A project report submitted for the requirement of

POST OF JUNIOR EXECUTIVE/EXECUTIVE –CORPORATE SOCIAL

RESPONSIBILITY

Sep - 2016

B B SHANEL A PERERA (AIB Sri Lanka , DCM - IBSL , MBA finance –Cardiff UK )

Junior Executive -credits

HNB Moratuwa

Phone +94 11 4213075 | +94 77 3149219 | Fax +94 11 2645294 |

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Introduction

The HNB Sustainability Foundation was established in 2009 as an independent body to

manage the community development initiatives of the Bank. CSR & sustainability has

always been an vital part of how HNB .Since its operates – as the „Partner in Progress‟, HNB

has focused not only on creating access to finance, but also strived to achieve social

inclusiveness for rural communities

During this period, each and every project continued to be focused on four key pillars namely

Education, Health, Environment and Entrepreneurship and is aligned to the Millennium

Development Goals of the bank. They are managed to ensure the long term sustainability of

the business.

Sustainability management is an hour of need topic to discuss; the approach to economic,

social and environmental risk management are the most. Committed to serve all layers of

society and with careful customer segmentation provide financial access and services across

the non banking groups. Sustainability is at the heart of the Bank‟s corporate strategy. By

incorporate social responsibility into core business processes and stakeholder management,

Bank believes its ability to achieve the ultimate goal of creating both social and corporate

value.

Does Corporate Social Responsibility Increase Profits?

It is generally believes that corporate social responsibility (CSR) could increase company

profits and thus most large financial institutions are actively engaged in it. They understand

that CSR can promote, respect the company in the marketplace which can result in higher

turnover, enhance employee loyalty and greater stability to the firm.

CSR activities focusing on sustainability may lower the operational costs and improve

efficiencies. An added advantage for public quoted companies is that aggressive CSR

activities may help them gain a possible awards, international recognitions and tax benefits as

well. This may eventually improve the company‟s stock price, and profitable stock will make

shareholders happier.

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SWOT Analysis

SWOT will help companies to think & take action on environmental challenges. It pushes

companies to explore relationship with internal departments, as well as suppliers, customers,

or other stakeholders on strategies to create and sustain long-term value.

•1. The largest private sector bank in Sri Lanka which has over 250 branches

•2. 4300 staff and strong management team

•3. Staff trained at the best training center in Sri Lanka (Asia's Overall Award forBest Results Based Training for the 4th time in succession)

•4. Strong brand – Bank brand was rated as the sixth most valuable brand in SriLanka by the Brand Finance Lanka 2013)

•5. Tailor made banking solution available to promote

•6. Best retail bank in Sri Lanka over the past 07 years (Asian Banker)over 128 years.

•7. Recent investment on IT developments..

•8. Over 3 million Existing customer base.

Strength

•1. Too many IT Systems.

•2. Staff retentions and retirements.

•3. Stick to out of date process.(manual statements , mortgage cancellation process)

•4. More towards operational aspects

•5. Service gap (interns)

•6. Lack of knowledge on product and services

Weaknesses

•1. Post war development

•2. Availability of low cost funding with the liberalizing of borrowing from foreign banks

•3. Recent changes of interest rates of government securities. Leads to gain on margin retained.

•4. High risk in new entrants

•5. Growing remittance, apparel, agricultural sectors and SME sector.

Opportunities

•1. Central bank regulations

•2. Declining switching cost, rapid pace of changing technology and mobility

•3. Global crisis – impact on remittances

•4. Stiff completion and price war

•5. Changing buying patterns

Threats

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Stakeholder group

Investors

Customers

EmployeesSuppliers

Community

Sustainability Vision & Strategy

Bank‟s vision “to be the acknowledged leader and chosen partner in providing financial

solutions through inspired people” is the beginning of HNB sustainability vision. Hence

sustainability is an embedded component of the business model of the bank.

Sustainable development is an ongoing and continuous process which gives a full

consideration when objectives, goals and targets are implemented, and is integrated with

governance and accountability arrangements and risk management.

Sustainability is at the very core of the Bank‟s corporate strategy. By integrating social and

environmental responsibility into core business processes and stakeholder management, the

Bank recognizes its ability to achieve the

ultimate goal of creating both social and

corporate value.

Bank is committed to serve all strata of

society and through careful customer

segmentation provide financial access and

services across the range of demographic

groups.

Sustainability management is an important precautionary approach to economic, social and

environmental risk management, careful loan covenants and adherence to the green pledge

bank integrate responsible environmental practices into our core business and serve as a

conduit for behavioral and attitudinal change in our key stakeholders.

Pillars of HNB -sustainability

Environment Conservation

Economic Performance

Community / social

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Pillars of HNB –CSR

Most of the financial institutions have a strong focus on CSR initiatives .Some of the critical

areas are covered by existing CSR projects including: Environment protection, awareness and

prevention of health risks, capacity building and youth empowerment, SME development

etc.

EducationAnnual Book donation

•Servicing of laptops donated to Visakha Nursery school

•Renovation of a HNB „Nena Pubuduwa‟ school library in Karapitiya

•Sponsorship of 2 students for an IT Forum

•Principal sponsor of the National Trust Sri Lanka for protecting cultural heritage

Health

• Principal sponsor of World Aids Day national programme held in Batticaloa, with the Ministry of Health

• Sponsored a Rapid Testing Centre -over 400 individuals were screened for HIV

• Financial assistance to selected cancer patients and maintenance of counselling centre at the National Cancer Institute Maharagama, an ongoing CSR project of the Bank was continued during 2015 as well

• Birthday card project with the Paediatric unit of the National Cancer Institute Maharagama - whereby drawings of the children at the Paediatric unit were used in the birthday cards for staff. In return, a payment was made to the unit to purchase expensive medicine for the children admitted to the paediatric unit

Environment

•Environmental and Social Management System

•The Bank‟s Environmental and Social Management System (ESMS) provides the policy framework, implementation process and a monitoring mechanism to ensure that the financing extended to our customers are used to set up and fund operations which are economically and socially sustainable, eco friendly and do not harm bio diversity via their outputs in the form of emissions, effluents, waste etc.

Empowering Entrepreneurs

•Empowering Entrepreneurs

•Financial Literacy and Capacity Building

• In addition to economic empowerment HNB also socially empowers a multitude of rural communities across the country, including those who are non-customers of HNB, via capacity building initiatives such as programmes on management skills and financial literacy and establishment of market linkages and tailor made solutions for financial solutions.

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The process implementation of CSR activities can be segregated in to

external and internal process,

Some of the national development priorities in summery

• As an external mechanisium I have seen a lack of coordination of CSR activities among each and every project there is an overlapping of activities; split of resources among different projects adhoc selection of projects, while certain development areas have gained more priority than others

• Hence a better coordination to streamline CSR activities according to national priorities will:

• - Enhance the impact of CSR activities on national development

• -Avoid overlapping of programmes to ensure efficient use of resources

CSR - EXTERNAL

•Internal processes are to be compiled with the expected goals of the bank mission “Combining enterprenual spirit with empowered people and leading edge technology constanttaly exceed stake holder expectation.

CSR - INTERNAL

Financial exclusion: not delivering the financial services to the poor segment of the society

Improving the level of nutritional energy consumption

Uplifting living standards in rural areas especially in Northern, Eastern, Uva, North Western and Sabaragamuwa provinces

Improving connectivity through facilitating greater usage of telephone, mobile and internet especially in rural areas

Ensuring environment sustainability by working towards reducing CO2 emissions

Improving child and maternal health in war affected areas and estate areas

Increasing employment opportunities for women with secondary and higher levels of education, especially in rural areas

Improving the quality of education and education outcomes

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Creating a shared value (CSV) not CSR

Logos are crucial aspects of business marketing .Logo attach a major graphical representation

of a company brand and become the single most visible manifesto of the company within the

target market. For this reason a well design logo is an essential part of any company s overall

CSR & sustainability strategy.

Following are some of the logos proposed for HNB CSR –SUSTAINABILITY

• Agenda is determined by external reporting and personal preferences

• Citizenship , philanthropy

• Sustainability

• Doing good to the society (charitable)

• Separate from profit maximization

• In response to external pressure

CSR -CORPORATE SOCIAL RESPONSIBILITY

• Agenda is company specific and internally generated

• Joint company and value Creation

• Economic and social benefits relative to cost

• Integral to profit maximization

• Essential to challenging

CSV - CREATING SHARED VALUES

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Proposed Recommendations and strategies of been a good corporate

citizens

As one of the leading financial institutions in the country, HNB has proved the sustainability

of its operations through existence in the market since its inception as Hatton Bank in 1888.

Today, the Bank has demonstrated sustainability through diverse initiatives which are directly

linked to its core business activities, to make a greater impact on the country and the

communities in which it operates.

Community Relations

• Mechanisms to identify requirements of the community that it interacts with, including partnerships and suppliers and response to the needs of communities. Company's overall strategy for identifying and implementing special projects

Governance

• frameworks, structures and processes of an entity to facilitate conformance to requirements, equity among stakeholders, ethical behavior and optimum performance

Financial Performance

• The performance and position of the entity measured in nancial terms

Environmental integration

• standards, compliance and measures towards greening the business processes and staff capacity enhancement towards greening the business

Environmental Management

• Eefcient use of resources by the company and measures to reduce the environmental foot print of the business and its clients businesses.

Economic Contribution

• the extent to which the entity contributes to the economy through investments, employment, value creation and facilitation of regional development

Customer Relations policies

• measures to improve the products/services for the customers considering needs/satisfaction, the extent/effectiveness in communicating all relevant information about the products/services to the public and compliance with regulations applicable to the distribution/sale of the products/services.

Employee Relations

• Strategies that were adopted during the year to strengthen Employee relations specially pertaining to training, career advancement, benets and equal opportunities in employment.

Environmental value

•additionspecic eco-friendly projects carried out by the organization that are not directly related to its normal operations

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“Good corporate citizenship is becoming increasingly important for the long-term health of

financial institutions even though most of them put great effort to show a return on their

investment from socially responsible activities “corporate citizenship is defined as go beyond

humanity and compliance, and is addressing how companies manage their social and

environmental impacts as well as their economic contribution. Corporate citizens are

accountable not just to shareholders, but also to stakeholders such as employees, customers,

suppliers, local communities and society at large.”

As a leading commercial bank in Sri Lanka, HNB‟s contribution to the economy of the

country is enormous. This contribution is not limited to the payment of taxes and funding

infrastructure projects, but creating employment directly as well as indirectly through the

customers of the Bank.

Hence, propose and recommend the enhancement of the following ongoing

initiation by the bank to more sustainability and been a good corporate

citizen

HNB‟s renowned micro-finance product ‘GamiPubuduwa’ is one of the greatest steps in the

industry towards social sustainability. A number of customers who obtained micro finance

loans under this scheme over a period of 25 years, have now grown into SME or corporate

level and make significant contributions to the country‟s economy. The Bank has been

partnering the progress of these customers not only through financing the startups and

expansions, but enhancing their capacity through workshops to improve financial literacy of

micro entrepreneurs, training programs for SMEs and facilitating buy-back schemes etc.

Sustainability for HNB also includes environment conservation and protection. Continued

investments in environmental and social management systems (ESMS) bear evidence to

how a corporate entity can contribute to environmental sustainability. These include taking

into consideration the adverse effects to the environment and society when granting loans to

customers‟ projects; investment in electronic banking solutions, investment in systems to

reduce paper usage; investments in LEED certified Green buildings, investments in advanced

technology to make the Bank‟s electricity consumption far below the industry average and

the HNB the HNB Green Pledge taken by all employees.

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