, which they even start to specialise in. In total, the CB serves around 18

million private and small business clients and additionally 60.000 corporate ones. They are

constantly working on and improving their services to fulfil their client’s requirements and meet

their needs better. In general, the CB wants to be perceived as a bank that is always at its client’s

side and acts in a fair and competent manner. The CB is, also, expanding their technical and

online products to live up to the current trends and the ongoing digitalisation. Additionally,

Comdirect in Germany and mBank in Poland are subsidiaries of the CB and at the same time

two of the most contemporary online banks in the world. Moreover, the CB is responsible for

around 30 % of Germany’s foreign trade.

Also, the topic CSR plays a big role in the CB’s overall strategy. On their website, they entitle

chapters on this topic with the words ‘responsibility’ and ‘compliance’. Here the CB tries to

make clear that for them CSR is not only a term describing a business that is conducted

according to the law, but that they are trying to incorporate it into the corporate culture of the

company, thus into all spheres of the bank. Therefore, the CB has set up a Code of Conduct

which holds several essential values for their sustainable strategy, named the ‘Comwerte’ in

german (engl. ‘Comvalues’). Those should offer an ethical guideline for all their employees. In

order to make their business transaction safer, the CB has created a degree programme in

cooperation with the Frankfurt School of Finance & Management in 2008. It should focus on

41

the education of compliance officers who are specialised in money laundering, fraud, financing

of terrorist activities and other dangerous and illegal affairs. Furthermore, the CB has created a

so-called Whistleblowing System to also fight financial crime. This mechanism mainly deals

with customer, employees and third parties who can report their suspicion there to a

professional institution. Additionally, the CB is also aiming at greater transparency for all their

clients. All in all, it is possible to say that at first glance the CB’s CSR strategy focusses on the

economic sphere which is directly connected with them. They especially want to fight unfair

and illegal businesses in the financial sphere. Other key issues that are obviously essential for

the CB are their global position and the creation of a trustful environment for their customers

(cf. Commerzbank AG, 2018). To take it a step further the bank is also trying to live up to a

good Corporate Governance according to the German Corporate Governance Code. It is an

important part of their self-image and for their self-regulation. They additionally developed a

voluntary code of conduct which ties in with many CSR principles as explained later. Annually

they report to the Corporate Governance Commission on whether they have reached their aims

this year or not (cf. Commerzbank AG, 2019).

Despite their high aims and ambition, the CB has been struggling a lot since the financial crisis

in 2008. Just several days before the Lehman Brothers were declared bankrupt the CB decided

to buy the once even more valuable Dresdner Bank. In the end, the state had to invest in the CB

so that they could finalise their deal. Now the state is one of the most important sponsors of the

CB, unlike the DB, who never needed the support of the state (cf. Braunberger, 2018). The CB

continues to struggle with the consequences of the financial crisis. The tentative peak of their

problems was when they had to leave the DAX in September 2018. The DAX being the most

important stock market index in Germany lists the country’s 30 most valuable companies. The

CB lost their place within the DAX to the financial online platform Wirecard after being listed

for more than 30 years. Experts consider this being the evidence for the CB losing at digitalised

banking (cf. Pfaffenbach & Reuters, 2018). The constantly recurring problems of the CB, as

well as the only slightly more positive situation of the DB, leads to rumours of the two banks

planning a fusion. Although neither the head of any of those banks nor other financial

institutions are denying it, such a major change will not happen within the next 1.5 years’ time

(cf. Manager Magazin, 2018). Some critics are still supporting this idea strongly stating that

two weak financial institutions are worse than one strong bank (cf. Pfaffenbach & Reuters,

2018).

42

Although being the second biggest bank in Germany, the CB was living through several

problems since 2008. Even though their future plans sound promising and their aims are set

high, the numbers and results tell a different story so far. Still, the CB is going through a lot of

major changes and continues to work on their further development towards a positive direction.

One of the major points on their agenda is their CSR strategy and responsibility within the

company. The way how their CSR concept is designed will be elaborated in further detail in the

following.

4.2.2. The CSR Report

ECONOMIC ENVIRONMENTAL SOCIAL

CLIENTS 17,86% 5,36% 3,57% MANAGERS - 3,57% 1,79% EMPLOYEES 7,14% 5,36% 17,86% LOCAL COMMUNITIES - - - RIVALS - - - SUPPLIERS - 1,79% 5,36% ACTIVIST GROUPS - - - SOCIETY - 12,50% 5,36% OTHERS - - 12,50%

Table 2: Summary of the CSR of the CB (cf. Commerzbank AG, 2017)

The CSR report from 2016 is labelled ‚GRI report of Commerzbank’ and consists out of 45

pages and 19.522, which is significantly less than the CSR report of the DB had to offer. Also,

the layout is comparably simple, there are almost no colours, and everything is held in black

and white. Unlike the DB’s report, the one of the CB does not feature any diagrams, graphics

or other pictures. There is also no table of contents to be found. Instead, the whole report is

designed in tabular form. Every new measure or strategic step of the CB’s CSR strategy gets a

new line. The line is divided into four parts where on the very left side the correct article within

the GRI framework is named and on the second column on the left side the initiative is

described. Those two sections form the main part of the report. On the right side there is also a

column for each – the corresponding articles from the UN Global Compact and the Sustainable

Development Goals of the UN. The latter two parts, however, are only partly filled out. The

main reference point here definitely seems to be the GRI framework. At the end of each page

there is a reference to be found to look at the CB’s website. The report itself was published in

July 2017 even though it refers to the year 2016.

The whole report starts with a very short introduction on the CSR report of the CB. There the

bank states that they set up this report according to the G4 guidelines of the GRI and that the

report is also addressed at the UN. The base for the report was a materiality analysis conducted

43

in 2015 and it was examined and approved by GRI. Looking further it becomes clear that the

table with all the GRI measures is divided into the two bigger chapters ‘General Standard

Disclosures’ starting from page 1 and ‘Specific Standard Disclosures’ from page 17 on. Those

are even further divided into more sub-chapters. The first, so to say general chapter resembles

a questionnaire very much, where on the left side a GRI standard is mentioned alike a question

which is answered then in the next section. Thus, the table starts with the GRI G4-1 and a

corresponding letter of the chairman and senior decision-maker Martin Zielke on the CB. He

states that some of the main aims of the bank are the fight against global warming and the

reduction of the organisation’s footprint as well as a focus on sustainable energies. Here it

already becomes visible that the CB puts a huge emphasis on the environmental sphere. Further

down the CB itself is described in more detail. The description includes the general aims and

targets of the CB, its clients, the market served, employees, financial figures and other

information and data. It aims to give the reader a more in-depth insight into the corporation

with a focus on sustainable issues. The chapter on general disclosures amongst other

information also defines the areas of action of the CB concerning the sustainability management

(cf. Commerzbank AG, 2017). Those are labelled “sustainable corporate governance, market

& customers and environment & society” (Commerzbank AG, 2017). They are similar to the

three areas the DB had distinguished in their report. Moreover, the CB also defines certain

sustainability issues, materiality aspects and their stakeholder groups. They, as well, put a huge

emphasis to enhance the dialogue with all their stakeholders and, therefore, try to do researches

to meet their expectations and satisfy them. Finally, the CB continues with some more technical

information such as the reporting period or the contact point of the bank, as well as the

governance structure and tactics to solve problems to finally finish with the CB’s values,

principles, standards and other norms of behaviour. There they state where they draw their basic

guidelines from and list the most important ones.

Before continuing with the actual CSR initiatives let’s have a short look at the GRI standards

mentioned in the report. As the CB’s report is structured in a table according to the GRI

standards, no principle apart from the G4-DMA is mentioned twice. In return, one guideline

can stand for several initiatives directed at various stakeholder groups. The G4-DMA standard

as already mentioned above refers to the approach of the management towards every aspect and

the importance within the whole report. This is why it offers an introduction to every new

thematic field. In general, 97 different standards are addressed in the report, whereby 37 % of

them already refer to the General Disclosures. Surprisingly the strongest section within the

specific disclosures is the social one. A little more than 40% of all standards refer to social

44

initiatives, whereas the economic GRI standard only amounts up to roughly 4%. This is very

little, especially considering that for the DB this was the strongest sphere.

When looking at the single CSR initiatives similar tendencies than within the GRI standards

can be detected. In total 56 different CSR initiatives could have been detected within the CB’s

sustainability report, which only slightly less than the DB had. The strongest section again is

the social section, as 46% of all the actions of the CB are addressed to this area what mirrors

the results from the analysis of the GRI standards only. The second sphere is the environmental

one with 29% of all initiatives. The economic sphere takes up only one-quarter of the CB’s

CSR strategy and is the weakest content-related area. This differs a lot from the strategy of the

DB that put their focus in the economic sphere. Looking at the stakeholder dimension, the target

groups of the CB and the DB are more alike. The party addressed the most by the CB are the

employees of the bank. 30% of all measures within the CB’s strategy are aimed at them. They

are followed by the clients with 27%, the society with 18% and other parties with 13%. All in

all, the four biggest stakeholder groups of the CB can even be described as congruent to the

DB’s target groups, although the order differs.

Although the economic sphere seemed to play a little role in the CSR strategy of the CB overall,

one of the most addressed sections in their report are the economic measures aiming at the

bank’s clients (cf. Commerzbank AG, 2017). Here a lot of guidelines are addressed at the

financial security of the clients. Thus, the CB is paying a lot of attention to a safe online platform

with a safe authentication and monitoring process (cf. Commerzbank AG, 2017, p. 40).

Moreover, the bank is trying to control all transactions in general in order to prevent money

laundering, corruption and other financial crimes. The CB wants their clients and their money

to feel safe (cf. Commerzbank AG, 2017, p. 35ff.). Therefore, one of the other top issues at the

organisation is transparent reporting and transparency in all spheres (cf. Commerzbank AG,

2017, p. 39). Furthermore, the CB wants to meet their client’s expectation and raise their

satisfaction which is why they introduced several programmes to their business structures. One

of them is called ClientCompass. It is a computer programme made to find the perfect product,

service or offer for each customer within comparably little time (cf. Commerzbank AG, 2017,

p. 38). Another example, how the CB is trying to enlarge customer satisfaction is the Net

Promoter Score (NPS). It is a special system to measure customer satisfaction including the

detection of all customer complaints. In case of any criticism the CB is trying to fix the problem

as fast as possible (cf. Commerzbank AG, 2017, p. 38f.). A final issue that has to be mentioned

in this section as it contributes to enlarge the CB’s customer base when at the same time

45

satisfying their customers is the big presence of the bank. There is a great number of branches

and ATMs all over Germany and abroad. This is how it is possible for the CB to reach customers

everywhere, even in areas that are not very densely populated (cf. Commerzbank AG, 2017, p.

36).

Another sphere that is just as important in the CB’s GRI report as the area mentioned above is

the section concerning social measures directed at the employees. Hereby especially the CB’s

diversity management must be mentioned. The bank puts a huge emphasis on employing people

with disabilities, of different nationalities, and so forth (cf. Commerzbank AG, 2017, p. 26).

Moreover, employees should feel comfortable at their place of work, which is why the CB is

offering special training and incentives for their staff to create a good working environment.

Thereto also contributes the constant dialogue with their employees to understand their feelings

and concerns (cf. Commerzbank AG, 2017, p. 26). In case of bullying or discrimination at the

work place, the CB introduced an Employee Assistance Programme to support their staff (cf.

Commerzbank AG, 2017, p. 34). Occupational health and safety, in general, are very important

for the company. Thus, they are trying to reduce the stress level at work to support the mental

and physical health conditions of the people working at the CB (cf. Commerzbank AG, 2017,

p. 27). Further, the CB tries to support their employees in finding the right work-life-balance.

Hence, the bank wants to encourage their staff members to pursue their careers as well as have

a fulfilled family life, there is company-sponsored childcare, support for people who take care

of relatives and many other privileges to combine family life with a career (cf. Commerzbank

AG, 2017, p. 31). The CB is also trying to please all their employees to maintain many long-

time employees. One of the corporate aims of the organisation is it to have an employee turnover

as little as possible (cf. Commerzbank AG, 2017, p. 27f.). The CB’s employees are also

encouraged to take part in various voluntary projects. Thus, the company, for example, is

supporting refugees in Germany with finding work. In case their employees want to receive any

special qualifications in order to support the refugees or want to take part in other social events

such as the Malteser Social Day, they are excused from work (cf. Commerzbank AG, 2017, p.

18ff.).

Another one of the very important areas within the CB’s CSR strategy is the environmental-

society section. As already mentioned in the very beginning of the report, environmental

protection plays an important role within the CSR strategy of the bank. Therefore, they have

many measures in order to decrease their ecological footprint (cf. Commerzbank AG, 2017, p.

18). To do so the bank is monitoring the energy used in their offices and other buildings

46

belonging to the company. The CB is trying to reduce their energy consumption as well as using

only renewable energy as a source for electricity and heating (cf. Commerzbank AG, 2017, p.

21). Furthermore, the CB has initiatives to reduce the consumption of paper and the toners used

for the printers (cf. Commerzbank AG, 2017, p. 21). Aside from electricity, heating and printing

utensils, the CB is also paying attention to the water used in their buildings. The bank is

exclusively using drinking water in their offices (cf. Commerzbank AG, 2017, p. 22). As a part

of the ecological footprint also the reduction of the carbon footprint is one of the core aims of

the CB. This is the reason why the institution is also looking after their greenhouse gasses and

CO2-emissions, for example during their business travels (cf. Commerzbank AG, 2017, p. 23).

Finally, producing waste is mostly unavoidable, especially for big corporations. Nevertheless,

the CB is trying to minimise their waste made as well as reuse or recycle it as far as possible

(cf. Commerzbank AG, 2017, p. 24). All those steps are ways in which the CB is trying to

contribute to a healthy and sustainable society by looking after the environment.

The next section that is equally important to the ongoing one for the CB is the social area

directed at all the other, little parties connected to the bank. Hereby, mostly many charitable

and voluntary projects and events are meant. The CB even has a special foundation centre,

which supports several programs helping various sections within the populations. Those target

groups such as young artists, refugees, students, sportsmen and others. Often the aim is to

connect people across races, ages, physical abilities and so forth (cf. Commerzbank AG, 2017,

p. 17ff.). Moreover, the CB is emphasizing to be a politically neutral institution not giving any

donations to any political parties, politicians or other political institutions. Every organisation

the CB is supporting financially or in any other way has to comply with the bank’s ethical

standards (cf. Commerzbank AG, 2017, p. 38).

The final sphere which is worth mentioning due to its importance within the CB’s sustainability

report is the one referring to the employees and the economic area. In the focus here is mainly

the personal and professional self-development of their employees. This is not only beneficial

for the bank clerks but also for the company itself. Hence, when their workers feel comfortable

in their working environment as they have a lot of opportunities to grow they will stay employed

on a long-term basis, which is one of the goals of the CB. Thus, they offer many talent

management programmes and other pieces of training to support the development of their staff

as well as internships for graduates who are wishing to work at the CB (cf. Commerzbank AG,

2017, p. 26ff.). In order to find the right programme for their employees the CB also tries to

monitor their performance and give them a regular feedback on their work done. The dialogue

47

with their clerks plays an important role for the CB and forms the basis for all further steps in

the self-development process. In some cases, even certain assessments or performance

evaluations are conducted to better estimate an employee’s skills and abilities. In this way the

strengths and weaknesses of everyone can be detected and worked on (cf. Commerzbank AG,

2017, p. 30).

In the end of their 2016 sustainability report the CB decides to give the reader some more

operational numbers and facts. Thus, the final information contains the sizes of all the three

spheres by financial volume as well as the amount of money spent on the social and

environmental section, whereby the expenses in the latter one are higher during the reporting

year. The CB closes their report with some information on their internal and external audit and

asset management especially related to social and environmental issues.

In general, the 2016 CSR report of the CB covers a lot of different topics and is addressed to

many different stakeholders. Unlike the DB the CB has a strong social focus within its

sustainability strategy which it tries to support by various initiatives. However, also the

environmental and economic area are taken into consideration and addressed within their report.

Looking at the targeted stakeholder groups the CB and DB resemble each other a lot more.

Also, for the CB the most important stakeholders are the employees, the clients, followed by

the society and others. Stakeholders not addressed at all in their report are the local

communities, their rivals and groups of activists. Still the sustainability report covers many

target groups and topics widely.

4.3. The European Central Bank

4.3.1. General Information

The ECB is not only a bank but an official executive body of the European Union and the central

bank for its 19 member states, Germany being one of the strongest. It was the institution that

introduced the Euro, is therefore mainly responsible for the price stability within the Euro zone

and, thus, maintains the purchasing power of the currency. The roots of the ECB go back to

June 1988, when the planning of an Economic and Monetary Union within Europe started.

Jacques Delors, who at that time was in office as the president of the European Commission,

was given the task to work out a plan to realise such an economic collaboration. Delors together

with the presidents of several national European banks as well as other specialists in this sphere

set up a plan on how to accomplish an Economic and Monetary Union in three steps. The first

stage started in July 1990 and was supposed to enhance the cooperation between the single

48

central banks of the member nations. This included the freedom to carry out capital transactions

all across the member countries as well as a better economic convergence. Furthermore, the

ECU (European Currency Unit), which was a forerunner of the Euro, was widely introduced.

The second phase started in January 1994. Then the European Monetary Institute was founded,

the central bank credit was forbidden, and better coordination of the monetary policies was

initiated. The economic convergence was tried to be developed. Also, the national central banks

had to become independent in order to later introduce the ECB. This was also started in the

second stage. The last and third step started in January 1999. Then, finally, the euro was

introduced together with a fixed conversion rate. The European System of Central Banks started

to function according to one single monetary policy and the Stability and Growth Pact came

into being. Since then the European Union is constantly enlarged as more and more states are

joining it. This also means that the duties of the ECB are continually growing. Since 2014 the

ECB is full of responsible in being the supervisor of all national banks in all of the member

states. They all conjoined a common supervisory mechanism (cf. European Central Bank,

2018).

Now the ECB is located in Frankfurt am Main in Germany and is one of the central executive

units of the EU. Its current president is Mario Draghi and it has more than 2.500 employees

coming from all over Europe (cf. European Central Bank, 2018). All the main tasks and goals

are regulated in a special contract. Most articles refer to countries using the euro as their main

currency, as initially all member states of the EU were supposed to do so. The main task of the

ECB is it to maintain the price stability connected to the Euro. Just when this is guaranteed the

ECB can take part in the economic policy within the EU. Thus, the ECB is responsible for the

financial policy referring to the euro, the foreign exchange trade, the monetary reserves as well

as a good functioning of the whole payment system. Additionally, the ECB is also in charge of

releasing new money, statics on and supervision of the Euro zone. Moreover, the ECB is the

organ trying to ensure trouble-free cooperation between the single member states (cf. European

Central Bank, 2018).

The financial crisis in 2008 was something also the ECB had to fight with. This was the time

when Draghi, the head of the bank, so to say added another task to the ECB’s duties. He said

to do anything that it takes to save the euro and, thus, lowered the interest rates to keep the

inflation stable. While some support that, other criticise the ECB that has bowed to political

interests. They view this move as a step away from the bank’s independence (cf. Pope, 2018).

When now the economic situation in Europe is recovering, the ECB still decided to maintain

49

the low interest rates at least until 2019 as well as continue to further purchase bonds. In this

way, the purchasing power in the European markets can be stimulated and are brought back to

its former strength (cf. Weisbach, 2018). Still, critics argue, that due to the low interest rates

the ECB has weakened itself too much. They try to push the bank to a faster increase of the

interest rates as they consider the European market to not be risky anymore. The ECB, however,

points to the various income levels and economic strengths of the different member states of

the EU and states that it needs to consider all EU countries (cf. Fairless, 2018). All in all, the

situation seems to only have been stabilised halfway and the ECB is still struggling a little with

the consequences of the financial crisis, although being on the right track already.

Although CSR is being a current topic, at first it seems that for the ECB, at least the expression

is not a priority. Unlike the two German banks mentioned above, at first glance, the ECB is not

putting any special focus on CSR in their overall strategy, nor do they have a special section

dedicated to this topic on their website. Single elements that seem important to the ECB and

can be viewed as CSR are still underlined in their overall concept. Thus, the ECB pays great

attention to lawful behaviour, as the whole system is based on a lot of legal acts and contracts.

Apart from that, transparency for the ECB is a central tool to fight financial crime and

corruption. Besides, art and culture are essential to the ECB. Hereby one can see that still a lot

of elements of CSR can be found amongst the general concept and main goals of the ECB (cf.

European Central Bank, 2018). The ECB also tries to implement certain CSR principles in their

Corporate Governance. Thus, they have set up several guidelines to lead their employees and

higher officials through their jobs such as the Ethics framework of the ECB or the Code of

Conduct high-level ECB officials (cf. European Central Bank , 2019).Therefore, it can be

concluded that CSR is still a major topic for the institution. As every European bank, the ECB

has to release a report on their CSR concept. A more detailed analysis below shall determine

their overall CSR strategy of the bank.

50

4.3.2. The CSR Report

ECONOMIC ENVIRONMENTAL SOCIAL

CLIENTS 6,67% 6,66% - MANAGERS - 2,22% - EMPLOYEES 4,44% 17,78% 4,44% LOCAL COMMUNITIES - - - RIVALS - - - SUPPLIERS - 11,11% 2,22% ACTIVIST GROUPS - - - SOCIETY 4,44% 28,89% 6,67% OTHERS 2,22% 2,22% -

Table 3: Summary of the CSR measures of the ECB (cf. Green ECB, 2016)

When looking for a 2016 CSR or sustainability report of the ECB, it is possible to find a

document entitled “ECB Environmental Statement 2016”. It contains 52 pages as well as 15.925

words. Thus, although consisting out of more pages than the CB’s report, the environmental

report of the ECB has less word. This might be due to the generous layout that contains tables,

illustration aside of the normal text. The report is also colourful unlike the one of the CB. Back

to the title of the report, one can already estimate that the ECB is setting an environmental

focus, unlike the other two banks. The second page confirms this by saying the report is on all

environmental activities addressed to all stakeholder of the bank. The same is done by the third

page that contains a table of contents. There the reader can see that the report is divided into 9

different chapters starting with a foreword and the premises of the ECB. Next is the

Environmental management as well as other environmental aspects and impacts that according

to its subchapters and page numbers seem to be the biggest parts of the report. Finally, the

statement is finished off with information on the CO2-emissions, the environmental

performance of the ECB, an environmental self-assessment as well as the verifier’s declaration.

Like both of the ongoing banks the report starts with a letter of one of the bank’s chairmen,

Michael Diemer, who again is underlining the bank’s efforts in the environmental sphere. He

is talking about global warming and green investments as well as about the prices that the ECB

has received for its environmental sustainability. Next, the report describes the main objectives

of the bank such as price stability and the maintenance of the euro’s value. After this there is a

detailed description on how the bank is organised mentioning the Governing Council, the

Executive Board, and the General Council as the three main decision-making bodies. After a

detailed description of the buildings that are home to the ECB, the report starts to talk about the

environmental agenda.

51

When analysing the measures mentioned in the report, first off one needs to understand that the

ECB from the beginning one determined an environmental focus in their strategy. Thus, almost

two-thirds of all the measures are in this sphere. Consequently, only 18% of all the measures

can be appointed to the economic sphere and merely 13% to the social one. As the tasks and

goals of the ECB differ a lot from the ones of common banks, their addressed stakeholder

groups are also different. Thus 40% of all measures are directed to the society, and 27% to the

employees working at the ECB. The clients and the suppliers receive each 13% of all measures,

which is why they also belong to the ECB’s biggest target groups. In general, 45 different

initiatives were identified in the report (cf. Green ECB, 2016).

In general, there are very little references found in the report. There is no GRI standard

mentioned and merely a few ISO standards, namely the ISO 14001 and ISO 9001 as well as the

OHSAS 18001 can be found (cf. Green ECB, 2016, p. 31). When the ISO 14001 refers to the

international requirements to certify sustainable environmental management within a company

(cf. Umwelt Bundesamt, 2017) and the ISO 9001 to the quality management system of the

processes within the environmental sphere (cf. TÜV Süd, 2015). OHSAS 18001 is an

internationally acknowledged norm for health and safety in the workplace (cf. TÜV Süd, 2018).

Apart from those few standards, no other references were found in the report.

Talking about the specific stakeholder- and content-related spheres it also has to be mentioned

that the mostly addressed section lies mostly in the environmental part. To be more precise the

most initiatives are of environmental nature addressed to the society. Hereby a lot of measures

are introduced by the ECB to protect the environment within their daily business and, thus, not

harm the society in any way. Mainly the ECB is trying to reduce their energy consumption,

especially when heating and cooling their buildings as well as lighting them (cf. Green ECB,

2016, p. 19). As every company still needs electricity to conduct their everyday business, the

ECB is trying to use only energy from renewable sources if possible (cf. Green ECB, 2016, p.

23). They are trying to reduce their water consumption as well as their consumption of working

material such as paper, toners, and so forth. In general, the ECB is trying to restrict the use of

hazardous substances in construction, cleaning and all others spheres connected to the bank as

well as reducing their waste produced (cf. Green ECB, 2016, p. 19). For the latter guidelines to

recycling all different kind of waste do exist which is how the ECB is trying to minimise the

negative impact of waste on the environment (cf. Green ECB, 2016, p. 30ff.). This aim is also

pursued by the design of their head offices in Frankfurt am Main. The main building of the ECB

has been specially planned to contribute to a sustainable environment by using the minimal

52

amount of electricity and energy possible and, thus, leading to lower carbon emissions (cf.

Green ECB, 2016, p. 9f.). Also, CO2-emission have been a recurring topic which is why they

also have various measures introduced in order to keep it low (cf. Green ECB, 2016, p. 19).

Furthermore, the ECB renovated the area surrounding their main building and turned it into a

massive green park. The aim was to not only give back the society a place to regenerate but to

also support the biodiversity and create a place where the ecosystem can unfold itself freely (cf.

Green ECB, 2016, p. 32). Finally, the ECB is also trying to rise awareness for environmental

issues amongst the society. For example, producing a movie on environmental production and

distributing it, is only one of their measures initiated (cf. Green ECB, 2016, p. 15).

The second focus within their environmental agenda the ECB put on their employees. One big

issue hereby is business travel. The ECB tried to cut business travel as far as possible and use

online chats or other alternatives to avoid them. In this way, they are also trying to cut their

emissions from business trips. Sometimes such are not avoidable, though. In those cases, the

ECB is trying to support their employees using public transport or other eco-friendly options.

Same goes for their employee’s daily commuting to work. Here the bank offers a special Job

Ticket to enhance a number of their staff using public transport. Moreover, there is also a special

bus driving from the city centre where the other ECB’s offices are located to the main building.

The ECB is also trying to support initiatives such as bike sharing and install special station

around their buildings to charge electric cars (cf. Green ECB, 2016, p. 16ff.). Next, it is very

important to the ECB that all their employees fully understand the importance of environmental

issues. Therefore, there are many pieces of training, workshops and other initiatives to pass on

relevant information to the ECB’s staff and raise their awareness. If new stuff is joining the

ECB’s team, environmental protection is even a topic mentioned in their introductory sessions

to the bank (cf. Green ECB, 2016, p. 11ff.). The ECB is, also, trying to motivate their employees

to take part in environmental initiatives such as the car-free-day during the European mobility

week (cf. Green ECB, 2016, p. 16). Finally, there is also a Business Practise Handbook which

every employee is supposed to put into use. That book contains guidelines on the environmental

management system and how to act sustainably when working for the ECB (cf. Green ECB,

2016, p. 14).

In the third section the ECB pays a lot of attention to the environmental-suppliers sphere. It is

very important for the ECB that all their suppliers act in compliance with certain ISO standards

on environmental protection as well as with the ECB’s environmental policy (cf. Green ECB,

2016, p. 34). Therefore, the ECB has a special assessment that every supplier of the bank has

53

to undergo before a possible collaboration between both parties might be taken into

consideration. Just when the supplier passes this process and is considered to be

environmentally friendly the ECB engages in business with this party. This also refers to service

providers the bank is cooperating with such as catering companies, cleaning companies,

companies responsible for the technical maintenance and so forth (cf. Green ECB, 2016, p.

16ff.). The ECB is also trying to integrate environmentally friendly procedures into their

procurement processes in general and is working on a high-quality system (cf. Green ECB,

2016, p. 11).

The final environmental section worth to mention is the one referring to the clients. Unlike the

other two banks, this section received relatively little attention from the ECB. This, however,

might be connected to the completely different area of responsibility compared to the other

banks, as mentioned before. Hereby, one of the most important key words might be

‘transparency’. The ECB wants to promote transparent communication with all parties involved

in their business. Therefore, it tries to keep up the dialogue with all their stakeholders, also their

clients, in order to communicate on all their environmental aims and actions. Also connected to

this process is the constant monitoring and measurement of their environmental performance.

Only due to those processes it is possible to objectively track the ECB’s initiatives and

determine their real outcome. This is the base for all the communication and therefrom resulting

transparency (cf. Green ECB, 2016, p. 11ff.). Finally, the monitoring of all the environmental

measures initiated by the ECB also contributes to its success and ensures that they comply with

the law. Additionally, it minimises the environmental risk. Thus, it is possible for the ECB to

not only protect the environment, but at the same time increase their customer’s trust and

satisfaction in them (cf. Green ECB, 2016, p. 17).

The other customer-related section the ECB concentrates on is the economic one. Hereby the

ECB stresses the importance of the maintenance of good relationships with all their

stakeholders, especially other European and national authorities. The frame for those relations

is set by national and international law, which has to be acted upon (cf. Green ECB, 2016, p.

5). Same as for the environmental section also in the economic one transparency and

communication play a big role. Communication is not only an issue within the economic sphere

but in all parts of the bank’s business with others. Communication is also the main factor in

creating a transparent and trustful environment for cooperation with others (cf. Green ECB,

2016, p. 11). To create such a working environment the constant checking and monitoring of

54

all issues is essential. Therefore, also here a corresponding system exists (cf. Green ECB, 2016,

p. 17).

Lastly, the social section directed to the society has to be mentioned as the last section addressed

several times in the report. By constructing their headquarters in Frankfurt am Main the ECB

not only tried to build up a sustainable building to conduct their businesses but also paid

attention to the looks of their building. They wanted to create something special and succeeded

in erecting an architectural heritage for Europe, which is worth to have a look at (cf. Green

ECB, 2016, p. 9). The ECB also tried to preserve the area around their main building to a great

extent in order to maintain the historical site (cf. Green ECB, 2016, p. 32). Finally, the ECB is

also trying to take care of the health and safety of the society. As it is the only institution able

to issue to Euro, the ECB is also responsible for the way how it issued. Therefore, the ECB is

trying to ensure that the euro bank notes are made from only friendly materials such as paint

that is not harmful to anyone’s health. This is how they try to contribute to society’s wellbeing

and health (cf. Green ECB, 2016, p. 34).

At the end of the report, the reader can find another list with all the measures, their aim and

their current progress as well as a general tabular summary of the ECB’s future aims and goals

including an estimated time frame. There is also a comment of the European Court of Auditors

as well as the declaration of the environmental verifier who has checked the report. In the very

last page the ECB gives the reader some other organisational information such as their contact

persons, address and so forth (cf. Green ECB, 2016, p. 41ff.). The last paragraph of the

document is entitled “Do you need to print this document?” (Green ECB, 2016, p. 51) followed

by a short note explaining the negative impact of unnecessary printing (cf. Green ECB, 2016,

p. 51). This little comment rounds up the whole aims of the report nicely so to say in real life.

All in all, the environmental report of the ECB not exclusively but mainly focusses on the

environmental sphere as already expected already before the analysis. Although there is a slight

shift of the targeted stakeholder groups compared to the two ongoing banks, the ECB still covers

many different parties. And same as the DB and the CB the local communities, their rivals and

group of activists are three groups not addressed at all in their agenda. In general, the ECB has

less initiatives than the other two banks, this however might be connected to the different

responsibilities of the bank as well as to the specific focus set in this report.

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4.3.3. The Annual Report

ECONOMIC ENVIRONMENTAL SOCIAL

CLIENTS 63,33% - - MANAGERS 3,33% - - EMPLOYEES 16,67% - - LOCAL COMMUNITIES - - - RIVALS - - - SUPPLIERS - - - ACTIVIST GROUPS - - - SOCIETY - - 6,67% OTHERS 3,33% - 6,67%

Table 4: Summary of the CSR measures of the ECB (cf. European Central Bank, 2017)

Furthermore, as there is no official CSR-report issued by the ECB in accordance with the GRI

guidelines, there shall be another look taken at its annual report for 2016. This shall also draw

a comparison towards the environmental report and make clear whether the ECB really only

focuses on this one sphere mentioned above when it comes to CSR or whether they also take

measures in other spheres. Their annual report issues 221 pages and 82.994 words, which is

considerably longer than all the CSR reports yet discussed, however, this might be due to the

fact, that it is an annual report and covers more topics than the usual CSR reports. The annual

report starts with the table of contents which splits it into three major parts called ‘The euro

area economy, the ECB’s monetary policy and the European financial sector in 2016’, ‘Other

tasks and activities’ and ‘Annexes’. Those are further subdivided. The foreword is provided by

Mario Draghi, the ECB’s president. There he states that although 2016 was not an easy year,

the ECB achieved some successes due to their policy which especially is about the maintenance

of the low inflation, but also about other topics. They will try to keep up the current tendencies

and further improve their actions.

Analysing the ECB’s annual report another 30 CSR measures can be identified, none of them

being in the environmental sphere as these ones are already covered by the environmental

report. Thus, the annual report completes, so to be seen, the ongoing environmental report in

terms of CSR measures. A vast majority, which is more than 86%, lie in the economic sector,

as those are closely connected to the main tasks of the ECB. The remaining few measures can

be assigned to the social sector. The by far biggest stakeholder group addressed are the clients,

which, as mentioned before, partly overlap with the stakeholder group of the society in the case

of a central bank. The second largest party aimed at are the employees of the ECB with around

17% of all measures being dedicated to them. Followed by other minor stakeholder and society.

Keeping all of that in mind the ECB’s main areas of action when it comes to CSR are the

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economic sphere targeted towards the clients and employees and the social sector dealing with

the society and others. Those shall be evaluated in greater detail in the following (cf. European

Central Bank, 2017).

Starting with the biggest of all groups, the economic – client one, many initiatives here are

connected to the supervision of internal and external financial processes to provide a safer and

stable economic environment. Therefore, the ECB is closely working together with the national

authorities of its member states when at the same time directly supervising those. To improve

their supervision processes the ECB started to redefine their expectations they have towards

banks concerning their internal capital and liquidity adequacy. By stating those in a clearer form

than earlier the ECB is hoping to strengthen the banks in the euro-area and, thus, provide a more

secure banking sector within the monetary union. Moreover, there were also recommendation

issued on the bank’s dividend distribution policies having a similar aim (cf. European Central

Bank, 2017, p. 64ff.). To enable easier supervision as a key word again ‘transparency’ has to

be named. It is also one of the main issues the ECB is concerned with and tries to constantly

improve (cf. European Central Bank, 2017, p. 65). To do so it is very important to them to

publish all the documents of the bank. Public accessibility provides the base for transparent

communication (cf. European Central Bank, 2017, p. 110). Furthermore, the open and

transparent communication shall enhance the effectiveness of the guidelines introduced by the

central bank. This is why the bank puts huge efforts into continuously developing the means of

digital and outreach communication (cf. European Central Bank, 2017, p. 99f.). There are also

several other measures the ECB initiated in order to provide a safe banking environment. In this

manner, the ECB made their anti-fraud and anti-money laundering measures stricter. They

introduced a rule allowing internal investigation within EU institutions, bodies, and all other

organs to prevent any kind of illegal actions (cf. European Central Bank, 2017, p. 109). The

ECB also took certain steps to prevent putting counterfeit euro bills into circulation (cf.

European Central Bank, 2017, p. 80). Furthermore, the ECB is engaged in the strengthening of

the legal system affecting the banking sector. Thus, they introduced several laws to support

financial stability as well as the banking institutions themselves and the macroprudential tasks

the ECB is carrying out (cf. European Central Bank, 2017, p. 68ff.). Further steps to provide

stability within the banking sector were taken by diminishing all different kinds of risks that

could affect it. Therefore, the ECB defined the risk types and set up explicit measures to fight

them. For maximal efficiency, the central bank is measuring the risks first off before taking

measures against it. An example, therefore, might be providing capital buffers against cyclical

systemic risks. The ECB is also supporting the Systematic Risk Board (cf. European Central

57

Bank, 2017, p. 65ff.). Additionally, the ECB is trying to live up to their user’s needs by

increasing their flexibility and quickness of action. This shall be achieved, for instance, by the

development of microdata platforms. They shall turn into the primary source of statistics and

increase the quality and transparency of the published data. In this way it is possible to faster

receive information and better satisfy the uses (cf. European Central Bank, 2017, p. 82f.). Apart

from this, further measures were taken by the ECB including an ongoing development of digital

payment sources, the upholding of good international relationships (cf. European Central Bank,

2017, p. 95ff.) and other. Although this area is the most developed one, the ECB also set other

focal points.

Another sphere the ECB mentions in their annual report is the economic – employee one.

Hereby the bank puts a huge emphasis on its diversity management. It does not only try to

enhance gender equality in leading positions and others but is active in all fields possible to

create a diverse environment. Consequently, the ECB is supporting groups such as the rainbow

network (cf. European Central Bank, 2017, p. 113f.). Beyond that, the ECB is trying to offer

possibilities for personal and professional development for graduates and young professionals.

After completing the European banking supervision traineeship programme the former students

have the chance to be integrated into the cohort of the ECB. Only in the year 2016 33 graduates

from this programme were employed by the bank (cf. European Central Bank, 2017, p. 113).

The ECB also has a special ECB Ethics Framework, which is a code of conduct that members

of the institution have to stick to. It contains certain ethical rules and guiding principles to

ensure the highest degree of competence, efficiency, integrity and transparency within the

company. To be aware of those rules and know them all of the employees in the ECB have to

undergo compulsory ethical training (cf. European Central Bank, 2017, p. 109ff.).

The other dimension the ECB addresses in their annual report is the social sphere. Hereby some

few measures aiming at the society and other groupings can be found. Counted hereto can be

the initiative that the financial institution is organising a presentation for the public to teach

about the euro and its functions. Included in this presentation are also visits to the headquarters

and other buildings of the bank. This shall support communication and transparency on a

professional and personal level within the public (cf. European Central Bank, 2017, p. 99f.). In

general, it is very important to the ECB to rise their presence within society. To do so they did

strengthen up their digital appearance. To provide easier accessibility of all necessary

information connected to the ECB, their website was simplified. It was made easier to

understand and more appealing for the public. Hereto also contributed the reinforcement of

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their social media channels (cf. European Central Bank, 2017, p. 100). Other more specific

groups within the society the ECB is trying to aim at students and children. As it is important

for the ECB that EU citizens are well informed about the euro and its functions and obligations

from a young age on, they organise special events for children and school kids. There are tours

for the younger ones offering educational games, workshops and other activities connected to

the euro and the ECB itself. For school students, the ECB is organising a competition named

‘Generation €uro Student’s Award’. Although the format of the competition differs a little from

the previously described tour with games, the aim is the same. The students shall be thought on

the Euro and the ECB itself (cf. European Central Bank, 2017, p. 100).

Shortly said, the annual report of the ECB mainly reflects on the economic sphere the ECB is

engaging in. This is no surprise, as many of the CSR measures described above overlap with

some of the main functions of the bank. However, there are also measures that go beyond, in

the economic area as well as in the social one. Seeing the annual report as a kind of

replenishment to the environmental report of the ECB, one can say that the central bank covers

and is active in all dimensions of CSR.

4.4. Short summary on the CSR initiatives of the German banks

All three German banks representing the German banking sector issued some kind of CSR

reports, which contain many common traits as well as differences. A short summary and

comparison shall be done in the following to once more shortly review and compare the three

German CSR initiatives.

The DB CSR report offered 30 different CSR initiatives, which were mainly concentrated in

the economic sphere. However, the other spheres were also taken into account and covered

relatively broadly. They addressed many different stakeholders in their report. A special

emphasis was put on their clients and on their employees followed by the society in general,

the managers and other minor parties. Looking at both dimensions at the same time the most

distinctive areas are the economic-client one, the economic-employee one as well as the

environmental-client one. Those three sections received the greatest attention counted on the

numbers of initiatives that can be appointed thereto.

The CB’s CSR report offered 56 different initiatives emphasizing the social sphere the most,

with almost half of all measure being assigned to this section. Still, it has to be mentioned that

the environmental and economic ones were also well-addressed and not let out. The CB also

covered most of their stakeholder groups, their biggest addressees being their employees, their

59

clients and society. They also dedicated relatively many measures to their suppliers and other

smaller parties. The most important content-related and stakeholder sections for the CB were

the economic-client one and the social-employee one. Next were the environmental-society

section and the one referring to the social sphere and other minor parties.

Finally, the ECB’s CSR report had a slightly different focus than the two ongoing ones. The

ECB strongly emphasized their environmental aims and, thus, more than two-thirds of all their

initiatives are directed to this sphere. Therefore, one can say, that the other two spheres received

comparatively little attention in the report. Overall the ECB presented 45 measures in their

report and, therewith managed to cover most of their stakeholder groups. Their biggest target

groups were the society in general, their employees, their clients and their suppliers. Looking

at the content- and stakeholder dimension all at once, it is striking that all the most important

areas lie within the environmental sphere. The most addressed areas hereby are the one for the

society, the one for the employees and the one for the suppliers. The most important areas not

included into the environmental sphere are the economic-client one and the social-society-one.

As the ECB did not issue a CSR report according to the GRI guidelines, still shall be included

into this research due to the important role of the bank in the German banking environment,

additionally, the annual report was being analysed. This one did not mention any of the

environmental issues mentioned in the environmental report of the ECB, however clearly

showed that the ECB is also caring about the two other spheres, which were the social and the

economic one. It included a total of 30 initiatives connected to the CSR sphere, mostly from

the economic sphere which logically is often congruent to the basic tasks of the ECB. Hereby

the ECB is mainly focussing on its clients and employees.

Looking at both reports together to get an as complete as possible picture of the CSR initiatives

of the ECB one can clearly notice that the economic and environmental sphere are almost

equally important to the central bank regarding CSR initiatives, while the social sphere receives

only slightly less attention. Still, the social-society is one of the strongest represented sections

of the bank, together with the economic sphere aiming at the clients and the employees and the

environmental sphere targeting the society and the employees. All in all, the ECB is trying to

cover all spheres as good as possible.

Looking at all three banks together, one can clearly see that, while the stakeholder-dimension

clearly resembles one another, the content-related spheres are majorly different. All three banks

chose a different sphere to emphasize in their CSR-agenda. Still they try to pay attention to all

three content-related areas. All three banks also try to address most of their stakeholder groups.

60

While the targeted parties of the DB and CB are almost congruent, the ECB who in general has

a similar direction, puts a stronger emphasis on the society than the other two banks do.

Considering that it is a central bank, though, one has to admit that in that special case both

sections overlap partly. In general, all three banks addressed their clients, their employees and

the society. Stakeholders that were not payed attention to by neither of the banks in their CSR

reports were the local communities, the rivals as well as the groups of activists. Going more in

depth and looking at both dimensions at once, there are three areas that are standing out. The

most important one is the economic sphere addressed to the clients, as for all three banks, the

DB and the CB and the ECB, this section is a priority. The second sphere which needs to be

mentioned is the economic sphere directed to the employees as not only the ECB focuses on it,

but it is also very imported to the DB. The CB, however, only has four single initiatives in this

section. The latter section is followed closely by the environmental area addressed to the

society. Merely the CB has only one initiative dedicated to this section. The other two banks

also prioritise it.

After this analysis of the major German banks and their CSR strategies, their common grounds

as well as their distinct features, now the Russian banks shall be put in the focus. In the

following a detailed description of the biggest financial institution in Russia shall be conducted

and their CSR strategies shall be examined.

5. The Greatest Russian Banks

5.1. Sberbank

5.1.1. General Information

The largest Russian bank, Sberbank, roots back to 1841 when its historical precursors were

founded by a decree issued by Tsar Nicholas I. Those namely were the Russian Imperial

Savings Association, which initially were merely two little offices in Moscow and Saint

Petersburg. With time they began to expand over the country. During the times of the Soviet

Union, the association was changed into the State Labour Savings Bank system. The continued

their expansion and finally became into today’s SB, which is the biggest bank in Russia and

active in 20 countries all over the world (cf. Sberbank, 2017). The SB has more than 14.000

branches in Russia operating in 83 of the country’s regions. Moreover, the bank has set up an

international network consisting out of branches, subsidiaries and representative offices in

Germany, the UK, the US and many other countries. In Russia, the SB is one of the biggest

employers overall. The bank also has more than 150 million clients all over the world in retail

61

as well as in corporate banking. As the bank is constantly trying to develop itself and keep up

with the current trends, it is also considered to be very modern. Its digital banking services are

used by approximately 61 million people. SB is also the owner to an online bank called ‘SB

Business Online’, which a digital bank specially developed for entrepreneurs. This bank already

won an award and is used by 1.8 million companies. In general, the SB counts itself to the

digital pioneers of the country. When setting up their 2020 strategy digital leadership was one

of the main goals of the bank. The other two were raising the customer’s satisfaction by further

evolving their products and services as well as a better development for their employees by new

pieces of training and workshops (cf. Sberbank, 2017).

Still, the SB has been struggling a little bit in the past years. Especially since the sanctions

against Russia have been raised the bank lost a lot of their deposits denominated in foreign

currencies. Just in 2018, it is said that the bank has lost almost 10% of their retail deposits that

were designated in another currency than the rouble (cf.Baraulina, 2018). Moreover, some of

Russia’s subsidiaries abroad of Russia are having a hard time. Especially, the SB offices in

Ukraine must be mentioned here. Nevertheless, the SB is not considering to simply close down

their branches there but they are looking for a party to buy them. This depicts their economic

strength in a way (cf. TSN, 2018). This is also one reason why others claim that the bank’s

overall economic performance remained stable over the years. They even consider the SB a

good option if one wants to invest in the Russian economy. As the absolute majority of the SB’s

shares is owned by the Central Bank of Russia, the company can be considered state-owned

and, thus, has a direct link to the Russian economy. All in all, it is possible to say, that despite

some ups and downs mainly due to the sanctions imposed on Russia, the SB is a strong Russian

financial institution having a solid performance in the past years (cf. Razdolgin, 2018).

“We make people's lives better by helping them fulfil their aspirations and dreams.” (Sberbank,

2017) is what the bank defines as their mission. Although their motto sounds a little dreamy,

their goal is to create a trustful environment for their clients and an institution they can rely on.

It also implies that the bank tries to orientate itself on the needs and wishes of their clients. All

their products and services are directed towards their customers and developed according to

them. Vice versa this is also the way how the bank wants to become a global leader in the

banking market (cf. Sberbank, 2017). To achieve their goals the SB set up three main guidelines

within their corporate culture (cf. Sberbank, 2017). Those three rules are ‘I am a leader’, ‘We

are a team’ and ‘All for the customer’ (Sberbank, 2017). When the first principle relates to the

fact that the bank is proud and confident in what they do and that they take the responsibility

62

for all their actions, the second standards refers to good communication between the employees

and the constant readiness to help one another. The last guideline is about the highest goal of

the bank which is to satisfy the customer. Additionally, there are some other principles that

circle around those three named above (cf. Sberbank, 2017).

Moreover, there is also an ethical code of conduct that every employee has to follow without

regards to his or her position. This code is based on the mission and the values described before

and aims at the creation of fairness and honesty amongst all members involved in the business

processes of the bank. Furthermore, the SB is not only trying to act in compliance with national

and international law but also fight corruption and financial crimes. Here it already becomes

visible that CSR is amongst the priorities of the institution (cf. Sberbank, 2017). The SB states

having a major interest in keeping up a good CSR strategy based on their mission and on their

corporate culture. They are having their goals and strategy already emphasized on their website.

Also, it is worth mentioning that the SB issued a Corporate Governance Code which mirrors a

lot of CSR principles in their guidelines. This might show that the SB is trying to take such

issues as CSR serious (cf. Sberbank, 2015). A more detailed analysis of the bank shall be

conducted in the following according to the CSR report of the SB according to the GRI

guidelines.

5.1.2. The CSR Report

ECONOMIC ENVIRONMENTAL SOCIAL

CLIENTS 36,67% 1,11% 1,11% MANAGERS 3,33% - - EMPLOYEES 17,78% - 6,67% LOCAL COMMUNITIES - - - RIVALS - - - SUPPLIERS - - 1,11% ACTIVIST GROUPS - - - SOCIETY 3,33% 7,78% 6,67% OTHERS 11,11% - 3,33%

Table 5: Summary of the CSR measures of the SB (cf. Sberbank, 2016)

The 2016 CSR report of the SB that can be found on the official GRI website is labelled “Annual

Report 2016”. It contains 301 pages and 96.988 words. Therewith this is by far the biggest

report examined in this study so far. The report is very colourful mainly held in white and green,

which is the colour of the SB’s logo. Next, some information on the report is given. There the

company states that the report is a joint statement on the overall strategic and financial

performance of the bank set up according to the IFRS standards, the Russian law as well as the

GRI guidelines. As this CSR report is a conjoint document not only documenting the CSR

63

strategy of the company but also its overall work, this might explain the exceeding length of

the report. Nevertheless, in the following, a focus shall be exclusively on the CSR related

contents of the document. On the ensuing pages SB included a disclaimer and a two-pages long

table of contents. The company starts with a chapter giving a general overview of the firm

entitled ‘Portrait of the Group’, followed by the ‘Strategic Report’ and the ‘Performance

Overview’. The latter one later is split into four bigger subchapters named ‘clients’,

‘shareholders’, ‘employees’ and ‘Development of society and the state’. After those three

subchapters, there are, however, three other chapters called ‘Information Technology’,

‘Financial Results’ and ‘Risk Management’. At the end of the report, the Annexes are to be

found.

The whole report starts with general information on the SB group such as on its structure, other

numbers and key highlights. They also explain their Sustainable Business Model which is said

to be centred around the client. This is stressed throughout the report several times. Like in the

other reports there is a letter of a chairman to be found. The SB offers even two different letters

of two different people from the Supervisory and the Executive Board. Both comment on the

relatively stable position of the bank despite having a hard time the past couple of years and

about the positive numbers the SB is making. In the following, a market review can be found

as well as an explanation of the Russian economy and the banking sector there. Further, the

future goals of the bank are set including their development strategy, its implementation and

the bank’s future priorities are described. Next, there is a lot of information on the financial

status of the bank and its services such as loans, payments and so forth. There explicitly is also

a reference to look at the website as it is one of the best sources of information. After displaying

the financial results of the bank and an asset and liability analysis, the report finishes with the

annexes. Aside of proving the compliance with several corporate governance articles as well as

displaying the consolidated financial statement according to IFRS, a list of subsidiaries and

affiliates and other information, there is also a chapter on CSR to be found. There further details

on the company’s CSR approach can be found. Additionally, a table is enclosed which is listing

all GRI standards addressed within the report. Although not a single GRI reference is found

within the main part of the Annual Statement, there all of them are listed with a page number

linking them to the main text. The annexes finish with a Glossary and an enumeration of all

Abbreviations (cf. Sberbank, 2016).

As mentioned before the only connection to the GRI standards can be found within the annexes

at the end of the statement. There a three pages long list is included naming 54 different GRI

64

standards from the fourth GRI version. The standard mentioned the most is called G4-SPM.

Although the bank entitles this standard ‘Management approaches’, no further information this

principle can be found within the documents of GRI and their official website. Due to their title,

however, it shall be assumed that it is the equivalent to the G4-DMA, which was mentioned in

the ongoing reports. Almost two-thirds of the standards mentioned can be assigned to the

General Standard Disclosures when the rest refers to the Specific Standard Disclosures.

Thereby most of them address the social sphere when the least are connected to the

environmental one. Only two environmental principles are recognised in the table. There are

four economic ones (cf. Sberbank, 2016, p. 286ff.).

A similar trend can be detected when looking at the overall initiatives mentioned in the text.

All in all, 90 different CSR-related measures were detected in the text, which is by far more

than any of the German banks mentioned. 72% of those initiatives can be assigned to the

economic sphere, which is by far the absolute majority of all measures. Thus, it definitely can

be said that the SB has a highly economic focus in their CSR strategy. Merely 19% of the

measures are of social nature, and only 9% are environmental ones. Moreover, the SB group

also sets a clear emphasis looking at the stakeholder dimension. 41% of all CSR initiatives are

directed to the bank’s clients. This is actually not surprising, as SB repeats throughout the whole

report, how important their clients are to them, that all their strategy centre around their

customers and they are the group’s first priority. The second biggest group addressed are the

employees who receive almost a quarter of the SB’s attention. Moreover, also the society and

others are mentioned in the SB’s report several times. All other parties are barely mentioned.

Due to the huge emphasis the bank put on two certain categories, it is pretty obvious that the

economic-client-area is the one addressed the most. More than a third of all CSR-related

initiatives were identified only in this sphere (cf. Sberbank, 2016). Hereby client satisfaction

plays a major role. As already mentioned, many of the bank’s actions circle around the client.

Thereby the bank is very keen on satisfying all of their customers through special targeting of

specific groups. Thus, pensioners, for example, are aimed at by an easy system via which they

can receive their pensions from SB (cf. Sberbank, 2016, p. 55), when there was a special

campaign for young developers that granted them many advantages like an easy access to

mortgages (cf. Sberbank, 2016, p. 59). Younger customers are rather attracted by the technical

developments and services of the bank. Technological innovation is another point that is

essential to the SB and where they show a great engagement. Therefore, the SB is continuing

the advancement of their technical offer. Through online apps and other digital customer

65

channels they can not only reach the youth in the country but also people in remote parts of

Russia. Due to the immense size of the country, this is an actual issue that inhabitants in distant

regions within the Russian land have little possibility and access to financial services. The SB

is trying to overcome such problems (cf. Sberbank, 2016, p. 49f.). A lot of banking services can

already be conducted via the smartphone such as the Smart Payment service. The SB is

continuously working to provide other, new digital payment solutions (cf. Sberbank, 2016, p.

62). The bank tried even to turn a whole city into an area where the vast majority of all payments

can be made on ‘smart’, contactless terminals. This project was called ‘Smart City’ and is still

in progress. Furthermore, the group also tried to establish noncash payments in certain spheres

like for example for public transport (cf. Sberbank, 2016, p. 54). A focal point of their constant

work on the IT sphere of the SB is the simple improvement of the yet existing services. Thus,

the bank is trying to provide technologies which the customers can trust and rely on. They

should not only enhance the flexibility of all parties but also save costs and have high

perspectives to be successful in the future (cf. Sberbank, 2016, p. 12). Moreover, the bank is

trying to solve problems and make decisions faster rather than earlier, which is why they are

about to centralise all their IT systems (cf. Sberbank, 2016, p. 174f.). Apart from that, the

company is trying to adapt their online services insofar that they can understand the client better

and, thus, offer him or her the most relevant services for them straight away. To do so the SB

developed a platform that detects the purchasing habits as well as the lifestyle of the customers.

This measure shall also contribute to increasing customer satisfaction (cf. Sberbank, 2016, p.

171). To come back to the fact on how to please the customer, the SB also has taken other

measures apart from the technical and targeted ones. This is why the bank wants to have a good

reputation and be viewed as a bank that can be trusted in. To achieve this the group is trying on

being as transparent and responsible as possible. This enables their clients also to easier predict

their actions and, thus, build up a relationship to their bank based on trust. This is an extremely

important factor for a bank (cf. Sberbank, 2016, p. 11ff.). To the feeling of safety contributes

also the fact that the bank is trying to be honest. Therefore, SB is trying to fight crime online

and in real life. The bank takes action to prevent the use of fake IDs or bank notes as well as is

trying to avoid cyber criminality through their security systems. Furthermore, data

confidentiality is also important to the corporation and is guaranteed in every transaction

conducted via the bank (cf. Sberbank, 2016, p. 71f. ). Of course, not only the compliance to the

ethical principles of the bank play a role in their corporate governance system but also the legal

framework the bank is operating in. The bank is also paying a lot of attention to act in

compliance with the national and international law (cf. Sberbank, 2016, p. 83). Apart from

66

financial services the SB group also offers an insurance programme to their clients which they

could use for a life time (cf. Sberbank, 2016, p. 65). The SB group also set up a whole system

to minimise the risks in the business und offer also a safer environment for their customers.

They classified different kinds of risk, determined the major factors and tried to eliminate or

minimise them as far as possible. The effectiveness of those systems is monitored and checked

via a special scoring system. All this approach taken together increases the trust of the clients

and thus improves the reputation of the company. To put it in other words, the system itself

lowers the reputational risk of SB already (cf. Sberbank, 2016, p. 205ff.). Furthermore, the SB

is also trying to show that they care about their clients. This is why several educational

programmes on financial literacy came into being. Those were not only aimed at the employees

of the bank but especially at their normal clients and pensioners. This programme was entitled

‘I like Sberbank’ (cf. Sberbank, 2016, p. 163). Other, little programmes were also initiated by

the group. Counted hereto must be the ‘Designing the Checkers Set of Coins project’, where

clients could create a set of coins by themselves (cf. Sberbank, 2016, p. 50), as well as ‘Spasibo

from Sberbank’. The latter one was an initiative where clients could collect bonuses and

exchange them for something else. Herewith they could receive for example tickets for musicals

or the theatre, rental cars or even plane tickets (cf. Sberbank, 2016, p. 54). All those measures

have the aim to increase the customer satisfaction. To do this more precisely SB is conducting

annual research on the perception of the group. Hereby the mainly the main investors are

questioned, but also ordinary people. Such surveys should enable the bank to better understand

the needs and complaints of their clients and thus develop in the right direction (cf. Sberbank,

2016, p. 142).

The second biggest sphere addressed by the SB is the economic-employee dimension. Almost

one-fifth of all measures aim at this section after all. It is also partly connected to the ongoing

section. Thus, the ‘I like Sberbank’ programme is also aiming at employees. Furthermore, there

is also another programme teaching employees on how important the clients are to the bank. It

should bring the client-centric business model closer to the staff. This project is called ‘Creating

the Best Customer Experience’ (cf. Sberbank, 2016, p. 50). Apart from this, the bank is also

trying to comfort their customers and, thus, is trying to create a good working environment for

them. The employees should feel comfortable at their place of work. They should feel that their

employer cared about them and wants them to feel good. This is partly reached by social

benefits. They should also be involved actively in all the processes connected to their work and

be able to develop and self-fulfil themselves (cf. Sberbank, 2016, p. 11). When the employees

can evolve in their jobs, they can become the best version of themselves, which is what the SB

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is aiming at. In the view of the SB this is the only way in which the staff can improve the lives

of their customers to its fullest (cf. Sberbank, 2016, p. 145f. ). Moreover, communication is

very important for the bank. The corporation is trying to maintain an open dialogue with all of

their employees to not only understand their complaints and worries better but to also be able

to answer the questions that are related to their customers faster. Hereby also the yearly talk

with Herman Genf, the chairman of the Executive Board, has to be mentioned. There is an

annual meeting with Mr. Genf where any employee can ask him questions and give him

impulses to improve and develop the strategy and the company itself. In the year 2016 72% of

the employees declared to be satisfied with the SB including its communication strategy to fulfil

its employee’s needs (cf. Sberbank, 2016, p. 155). Communication is also essential for the SB’s

strategy to minimise risk. The employees should be ready to accept constructive criticism and

be open to new ideas and impulses. This is how financial risks can be avoided as one can learn

from the mistakes of the others. In this process collaboration and openness of the staff plays a

big role (cf. Sberbank, 2016, p. 15f.). The SB also offers many educational programmes for

their workers. This includes several pieces of training on self-management, the development of

the team spirit and other topics. Furthermore, there are also special programmes including

webinars and other training for newcomers to the company called ‘Welcome to Sberbank’. New

employees also get a co-worker instructor who should help the new staff member to get used to

its new working environment (cf. Sberbank, 2016, p. 150ff.). Finally, the SB also worked out a

special motivational system for their employees. This one includes financial and non-financial

incentives. Therefore, staff members can receive additional payments or other rewards such as

corporate awards for example (cf. Sberbank, 2016, p. 153f.).

The next most addressed sphere of the SB is the environmental-society dimension. This is one

of the very few environmental sections that are mentioned in the report and the only one

including several measures. A first initiative that needs to be mentioned here are the investments

directed at environmental protection. A field the SB is especially engaging in is the wildlife

protection in Russia (cf. Sberbank, 2016, p. 156ff.). Furthermore, the bank is also engaging and

supporting several environmental initiatives such as the ‘Russian Partnership for Climate

preservation’. This project should draw the public’s attention to several issues connected to

global warming and the climate change in general (cf. Sberbank, 2016, p. 170). Additionally,

the group is also organising several local initiatives such as clean-up days as well as a ‘Green

Marathon’ (cf. Sberbank, 2016, p. 162). Furthermore, the Sberbank is paying great attention to

the resource management within their own offices. Thus, they are trying to use as little waste

as possible, minimise their paper and electricity reduction and the use of technical equipment

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such as fluorescent lamps or storage batteries. The group is also looking after their energy and

heat consumption as a whole and wants to reduce it. The same counts for the volume of fuel

they are using (cf. Sberbank, 2016, p. 168ff.).

A sphere also referred to at least several times is the employee-related dimension with social

measures. Thus, the SB is promoting Occupation Health and Safety during work. To prevent

injuries on the workplace and diminish their frequency, various actions were taken. The SB, in

general, is trying to encourage their employees to live according to a healthy lifestyle. They

initiated various campaigns on healthy food and the importance of a regular medical check-up.

Also, they have started to issue a newsletter for their staff with advice on how to live healthier.

Another event that ties in with this topic and is organised by the SB is the so-called ‘Sberbank

Olympics’. This is a sports event for the employees of the bank itself and its subsidiaries, where

they can participate in various disciplines (cf. Sberbank, 2016, p. 156). Apart from this, the

bank thinks that is important for their staff members to engage in social projects. Therefore,

they are trying to encourage them often to volunteer at various events and other activities (cf.

Sberbank, 2016, p. 162). An example of such a social project might be a day where children

and teenagers can come to the bank and inform themselves on professional perspectives in the

banking sphere. In general, the SB offers several actions for children and parents. The SB has

also a special charity foundation to help children to not only get a good feeling and profound

knowledge of the banking sphere but to also develop other competencies. This is how the group

wants to make a contribution to charity and encourages also their employees to help there (cf.

Sberbank, 2016, p. 146f.).

A final sphere that is worth mentioning due to the number of measures dedicated to it is the

social-society section. Here again one of the bigger topics is charity and sponsorships. The SB

is very much financially supporting various cultural events as well as educational and research

programmes. Thus, the bank was trying to promote museums by enabling people to visit them

for free on certain days. The company also supports theatres, concerts, International Cinematic

festivals, and other cultural events and functions as its sponsor. A special project the SB took

part in was the creation of a museum for blind people. There several sculptures were exposed

which could be touched and explored (cf. Sberbank, 2016, p. 156ff.). Furthermore, the bank

tries to support the education of the population and organises various events there. In this frame,

the SB was initiating educational conferences and other programmes to improve the education

of the country. Their special focus was modern education as well as the inclusive environment.

With the help of the SB many new activities were started such as a Support Program for

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teachers, different kinds of training for students on various topics like communication or critical

and creative thinking (cf. Sberbank, 2016, p. 159f.). As already mentioned before a healthy

lifestyle is one of the SB’s priorities. This is also what the bank is trying to show the outside

world and help every citizen to live a little better. This is why the group is also supporting sports

facilities and organising various events to maintain a healthy lifestyle. One of those events is

the ‘Green Marathon’, for example. There, of course, physical activity is involved due to the

marathon. Exceeding this on such events everyone can also get a free health check-up or engage

in cleaning one’s city. There are also other social events of this kind sponsored or organised by

the SB (cf. Sberbank, 2016, p. 161ff.).

All in all, one can say that the SB picked out some special fields which they emphasized

especially in the report and also within other communication channels. That the bank put their

emphasis in the economic sphere was mentioned already earlier as well as that they focus a lot

on their clients and do everything to satisfy them. Other focal points of the CSR report of the

SB were their technical development which they are trying to push as far as possible. Although

the SB focussed very strongly at special target groups, the stakeholder that were not addressed

at all remain the same compared to the German companies. Those are the local communities,

the rivals and the groups of activists. Taken all together, the report covered many spheres and

topics within the CSR related sphere. Still is becomes clear that there is a stronger emphasis on

special fields than in most of the German reports.

5.2. VTB Bank

5.2.1. General Information

Nowadays the VTB Bank is the second biggest bank in the Russian Market. Although its history

is significantly shorter than the one of the SB, it still has an impressive history since its

foundation to the present times. In October 1990 the bank was found under the name

Vneshtorgbank, which translates to English like Foreign Trade Bank and was later shortened to

simply VTB. It was found by the State Bank and the Ministry of Finance with the aim of

integrating the Russian state better into the global economic market. Already at the beginning

of January 1991, the bank received a license which enabled it to carry out all kind of banking

transaction no matter in which currency. Merely three years later ‘The Banker’ magazine

counted VTB already amongst the Top 1000 World Banks. In 1997 the bank was decided to be

transformed into an open joint stock company. The Central Bank of Russia immediately became

its biggest shareholder. The capital of the institution grew, and it became the most capitalised

lending institution in Russia. In the year 2002, the government of Russia became VTB’s biggest

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shareholder. The bank continued to grow in retail as well as in investment banking and

strengthen its position in Russia and outside. Although also being affected by the global

financial crisis, the bank still tried to keep up a steady performance. By adapting to the new

conditions and hard work, VTB could even reach some of its best results in the time after the

crisis. In 2014 the bank settled for a two-year plan with several aims that were to be reached by

2016. The objectives of the bank included the maintenance of their corporate-investment

performance, an increase in the retail loan and deposit market, a focus on SME and a further

development of the bank’s risk management. All of those goals were achieved or even

exceeded. Moreover, some major strategic initiatives were implemented within that two-year

period. The bank strengthened its position within medium-sized corporations in Russia,

especially when it comes to regional ones, it underwent one of the major mergers on the Russian

market with the Bank of Moscow adjoining the Russian Post Bank, which gave VTB access to

the international infrastructure of the post. Furthermore, the VTB Group already published its

new strategy for the year 2017 until 2019. Their main goals for this period include a boost in

their profit, an optimisation of the group’s structure as well as measures to modernise the bank

especially in a technical and digital kind of way (cf. VTB, 2018).

At the present day, the VTB Group is a bank operating globally in all kind of financial segments.

It has branches and subsidies all around the world including Germany, Austria and other

countries across Europe and Asia. All members of the VTB Group work under a common brand

and a centralised financial and risk management model, as well as according to one strategic

model. Their current headquarters are located in Saint Petersburg (cf. VTB, 2018). The bank

views its mission at offering the best financial services and improve the future of their

customers as well as shareholders and society. They also define their key values as being trust,

reliability, transparency, versatility and the team. The VTB says they orientate themselves on

those values in all parts of their work (cf. VTB, 2018).

In recent times VTB has been having a hard time due to the sanctions introduced by the USA

against Russia. This is one reason why the bank suggested to decouple their businesses from

the dollar. In this way, they hope to protect the domestic economy and prevent a further drain

of the money out of the country. Therefore, in July 2018 VTB worked out a plan to become

more independent from the dollar, which Putin already even approved as a whole. The main

goals of that strategy include the attempt of avoiding the dollar in international transactions

using other currencies like the Euro, the Yuan or the Rouble instead and the transition of

Russian companies registered abroad to work under the Russian laws. Although the leading

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economists and heads of the bank try to minimise the damage that might occur after the

sanction, the results still might turn out to be serious (cf. Kozlovskij, 2018). VTB is also

working hard to develop a good Corporate Governance according to the Corporate Governance

Code, however, did not develop a code of conduct in this sphere by themselves. The general

framework described on the official website of VTB, nevertheless indicates that they are taking

this topic seriously and hints at several CSR-related contents being included there (cf. VTB,

2019). As seen in this general overview VTB pays a lot of attention to strategies and plans.

What their CSR strategy looks like will be evaluated in the following.

5.2.2. The CSR Report

ECONOMIC ENVIRONMENTAL SOCIAL

CLIENTS 27,78% - 1,11% MANAGERS 3,33% - - EMPLOYEES 26,67% 2,22% 7,78% LOCAL COMMUNITIES 1,11% - - RIVALS - - - SUPPLIERS - - - ACTIVIST GROUPS - - - SOCIETY - 8,89% 17,78% OTHERS 3,33% - -

Table 6: Summary of the CSR measures of VTB (cf. VTB Bank, 2017)

The CSR report from 2016 published by VTB is called “Social Report 2016”. On the first pages,

two other captions can be found stating the motto of the company “VTB. World without

Barriers. VTB Group.” and another subtitle “Conscious Responsibility”. The first page displays

a tiger playing in nature. The report consists out of 92 pages and 30.853 words, which unlike

the Sberbank’s report resembles the ongoing German reports a little more. The overall design

of the report, is very colourful including a lot of graphics and other pictures. On the second

page of the report a table of contents is visible. There it becomes clear that the overall report is

divided into seven chapters named ‘About VTB Group’, ‘Market Environment’, ‘Internal

Environment’, ‘Social Environment’, ‘Natural Environment’, ‘About the Report’ and

‘Appendices’. Next, the most important numbers concerning the bank as well as its

achievements and efforts are highlighted in a short table. It includes the VTB’s profit and

awards, its number of employees and their education and development, as well as some social

and environmental goals reached by the bank. After a list of abbreviations used a letter of the

president and chairman of the Management Board of VTB Bank, Andrey Kostin, is shown. The

chairman once again described the main initiatives and goals as in the table. He is trying to give

the reader an overall introduction and is mainly putting the focus on education and cultural and

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environmental events. Next, some financial information on the VTB is given, followed by their

development strategy and the importance of CSR to the company. VTB states that their ethical

principles and CSR, in general, is binding to all parts of the company. The bank also conducted

a materiality matrix to determine all the essential issues to internal as well as external

stakeholders and, thus, set a focus for their own CSR strategy. Based on this research their CSR

concept and the report were put together. At the end of the report, the group states that the CSR

report is the 9th nonfinancial report of VTB. Within the appendices amongst others again a table

is attached containing all GRI principles that the text refers to. Unlike the German banks, neither

the SB nor VTB did mention them straight away in the text. The report finishes with a letter by

EY that verified the report as well as the bank’s contact details (cf. VTB Bank, 2017).

As the GRI standards are all listed in a table at the end of the report, no one of them is mentioned

twice. In general, VTB lists 51 different standards in its table. Most of them are part of the

general disclosures of the GRI principles, only around one-third of them are Specific

Disclosures. Hereby the majority addresses social principles when the economic and

environmental ones have four GRI guidelines each. Thus, tendentially the VTB’s table

resembles the one of Sberbank. Furthermore, the VTB also includes several Financial Services

Indicators (cf. VTB Bank, 2017, p. 86ff.).

The analysis of all the initiatives named in the report directly displays a different picture than

the GRI guidelines. All in all, 90 different CSR initiatives were detected to be mentioned in

VTB’s 2016 CSR report. This is around the same amount than the SB, but significantly more

than seen in any German bank analysed in this paper. Here the strongest sphere is by far is the

economic one. More than 60% of all measures are of economic nature, mainly concentrating

on the bank’s clients and employees. One-quarter of all the CSR measures of VTB are social.

This is still much less than the economic area. Finally, only 12% of the initiatives are aimed at

the environment. Therefore, one can say, that VTB like the SB has a strong economic focus.

Looking at the stakeholder groups most of the initiatives are aiming at the employees of the

bank. More than one-third of all CSR measures is dedicated exclusively to them. Other relevant

stakeholder groups for VTB are their clients and society. Moreover, VTB is the only bank in

this paper so far, that does not mention their suppliers in any way (cf. VTB Bank, 2017). Instead,

they are also the only bank in this study, that explicitly mentions to also try to address the local

communities within their area of action. The VTB states that they respect the needs of the local

communities and that they want to maintain an open and constructive dialogue with them (cf.

VTB Bank, 2017, p. 17).

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The area addressed the most by the VTB bank is the economic-client sphere. More than one-

quarter of all initiatives of VTB refer merely to this field. Hereby also communication plays an

important role. The bank also is trying to keep up an active dialogue with all kind of their clients

as well as their shareholders. In this way, they are trying to show that they are a reliable,

transparent and accurate bank. The financial institution is also working on improving their

feedback system. Amongst other mechanisms, they implemented a whistle-blower hotline to

faster detect suspicious or wrong actions (cf. VTB Bank, 2017, p. 13ff.). Other tools to

communicate and promote the company and to get in touch with their customers are personal

meetings. Counted here into have to be conferences and workshops as well as the ‘Open Days’

or ‘Investor Days’ of the bank (cf. VTB Bank, 2017, p. 19ff.). Good communication can have

a major influence on customer satisfaction. Therefore, the VTB conducted several studies and

assessments on this topic and also set up another system to reply to customer complaints faster

(cf. VTB Bank, 2017, p. 38). Furthermore, the bank is concentrating on the technical

development of their services. This shall additionally raise the satisfaction amongst their clients

and build up loyalty. Same as the provision of high-quality services due to a good, professional

competence of the staff (cf. VTB Bank, 2017, p. 12ff.). In order to further extent their customer

network and reachability within Russia, which after all is the largest country in the world, the

VTB is also trying to increase their number of ATMs as well as their branch network. This

measure is especially aiming at people living in remote areas of the country. Hereby, also a

further development of digital banking has to be mentioned (cf. VTB Bank, 2017).

Additionally, VTB is offering financial support to businesses operating in certain industries

such as agriculture, the housing industry or health care. Businesses operating in those spheres

shall be supported as they make a contribution to a better and healthier society. Thus, they can

receive better conditions when for example taking up a credit (cf. VTB Bank, 2017, p. 27ff.).

Hereby especially small and middle-sized businesses are meant. VTB initiated many measures

to improve the business environment for them such as a special Lending Promotion Program or

a campaign for financial and non-financial support of such enterprises (cf. VTB Bank, 2017, p.

34f.). It also must be mentioned that the bank is not only offering financial services but also

works as an insurance. Therefore, it offers also various insurance programs to help and support

their customers in different stages of their life (cf. VTB Bank, 2017, p. 38f.).

The second biggest sphere addressed in the report is the economic-employee sphere. Here

again, VTB has more than a quarter of all measures directed towards this area. One key term of

this area is ‘corporate culture’. The bank states that it has worked really hard to set up certain

principles and promote them in order to create such a corporate culture. It is very important to

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them that all employees follow those principles and therefore support this culture within the

company (cf. VTB Bank, 2017, p. 51). This corporate culture to a huge extent is based on good

communication. The employer wants to be in contact with its staff to build up trust and better

understand their needs and complaints (cf. VTB Bank, 2017, p. 17f.). A huge role within the

relationship of the employees and their superior plays motivation. The company considers it

essential to offer financial as well as non-financial support to all parts working for the

enterprise. In VTB it is based on a compensation system where apart from money an employee

can also receive a membership in the corporate pension program or additional paid leave (cf.

VTB Bank, 2017, p. 44ff.). Another part of the internal communication is conducted via a

corporate magazine called ‘Team Energy’ (cf. VTB Bank, 2017, p. 50). For a comfortable

working environment, the bank also considers it to be important that every employee feels equal

one to another. Everyone is supposed to have the same chances (cf. VTB Bank, 2017, p. 45).

Therefore, education and self-development are some of the core issues the institution is dealing

with. There are various types of training and seminars for the staff dealing with different topics.

The most popular variant of those is distant learning, but VTB also organises training sessions,

business games, workshops, webinars and so forth. One example of a self-development

platform for employees might be VTB’s ‘Knowledge Academy’. It is a virtual forum to

exchange all kind of different thoughts, worries, experience, etc. between the employees (cf.

VTB Bank, 2017, p. 46ff.). The bank also carries out special training to not violate the law and

an anti-corruption-training. The compliance to law and responsible behaviour at work and

outside is very important to the group and is also viewed as one of the main parts of their

corporate culture (cf. VTB Bank, 2017, p. 13ff.). Furthermore, there are also training arranged

by the insurance department of VTB. They mainly deal with the main products if their company,

their key terms and most important advantages. There are also health-related seminars to

manage psychological stress or maintain one’s psychological balance (cf. VTB Bank, 2017, p.

48). Apart from training their present employees one of the main goals of VTB is also to look

for new talents. Thus, the bank takes part in different job fairs, conducts master classes and

presentations at universities and offers an internship program for young master’s degree

students or graduates (cf. VTB Bank, 2017, p. 48). Finally, it needs to be said, that VTB is

implementing a strict checking system within the while the company to minimise all kind of

internal and bank-wide risks. Employees also have to undergo these regular check-ups to prove

their compliance to all regulations set up by the company (cf. VTB Bank, 2017, p. 17).

Another frequently mentioned section within the CSR report of VTB is the social-society one.

As already mentioned before VTB is supporting certain industries financially. This is not only

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profitable for the enterprises, but also for the society. If a business constructing high-quality

housing for the society is aided, then the society can also draw benefits therefrom. Same goes

for the health care industry and others (cf. VTB Bank, 2017, p. 30ff.). VTB is not only trying

to support certain fields essential for the society financially but also by other projects. Thus, the

bank is trying to promote a healthy lifestyle by trying to raise the number of velobikes used (cf.

VTB Bank, 2017). The corporation is also supporting health care facilities for example by the

‘World without Tears’ program. This one helps hospitals and other such institutions to acquire

equipment they couldn’t afford without external help (cf. VTB Bank, 2017, p. 69f.).

Furthermore, the bank is also trying to help various athletes and is funding diverse sports teams

and events. Some of the competitions are even initiated by the bank itself like the ‘VTB Kremlin

Cup Tennis Tournament’. Sports facilities are also one of the groups priorities (cf. VTB Bank,

2017, p. 56ff.). VTB is also a big supporter of all kind of cultural events and institution.

Therefore, they keep up cooperation with many museums and aid with exhibitions. The bank

also sponsors different theatre tours, ballets, opera and music festivals such as the ‘Spasskaya

Tower Festival’ or the ‘Usadba Jazz Festival’. They help the cinema and mass media and offer

assistance to the culture TV channel or film festivals (cf. VTB Bank, 2017, p. 56ff.). Literature

is one of the other big efforts of VTB. They want to preserve the Russian literary heritage and

if possible make Russian literature more popular in the country and abroad, as well as bring

foreign literature to Russia. To do so the bank participated in a project translating Russian

literary works to exotic languages such as Vietnamese. In return, Vietnamese writers were

introduced to the Russian public (cf. VTB Bank, 2017, p. 68). Apart from the preservation and

support of many cultural and social aspects, VTB also engages in the education of the Russian

population. Special attention hereby received the topic of financial literacy amongst Russian

society. VTB is improving it by holding conferences about this topic or free seminars. The bank

is also trying to aim at children, for example by master classes and simulation games.

Furthermore, social networks and other online channels are used to distribute information about

this theme (cf. VTB Bank, 2017, p. 56ff.). In general, it needs to be mentioned that the financial

institution is supporting disadvantaged social groups a lot and is offering help to them. Counted

thereinto are children, disabled people, elderly and disadvantaged families. VTB, for example,

initiated awareness campaigns to draw attention to veterans who live by themselves (cf. VTB

Bank, 2017, p. 56ff.). Finally, one of the most basic values that forms the base for a lot of

initiatives in this section is the respect for human dignity and worth. This is one essential

principle that VTB orientates itself on in many of its measures and which they regard as very

important (cf. VTB Bank, 2017, p. 13).

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Another section worth examining is also connected to society but this time in the environmental

sphere. As one of the most current topic energy efficiency is also important to VTB. They are

trying to save energy by for example using LED lamps. Also, the bank is trying to level down

their fuel consumption as well as paper usage. For the latter one the recommendation was

established to print on both sides of the paper instead of on only one. The VTB is also promoting

sustainable waste management and the sorting of waste, what in Russia by far is not common

yet. Therefore, they put up several containers for different kind of wastages. The bank is also

attempting to move all their offices to modern and sustainable buildings. Environmental

awareness campaigns get supported by the bank, as well as environmental projects, charitable

events or institutions that fight for energy efficiency, biodiversity or other environmentally-

related topics. One of the biggest projects of the past year was when the VTB participated in an

initiative in cooperation with WWF to conserve the population of snow leopards, Siberian tigers

and other wild cats in Russian regions (cf. VTB Bank, 2017, p. 74ff.).

A last mentionable area is the social-employee one. Here occupational health and safety play a

big role. Therefore, the work place of most employees is tested, and the complaints are recorded.

With the help of the results special training for the employees can be put together how to safely

behave in their work place (cf. VTB Bank, 2017, p. 53). The good health of their employees is

one of the core goals of the company. Thus, the bank is also encouraging their staff to do sports

by promoting various kinds like football or hockey (cf. VTB Bank, 2017, p. 51). Moreover,

VTB offers a free medical examination to their employees. It should prevent various diseases

and is conducted regularly (cf. VTB Bank, 2017, p. 53). The balance between work and family

life is another issue that is crucial in this section. To maintain both the company is organising

family events and little campaigns such as Christmas gifts for the employee’s kids (cf. VTB

Bank, 2017, p. 52). Furthermore, female staff members have the possibility to work from home

when on child-care. In this way, it is possible for them to earn money and maintain their

professional skills at the same time (cf. VTB Bank, 2017, p. 45). Also, volunteer projects are

very popular amongst the VTB’s staff. Like this, they are able to help children, elderly people

and other disadvantaged social groups. An example of such a voluntary action is blood donation

(cf. VTB Bank, 2017, p. 52).

All in all, it is possible to say, that the VTB bank again lies certain strong focuses in some areas.

Thus, the economic sphere is definitely the one represented the most, while the other two

spheres amount to merely a little more than one-third of all initiatives within the bank’s CSR

strategy. Although VTB is covering many different stakeholder groups 93% of all CSR

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measures are aimed at the employees, the clients and the society. Other groups are barely

mentioned. The rivals, suppliers and groups of activists are completely not taken into

consideration. 7 CSR measures only are aiming at the managers, local communities and others.

Despite the fact that this is the first report examined for this paper that mentions the local

communities they still receive very little attention. Therefore, it can be said that also the VTB

has several areas it specifically focusses on while to a great extent leaving out other spheres.

5.3. The Central Bank of Russia

5.3.1. General Information

The Central Bank of Russia nowadays is the leading financial institution in Russia. Its origin

roots back to 1860 when it was still called the ‘State Bank of the Russian Empire’. It was found

when capitalism started to grow in Russia and is counted as the first reform of Emperor

Alexander II. It was a commercial bank for short time credits. While at first, the bank was

merely helping the Ministry of Finance, since 1894 it turned into Russia’s government

instrument to control the economy in the country and support commercial banks. When the gold

monometallism was introduced, the bank received the right to issue currencies. Since 1906 the

bank began to transform into one of the most powerful lending institutions overall with huge

gold resources. During the First World War, the bank invested huge sums into Russia’s military

and war operations (cf. The Central Bank of the Russian Federation, 2018). In 1917 the

Bolsheviks took over the control over it. In December they have had taken over the control of

all the banks in the country and issued nationalisation of them all to create a state monopoly.

Within a month the ‘State Bank of the Russian Empire’ was renamed into the ‘People’s Bank

of the Russian Republic’. Officially it should have worked according to the laws established in

1894. In real life, the current rulers regulated it with new decrees and resolutions. Its main aim

was to issue paper money. Roughly a year after the take over of the bank by the Bolsheviks the

Ministry of Finance started to support the country’s economy and the People’s Bank of the

Russian Republic stopped to function as a lending institution. As banks, in general, were a

contradiction to the Bolsheviks vision of an economy without money, the bank was abolished

in January 1920 (cf. The Central Bank of the Russian Federation, 2018). Under the New

Economy Policy, the bank started to conduct operations again and became fully re-established

in 1923 named the ‘State Bank of the USSR’. In this form, the bank turned into a part of the

People’s Commissariat of Finance. It was granted the right to make transactions with foreign

currencies as well as issuing the USSR currency. Due to political as well as economic reasons

USSR could not be industrialised by foreign loans. This is why it was financed by additional

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money emissions. It was considered to be the easiest way to equally distribute money amongst

all sectors. In 1927 the authorities decided to introduce a stronger control to their system which

was conducted daily. Further changes in the Soviet banking system took place until all the cash

operations were concentrated in the State Bank. As the reforms were carrying on the State Bank

lost all features of a commercial bank and became a typical Soviet Bank that could only make

a transaction to support the country’s economy. In other words, it could mainly support the

planned loans to the economy and control the cash circulation. With time the bank’s

responsibilities were further and further narrowed down. The currency of the USSR was also

withdrawn from the foreign markets in the beginning of 1930. When in 1939 the bank started

to withdraw money from the public, during World War II it began to issue a new currency. In

1961 the rouble was re-denominated again. After several economic reforms in the country, the

State Bank became the main bank in the USSR. It elaborated the credit plan and distributed the

funds of its funds. In 1990 the State Bank of the USSR and the Russian Republic Bank merged

to the State Bank of the RSFSR and became the central financial institution of the country after

a long dispute (cf. The Central Bank of the Russian Federation, 2018). This legal entity later

merely got renamed to become the Central Bank of the Russian Federation, or short Bank of

Russia. Since then it started to turn into the bank that is Russia’s main financial institution

today. In the period between 1991 and 1992, a network of commercial banks was re-created

and trade on foreign markets was taken up again. From then on, the Russian constitution also

started to stipulate the Central Bank of Russia to carry out their transactions independently of

any governmental institution. From 1992 until 1995 the CBR created a control system to

stabilise the country’s economy. Learning from the mistakes of its past the CBR tried to take

measures while restructuring the Russian banking system and maintain a bank’s liquidity. The

main goals of the new CBR until now is the maintenance of financial stability as well as keeping

up the economic growth. Since 2003 the bank started to report under international standards

(IFRS). It should raise the transparency of financial institution and attract foreign investors to

the country. The CBR nowadays pays special attention to several issues such as fictitious

capitalisation of banks or price dynamics. They have introduced special regulations to prevent

problems. Some of the main aims of the modern CBR include the protection of depositors and

creditors, a greater amount of competitive financial institutions in Russia, avoiding criminal

practices in the banking sphere and others. The CBR also wants to gain a good position in

international markets. In general, one can say that the CBR tried to learn from its mistakes of

the past and took measures to conduct a safer and more sustainable financial policy (cf. The

Central Bank of the Russian Federation, 2018).

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Nowadays, the main functions of the bank are, as partly mentioned above, to act in compliance

with the Russian law, the protection of the rouble and the maintenance of the economic stability

in the country. Moreover, it is the only institution having the right to issue money in the country.

Other functions of the CBR include working out the monetary policy together with the federal

government as well as its implementation. It is the main instance of financial supervision and

shall oversee the national payment system as well as all actions of other actors such as non-

credit financial institutions, joint-stock companies and others. Furthermore, it also decides on

the rules for banking transactions and is in charge of the country’s international reserves as well

as its budget accounts. The CBR is responsible for the rouble’s denomination on foreign

markets and, thus, influences its exchange rate directly. The analysis and forecast of the

situation of the Russian economy also is part of the CBR’s responsibilities. All in all, nowadays

the CBR acts as the main bank of Russia and carries out many of the typical main functions as

such. This mainly includes supervisory tasks as well as anything connected to the issuance and

the value of the national currency (cf. The Central Bank of the Russian Federation, 2014).

Like Russia’s economy in general and most of the country’s banks including the CBR have

been struggling with the sanctions that had been introduced against Russia by the western

countries. Most of the central bank’s future prediction of their economic situation is based on

worst-case-scenarios because of that. The greatest worry of the bank is the fall in oil prices,

which according to the CBR might fall even more than 50% from their current price. This would

have a massive negative impact on Russia’s GDP and inflation. Another fact that is worrying

the CBR is the unpredictability of further sanctions (cf. Rapoza, 2018). Still, it is said that the

CBR reported a trade surplus in the ongoing year of 2018. Furthermore, Russia bought more

foreign reserves especially, in US-Dollars. This measure shall prevent the Russian economy

from the fluctuations in oil prices by stacking up on their reserves (cf. Xinhua, 2018). Finally,

it also needs to be mentioned that the Russian banking system including the central bank is still

struggling with various scandals circling around money laundering and corruption (cf. Hines,

2018). All in all, the CBR is trying to maintain their global standards within their financial

politics despite struggling with various problems.

Regarding their CSR strategy, there is very little information found about the CBR on their

official website or anywhere else. This already might imply that the bank pays much less

attention to it than the ECB, especially as there is also no official sustainability statement

published by the CBR unlike its European counterpart did. Moreover, there is no official

information on the Corporate Governance of the CBR disclosed. Merely a statement that the

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CBR reviews Russian public companies on their Corporate Governance is to be found (cf. Bank

of Russia, 2019). Due to the lack of a CSR report for the analysis of their CSR strategy here

the bank’s annual report shall be consulted instead. The analysis is evaluated in the following.

5.3.2. The Annual Report

ECONOMIC ENVIRONMENTAL SOCIAL

CLIENTS 60,98% - - MANAGERS 2,44% - - EMPLOYEES 9,76% - - LOCAL COMMUNITIES - - - RIVALS - - - SUPPLIERS - - - ACTIVIST GROUPS - - - SOCIETY 12,20% 2,44% 4,88% OTHERS 2,44% - 4,88%

Table 7: Summary of the CSR measures of the CBR (cf. The Central Bank of the Russian

Federation, 2017)

In this section, the official CSR Report is replaced by the ‘Bank of Russia Annual Report for

2016’ due to the lack of an official CSR Report. The statement evaluated here contains 268

pages and 122.696 words. Although the page number does resemble the SB’s report, for

example, the words by far exceed all other reports. However, it has to be kept in mind, that the

here examined report is the financial one and contains a lot of financial information and

numbers, which might explain it. Furthermore, the statement is mostly kept in black and white,

with some exceptions on various tables or titles. The report starts with a several pages long

table of contents where the overall structure of the report can be seen. It starts with a description

of the overall Russian economy and the activities of the CBR. Then some information on the

organisational development of the bank is given, followed by its financial information. At the

end, the reader can find the appendices, a list of charts and tables. The table of contents follows

a list of abbreviations. Next, the board of directors are introduced, and some introductory

remarks are given. The latter one a letter of the governor of the Bank of Russia Elvira S.

Nabiullina. There she states that 2016 has been a year of stabilisation and that the CBR is

working further towards this goal. She also lists some measures and initiatives the CBR is

implementing at the moment (cf. The Central Bank of the Russian Federation, 2017). Further,

in the section ‘The State of the Russian Federation Economy’ the overall economic situation of

the country is described. It states, that the slowdown of the Russian economy is declining, same

as the inflation and the unemployment rate is remaining relatively low. Still, the external

conditions in Russia are rather unfavourable due to the many sanctions that had been issued

against Russia and Russia’s countersanctions. There are some positive trends within the Russian

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economy like for example the growth of oil prices which are one of the main industries in

Russia. However, the population still doesn’t feel safe which is why Russian households prefer

to save money rather than spend it (cf. The Central Bank of the Russian Federation, 2017). In

the next two sections called ‘The Bank of Russia’s Activities’ and ‘Other Activities’ everything

what the CBR is doing is described including initiatives that can be connected to CSR (cf. The

Central Bank of the Russian Federation, 2017).

All in all, 41 CSR initiatives could have been detected in the report, which is considerably less

than the ongoing two Russian banks. Hereby almost all of the initiatives are dedicated to the

economic sphere. Less than 10% are social, and only one initiative could have been found that

can be assigned to the environmental sphere. Regarding the stakeholders, the clients followed

by the society are the two stakeholder groups being addressed the most. Hereby, however, it

also needs to be mentioned that in the case of a central bank those two sections are partly

overlapping. Another stakeholder group that needs to be pointed out are the employees which

after all have almost 10% of the initiatives aiming at them. Stakeholder groups that have not

been mentioned at all are the local communities, the rivals as well as the suppliers and groups

of activists (cf. The Central Bank of the Russian Federation, 2017).

More than half of all the detected CSR initiatives of the CBR are in line with the client-oriented

and economic sphere. Counted hereto can be some of the most basic tasks of the CBR such as

the securing of the price stability, the maintenance of the liquidity in the banking sector or the

monitoring of financial risks that again serves to prevail financial stability (cf. The Central Bank

of the Russian Federation, 2017). As all those measures help to ensure that a safe and

competitive market is provided, and the strength of the currency doesn’t depreciate, those issues

can be counted into the concept of CSR. Moreover, the CBR is working a lot to mitigate risks

in the banking sphere. This refers to credit risks, liquidity risks, investment risks, etc. (cf. The

Central Bank of the Russian Federation, 2017, p. 59ff.). There were several measures

implemented in order to prevent those. One of them is a special trust management system that

is concerned mainly with investment questions (cf. The Central Bank of the Russian Federation,

2017, p. 69f.). Apart from this, there was a new reform introduced to better and more efficiently

supervise credit institutions in the country. This is a measure to reduce credit and investment

risk. The reform is a big part of the centralisation measures undertaken by the CBR in 2016. By

centralising most of their main institution including the supervision bodies, the bank hopes to

make the internal processes faster and more efficient (cf. The Central Bank of the Russian

Federation, 2017, p. 72ff.). This aim is also pursued by the collaboration of the CBR with the

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Risk Analysis Service. This should additionally strengthen the possibilities of evaluating certain

issues connected to the financial sphere such as the equity capital of credit institutions. (cf. The

Central Bank of the Russian Federation, 2017, p. 74). The CBR, however, is not only

responsible for the supervision of credit institution, but for all market participants like NGOs

(cf. The Central Bank of the Russian Federation, 2017, p. 82ff.). Another important matter that

the CBR is trying to prevent is the discourage of malpractices in the financial sector. Counted

hereto can be the misuse of insider information, manipulation as well as money-laundering or

the financing of terrorism and other illegal transactions. Several measures to make the banking

sector in Russia more secure were introduced and revised in 2016 (cf. The Central Bank of the

Russian Federation, 2017, p. 75ff. ). As already mentioned before there were also several

changes conducted to make the internal processes within the bank faster. Those changes also

affected the process management system, the project management system and information

technologies. Herewith the CBR is trying to make all the processes internally and externally

more efficient (cf. The Central Bank of the Russian Federation, 2017, p. 151ff.). Furthermore,

the project ‘Complaints as a Gift’ shall also be mentioned in this section. The CBR is trying to

react faster to all kinds of complaints reaching them, which is why they have had issued this

project. It is aiming at processing complaints faster so that consequently the action thereto can

be taken faster. This shall make the clients and the society, in general, feel safer and more

content with the CBR (cf. The Central Bank of the Russian Federation, 2017, p. 114). Finally,

it also needs to be mentioned that the CBR is trying to increase the transparency when disclosing

financial information. This does concern not only the CBR itself but also other credit

institutions and actors within the economic sphere (cf. The Central Bank of the Russian

Federation, 2017, p. 75).

Another section worth discussing is the one referring to the economic sphere as well as the

society. Although it is partly overlapping with the ongoing sphere, the measures mentioned here

are rather referring to all citizens of Russia, also the very simple ones. Thus, the CBR is trying

to influence and improve the quality of life of all people living in the Russian Federation. Using

financial instruments, the CBR is aiming at protecting their lives, improving the public

reception and other issues (cf. The Central Bank of the Russian Federation, 2017, p. 110ff.).

Additionally, also the CBR is trying to care about their citizens living in remote areas of the

country. They are working on the development of the remote banking services so that everyone

can access them (cf. The Central Bank of the Russian Federation, 2017, p. 124). Besides, the

bank is trying to raise the confidence of the Russian citizens in the Russian banking system and

the banks themselves. It is especially an important issue and one of the main problems of the

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Russian economy at the moment, that households prefer to save their money instead of spending

it, as mentioned earlier. In order to change this the CBR is paying a lot of attention to improve

their information policy as well as increase the availability of information throughout the

country (cf. The Central Bank of the Russian Federation, 2017, p. 128). At the same time, the

CBR has issued several laws to protect Russian citizens from illegal actions on the market.

Included hereto can be a law to prevent the bankruptcy of credit institutions or the prohibition

to finance terrorism (cf. The Central Bank of the Russian Federation, 2017, p. 141f.).

The third economic sphere that has to be mentioned is the one concerned with the employees.

Here again, the improvement of the information system is a current issue. To pass the

information on more effectively and make the process within the bank quicker, the CBR is

aiming at improving its information and library system for their employees (cf. The Central

Bank of the Russian Federation, 2017, p. 132). The CBR is also conducting programmes and

training to enhance the professional competencies of their employees. This concerns people

working in the CBR’s local branches as well as the ones in the headquarters (cf. The Central

Bank of the Russian Federation, 2017, p. 111). Skills that should be developed include the

communicative, leadership and managerial skills. Those programmes are conducted by the

Russian Corporate University and have several forms of carrying out. Employees can take part

in them via workshops, blocked courses, online training and so on (cf. The Central Bank of the

Russian Federation, 2017, p. 149). Additionally, the CBR is also making efforts to form a

corporate culture guiding employees through their work practice. It is even considered to be

one of the most important projects of the CBR. Especially, therefore, an Ethics Committee has

been set up (cf. The Central Bank of the Russian Federation, 2017, p. 147f.).

The environmental as well as the social sphere are barely taken into consideration within the

Annual Report of the CBR. Between those two the social sphere is still addressed a little more

often than the environmental one. The social sphere contains measures such as the improvement

of the quality of life of Russian citizens with the use of financial instruments (cf. The Central

Bank of the Russian Federation, 2017, p. 110) as well as the enhancement of financial literacy

within the Russian population (cf. The Central Bank of the Russian Federation, 2017, p. 114f.).

Furthermore, projects were issued to support small businesses, individual entrepreneurs,

students, and teachers. Latter ones shall be mainly trained for the FinTech sphere to develop it

(cf. The Central Bank of the Russian Federation, 2017, p. 110ff.). The only environmental

initiative to be found in the financial statement of the CBR is the development of promising

technologies such as the ledger technology to transmit financial messages. Amongst others the

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information systems shall be improved here by which shall lead to a sustainable reduction in

the paper consumption of the banks (cf. The Central Bank of the Russian Federation, 2017, p.

118ff.).

In general, it needs to be said that the CBR has a strong financial focus in all spheres. It was

possible to find CSR initiatives within the Financial Statement for 2016 of the CBR, however

many of them were related to the basic tasks of central banks. Thus, it can be said, that the CBR

is making little additional effort to implement CSR into their bank. Especially social and

environmental issues don’t play a major role in the CBR. The main stakeholder groups are the

in this case partly overlapping clients and society. Single measures were aimed at other

stakeholder groups such as the employees.

5.4. Short summary on the CSR initiatives of the Russian banks

Like the German banks, so do also the Russian banks show common traits as well as differences

within their CSR initiatives. To be able to make a clearer comparison of both countries

afterwards, in the following part of this work a short summary of all banks representing the

Russian banking sector regarding CSR shall be provided.

The SB described a total of 90 different measures referring to CSR in their GRI report. More

than half of those measures were found to be in the economic segment of their CSR strategy.

The second strongest zone was the social one with after all having almost one-fifth of all

measures being appointed there. As for the stakeholder groups, the SB again points out four

categories which the bank seems to prioritise. Most initiatives are aimed at their clients and to

their employees. The next bigger stakeholder addressees are the society and other smaller

groups. Other stakeholder groups are rarely mentioned if at all. The three biggest cross-sections

mentioned all lie in the economic sphere and refer to the clients, the employees and others.

Herewith it becomes quite clear that the SB sets quite strong focuses. When content-wise the

bank centres the economic sphere, the preferred stakeholder groups can be said to be especially

the clients and the employees.

Moving on to VTB bank one needs to say that their CSR plan slightly resembles the one of the

SB. Alike the ongoing bank VTB also described 90 different CSR initiatives in their CSR

report. Those again were also focused on the economic sector, even though not quite as strong

as at the SB’s CSR report. Still, VTB dedicates more than 60% of their social responsibility

initiatives to the economic sphere. Therefore, the social area, which is the second important one

alike in the SB’s CSR strategy, amount up to more than a quarter of all CSR projects. The

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environmental sphere is similarly unnoticed in both banks. Looking at the stakeholder

dimension slight differences to the SB can be noticed. Although the bank also sets three

priorities of whom to address in their report, the mostly mentioned group are the employees,

when the clients just come second. The third group that needs to mentioned is the society which

is close up to the clients. Furthermore, the three most popular cross-sections of VTB do not

exclusively lie within the economic sphere. While some of the most popular spheres are the

economic one focussing on clients and employees, still the third most mentioned area is the

social-society one. Thus, shows that although the CSR strategies of SB and VTB resemble each

other at first, they are still some differences to be found.

Finally, the CBR as one of the key institutions of the Russian banking sector was taken into the

analysis, although not issuing a CSR report itself. The fact, that the CBR does not publish any

CSR report at all already indicates that the central bank doesn’t consider CSR to be one of its

priorities. Furthermore, alike the two ongoing Russian banks the CBR also has a strong

economic focus. Amongst the 41 initiatives that could be detected in the annual report of the

bank almost 90% were referring to the economic sector. The social sector again was considered

second important with almost 10% of all measures being aimed at. The environmental area was

almost overlooked at all being mentioned only once in the whole report. Looking at the

stakeholder dimension the preferences are a little more distributed. Although the clients are still

the number one priority within the CBR’s report, there are also several measures to be found

aiming at the society as well as the employees. Thus, the stakeholder dimension becomes rather

comparable to the SB and VTB. The most popular cross-sections in the report of the CBR, of

course, also lie within the economic section addressed to the clients. The economic-society and

economic-employee section are second and third, however far behind the first one mentioned.

Generally, it can be said, that all three banks representing the Russian banking sector set similar

priorities within their CSR initiatives no matter whether it’s the SB, VTB or the CBR. Overall

a strong economic focus becomes apparent in all three banks. This is why more than 70% of all

CSR measures found in Russia can be assigned to this sphere. The weakest sphere in Russia is

the environmental one which all three banks considered very little. Also, within the stakeholder

dimension, all three Russian banks are congruent. The three most popular sphere are always the

client, the employee and the society one. VTB was the only bank to prioritise their employees,

while the other two institutions chose their clients. Same accounts for the content-stakeholder-

sections. The SB, as well as the CBR, focused on the economic sphere aiming at the clients, the

employees, and the society. Merely VTB, although also having a strong economic focus,

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prioritised the social-society cross-section into their top three ranking. The first two sections

still lie in the economic part of CSR aiming at the clients and employees. Talking about the

number of initiatives SB and VTB both formulated 90 different issues within their report, while

within the CBR’s only 41 could have been identified.

After having had a detailed analysis of the major representatives of the German as well as

Russian banking sector, in the following both banking sectors regarding their CSR initiatives

shall be compared. Therefrom some recommendations for Russian banks on how to improve

their CSR initiatives shall result.

6. The comparison of the CSR initiatives in German and in Russian banks

When comparing the German with the Russian banks the first thing that becomes apparent is

the number of CSR initiatives issued at the different countries. On average Russian banks do

issue about ten CSR measures more than German banks do. The mean in Germany is 64

measures per banks, while in Russia it is 74. Looking at the central banks and the other financial

institutions separately the picture changes slightly. While the difference between the

commercial banks in each country even increases, the central banks change positions. Thus, an

Russian commercial bank publishes 90 CSR issues, while a German commercial bank only

issues around 58 CSR measures per bank on average. The ECB, however, talked about up to

75 CSR measures in their reports, while in the report of the CBR merely 41 issues were

identified. As for the central banks this together with the fact that the CBR does not have their

own CSR report at all, indicates that CSR does not seem to be a priority for the CBR. As the

CBR is considered to be one of the main institutions that influences the Russian banking

landscape, this ties in with Russia’s bad CSR results mentioned at the beginning of this paper.

Considering the commercial banks, however, a different picture is drawn. In general, the

Russian banks issue even more CSR measures than the German ones. However, it is possible,

that there are too many issues. If there are too many CSR measures it is impossible for a bank

to carry them out thoroughly. This might be a problem while setting up a good CSR strategy.

Content-wise in both countries the economic sector is logically the most mentioned one. The

differences between the single areas, however, are much smaller in Germany than in Russia.

While in Germany no of the three parts scored more than 50% of measures and thus the separate

CSR are measures can be called approximately equally distributed, more than 70% of all the

CSR initiatives in Russia can be appointed to the economic sector, while the remaining third is

split between the environmental and social area. Hereby the environmental sector goes almost

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unnoticed with only a few initiatives being found to be dedicated to this section. Having a look

at the two central banks separately those tendencies are shown even clearer. Although the ECB

neglected the social sector for a little bit and merely 13% of their initiatives can be applied to

this part of CSR, the other two areas are both taken into consideration up to a similar point. The

CBR on the contrary devoted 88% of their measures to the economic sector. Apart from this

only one measure can be found within the environmental sections and four within the social

one. It is similar for the commercial banks. While in Germany the distribution of CSR initiatives

between the three sectors seems almost even, in Russia 67% of all CSR initiatives are allotted

to the economic category. The other third of the CSR measures is split between environmental

and social actions. Again, the environmental sector is very weak with a minimum of measures

being appointed there. Here it becomes visible, that neither the environmental nor the social

sector are really taken into consideration within the CSR strategies of the Russian banks, while

they clearly focus on the economic sphere. Especially environmental measure can be described

to be neglected in Russia.

The stakeholder-related dimension in Germany and in Russia seems very similar, though. There

were no measures concerning rivals or groups of activists mentioned in neither of the countries.

Stakeholder groups that were taken into consideration very little are the managers, the local

communities, the suppliers and others. The most addressed stakeholder parties are the clients,

the employees as well as the society. Even the order of the most to least preferred stakeholder

is identical in the overall picture of both banking environments. The biggest difference between

Russia and Germany lies within a rather small grouping – the suppliers. While Germany

dedicated almost 6% of the CSR measures in the environmental and social sectors to the

suppliers, within the Russian banks only one measure can be found applying to suppliers. The

CBR does not consider the suppliers at all, while 8% of the measures of the ECB can be applied

to this stakeholder. Other stakeholder groups both central banks do not take into account are

again the local communities, the rivals and the groups of activists. For both central banks the

most important stakeholder is the client. When the ECB, however, appoints one-third of all of

their measure to the client, the CBR addresses 60% there. Again, the Russian bank sets a very

strong focus. The second important stakeholder group by the number of CSR measures

addressed in both countries is the society, followed by the employees. While in Germany though

the percentage of CSR initiatives appointed to those stakeholders seem to be approximately in

one line, the differences in the CBR are a little greater. Looking at the commercial banks the

stakeholder priorities in both countries seem to be more similar again. Approximately one third

of all CSR projects are aimed at the client, another third at the employees in both countries. The

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main difference again remains the neglection of the supplier by the Russian banks. Only one

measure is dedicated to this grouping. While in Germany it is also counted as a small

stakeholder group, there are several more CSR initiatives considering the supplier. The reason

therefore might be that the supplier unlike the client does not bring any direct competitive

advantage to the banks themselves.

Having a look at the cross-sections that are considered the most important in Germany and in

Russia merely slight nuances become visible. In both countries, the most quoted spheres are the

economic-client followed by the economic-employee one. While in Germany the third area

which most of the CSR initiatives are aimed at is the environmental-society one, in Russia the

social-society one is mentioned more often. As already mentioned earlier Russia is leaving

environmental issues unnoticed to a great extent. In Germany social issues sum up to almost

one-third of all CSR measures, however, they are distributed amongst the stakeholder parties.

Additionally, the difference between those two last mentioned sections in Germany and in

Russia merely amounts up to 4%. Thus, one can say that the differences between the cross-

sections in both countries are considerably little. Looking at the central banks only, it becomes

clear that the central bank in Russia is merely focussing on the environmental area. All three of

its most quoted cross-sections lie within the economic sector and aim at the client, the society

as well as the employees. The ECB mentions most of its CSR measures also to be in the

economic-client sphere, however, its second most important category becomes the

environmental-society one, followed by the environmental-employee one. Thus, once again the

overly strong economic focus of the CBR becomes visible. For the commercial banks again the

most discussed cross-section is the economic-client one for both countries as it was in all the

previous sections, the second most considered was the economic-employee one. Next Germany

focusses on the social sector aiming at the employees and other groupings equally when

Russia’s third important sector is the social-society one. Again, it becomes visible that Russia

is putting very strong focusses to certain stakeholder groups while others are left unnoticed to

a great extent. In Germany, the distribution of the measures even amongst smaller stakeholder

groups is more evenly.

All in all, there were several differences detected between the CSR strategies of German and

Russian banks. First, Russian banks, in general, published much more CSR initiatives than

German banks on average in their CSR report. This might seem positive at first, but only if all

the initiatives are planned and carried out with the necessary dedication and precision. If the

CSR measures listed in the CSR report are not put into action thoroughly or are even only put

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into the report to achieve a better quota, it turns into a negative trait. Secondly, all of the Russian

banks focussed very much on the economic sphere when leaving the environmental and social

areas often unnoticed. This, on the one hand, is clear, as a bank in the first line is an economic

institution responsible for economy-related issues. On the other hand, a good CSR strategy can

only exist when taking into consideration all three content-related sphere CSR consists of. Thus,

unlike the Russian banks, the German financial institutions managed to juggle all three spheres

a little more equally amongst each other. Hereby, it needs to be mentioned that especially the

environmental sphere received very little attention among the Russian banks. The strongest

economic focus was found at the CBR. Furthermore, although having overall the same

preferences in Russia as in Germany speaking about the stakeholder-related dimension,

especially when looking at the little stakeholder groupings differences became visible. The

biggest discrepancy was concerning the supplier, who while almost being forgotten by the

Russians received a respective percentage of CSR measures within the reports of the German

banks. As the stakeholder who indeed is also of importance for banks, it also should be

considered within a good CSR strategy. However, measures accounted to the supplier were

mostly placed in the environmental as well as social sphere in Germany which, as mentioned

earlier, were the weaker CSR spheres in Russia. Also, the supplier is of no economic value to

the bank. Thus, one is able to say, that although especially Russia’s CSR strategy is very well

worked out concerning the big stakeholders like the client the employees and the society and

especially in the economic sphere, there is still some single points to work on. Therefore, in the

following last part of this work, three pieces of advice for the improvement of the CSR strategies

in Russian banks based on the ongoing analysis shall be given.

7. Conclusion – how to improve the CSR strategies in Russian banks

Since the beginning of this paper, Germany has been outlined as one of the most successful and

essential countries within the CSR sphere according to some major, international ratings and

indexes. This applies to all sectors including the German banking environment. Russia, on the

opposite, has been ranked a lot further down in all those rankings. Additionally, Russian banks

were struggling to position themselves well in the CSR sphere. The root of the problem might

already be described in the first part of the work by the country comparison. In a lot of areas

Germany seems to be a couple of steps ahead of Russia and has already dealt with some

problems that are now becoming urgent there. Russia at the moment is struggling economically

as well as legally with such issues like corruption and money laundering. In Germany, those

are rarely considered to be an acute problem. Furthermore, Russia just now started to adapt to

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international standards and laws. This fact additionally to the great number of new laws that

had been introduced to the banking environment to prevent another financial crisis already had

a great influence on the Russian banking sector which makes it rather unstable. In contrast,

Germany already is considered one of the economically strongest countries of the EU having

one of the biggest, most secure and constantly developing banking environments. Furthermore,

many advances, especially in the technical and environmental sphere which have already been

reached in Germany, are just about to happen in Russia. The digitalisation, for example, just

now is gaining a foothold among the Russian population. Same goes for the environmental

consciousness which is just about to form in Russia. All of those just started to happen in the

recent future, as some of the environmental issues Russia is struggling with become pressing

affecting not only the politics but also the population within the country. Thus, at the present

time a discussion was started trying to solve them. Besides Russia is also struggling

economically with a lot of changes and other consequences from the financial crisis. Those

issues seem to be more acute for the financial institutions in Russia than CSR, which is why

they might not invest that much time in it as it would require. It also needs to be mentioned that

the Russian society, population and economic environment is just developing an awareness for

environmental issues and is starting to care about their surroundings. This is why the concept

of CSR itself is just becoming popular. Experts expect it to grow in the future. Still, the country

comparison already shows the discrepancy between Germany and Russia and offers a possible

explanation why Russia is staying behind in many CSR rankings compared to Germany.

Further, in the paper, the biggest participants of the German as well as Russian banking sphere

were determined, and their CSR strategies were analysed to be able to finally compare them

one to each other. Hereby several issues were detected that German banks tend to do differently

in their CSR strategies than Russian banks do. Starting from those differences three main pieces

of advice can be drawn to give to the Russian banks on how to improve their CSR strategies.

Those concern the number of CSR measures in general, the content-related sphere as well as

the stakeholder dimension and will be explained in the following.

Firstly, the number of CSR measures shall not be exaggerated and possible to be carried out

thoroughly. As the general amount of projects in Russian CSR reports usually exceeded the

ones named in German sustainability reports, one can assume that there are just too many

measures presented by the Russian banks. If this is the case, it’s hard to think them all through

correctly and plan them well, as this would require great resources from the side of the banks.

Therefore, it is sometimes better to set some boundaries and pick just the most important or

91

promising measures to be published and realised. Additionally, it will make the CSR report

seem rather trustworthy when the measures listed there are well structured and properly thought

through. This is why the Russian banks should prioritise their CSR initiatives and limit the

number of those to be carried out.

Secondly, all three content-related spheres of CSR – economic, environmental and social – shall

be taken into account at a similar level. Although the CSR measures mentioned in the report

shall be prioritised, they still should cover all three content-related spheres more or less equally.

It is clear, that the economic area will always be in the fore as a bank’s primary tasks are of

economic nature. However, the environmental as well as social section should not only be of

marginal interest, because nevertheless they are two big parts of any CSR strategy. When

defining the term ‘CSR’ it was stated that the concept circles around three big thematical areas.

Thus, it is logical that a good CSR strategy must include all of them. Russian banks mostly

focussed on the economic sphere, when leaving the social and especially the environmental one

unnoticed to a great extent. This was especially visible at the CBR, that had the strongest

economic focus of all three Russian banks analysed. Hence, the second recommendation is to

focus on all three content-related spheres to a similar degree.

Thirdly, not only stakeholders that create economic value for the bank shall be taken into

account. While the most important stakeholders for banks to gain competitive advantage are

logically the clients and the employees, there is also other stakeholder involved in banking

transactions. They might be not as important to the bank as the stakeholders named above, but

still must be considered within the development of a successful CSR strategy. In the here

presented analysis it became clear that the only other stakeholder Russian banks truly included

into their CSR initiatives was the state. German banks on the other hand also addressed a couple

of measures towards their supplier. Choosing a sustainable supplier might not create any

additional value for the bank economically, however, should still be considered within a good

CSR strategy. Stakeholders like the supplier were almost not mentioned by the Russian banks

at all. Therefore, the last suggestion is that Russian banks should take greater care of

stakeholders who are economically not beneficial for them in the first place.

Those three suggestions might make a beginning when trying to improve the CSR strategies in

Russian banks. However, the whole concept of CSR is still struggling with some problems in

the country. The distorted view in Russia that CSR is only a company’s instrument to create a

greater competitive advantage via generating a positive reputation is another factor hindering

the development of CSR in Russia apart from its unstable country conditions. Many Russians

92

believe that CSR measures shall not really contribute to a sustainable environment, but merely

create a positive image of the given institution (cf. Blagov & Petrova-Savchenko, 2016). This,

for sure, is another reason why the above analysed CSR strategies are lagging behind compared

to the German ones. However, time is not standing still. Same as the economic, environmental,

technological and legal situation in Russia is changing and improving, so does the situation of

CSR in the country. One of the main figures in this process is the state. As one of the most

powerful players in the economic and public life, it has the greatest influence not only on the

banks and other institutions but also on society. Many companies, especially SME, are not

interested in implementing CSR in their corporate culture. They do not consider it necessary. It

must become the task of the state to stress the importance of CSR and to further promote it.

Some claim the right way to do so is to provide incentives for SME to develop and use CSR

strategies in their environment in order to trigger a top-down movement. Another option is to

stress the great significance of CSR by raising public awareness within Russian society (cf.

Vinogradov, 2013). The Russian people need to understand how important it is to develop and

invest in a sustainable environment and how CSR contributes to it. This will trigger the CSR

movement to develop bottom-up as a demand from the people. It is yet impossible to say how

CSR will evolve in Russia in the nearest future, which is why it might be interesting to monitor

it. As for now the ecological year in 2017 might have been a first step towards the right direction

of Russia to become a socially and environmentally responsible nation.

93

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