Barclays 2007 Annual Report Download - page 74

Corporate sustainability
72 Barclays PLC Annual Report 2007
Corporate sustainability
For Barclays, there are two separate but mutually dependent aspects to
sustainability. One is our duty as a bank to provide sound and enduring
returns for our shareholders, and the best possible services for our
customers. The other is our responsibility to conduct our global business
ethically, and with full regard to wider social and environmental
considerations. Our ambition is to develop both of these complementary
strands as we move forward.
Barclays as a sustainable bank
Banks are central to every society; they provide the funding that facilitates
business and entrepreneurship, support a sound financial system, and
help to create jobs and wealth. As one of the world’s leading banks, with
nearly 135,000 employees and operations in over 50 countries across
the world, Barclays plays a significant role, whether it is working with
governments on major infrastructure projects or bringing mainstream
banking to customers in emerging markets.
In all of this, the customer is absolutely central. If we are to make
sustainable banking successful, and successful banking sustainable, we
must put our customers at the heart of everything we do, and build our
services around them. We must earn – and keep – their trust by ensuring
that the products we sell are understandable and appropriate.
This may seem like a statement of the obvious, but the banking sector in
general has not always had a reputation for doing this. We want to change
that. This aspiration covers every aspect of our business and every stage in
a customer’s relationship with us, from the purchase of a Barclays product
for the first time, to the way we assess applications for loans, to the more
general aspects of customer service such as complaints-handling,
confidentiality, and security.
Focusing more on the customer is also an integral part of what we call
‘inclusive banking’. This is partly about appealing to the broadest possible
range of people as part of our strategic move into mass-market services in
our emerging markets businesses, and partly about understanding the
exact nature of our local customer base, and adapting our business model
and product range accordingly.
A good example is our approach to basic banking accounts. In the UK
we now have over 660,000 customers who have our basic Cash Card
Account, and we have been working closely with consumer groups and
third parties such as housing associations to ensure that these accounts
are easily accessible and the product features and communications are
tailored to meet their needs. In Africa the potential for growth in this area
is enormous: over 100 million of the continent’s people have yet to be
brought into mainstream banking, and could in time buy a whole range
of other financial services. Absa has been a pioneer of basic banking in
South Africa, and has attracted over 4 million customers to these accounts.
The same thinking is now being applied in other African markets and India,
with new basic banking products being developed. We are also distributing
these products through new and innovative formats such as express
branches and direct sales agents, alongside our traditional branches.
This is another lesson we have learnt from our South African operations.
In Ghana our microbanking programme is now working with over 500 Susu
collectors and reaching over 280,000 market traders across the country.
The programme is being extended to other intermediaries such as credit
unions, trade associations, microfinance institutions and church groups.
Responsible lending
We have reported on this issue in our recent Corporate Responsibility
reviews, setting out our approach to what remains a high-profile and
intractable issue, especially in the UK. In the last year we have continued
to enforce strict criteria on new credit card applications, using a scoring
system that takes over 400 variables into account when assessing an
applicant’s likely ability to manage their credit. Around 50% of applications
for credit cards are declined as a result. We have also extended our
data-sharing collaboration with the UK credit reference agencies: pooling
information about cash advances and minimum payments is proving to
be an effective way of flagging up those customers who are in danger of
incurring serious debt problems. We have a new unit that can step in at this
stage and offer support and guidance to get their finances back on track.
We are also testing a new product, Barclaycard Freedom, which combines
a credit card and the features of a structured loan, making it easier for
people to manage their borrowing and keep their interest payments down.
Customer service
We have a strategic priority to be the best bank in the UK. In the last twelve
months we have started to roll all our various customer initiatives into
what we are calling ‘Real Retail’. We are sharing best practice more actively,
and both managers and employees are getting new powers to make
decisions, and tailor their product range, based on local customer needs.
Real Retail also includes a new programme to telephone customers to
ask about the quality of our service and products they have purchased.
Over 20,000 calls have been made so far, and the feedback is being
channelled back to our product development teams.
Risk management
The incorporation of environmental and social risks into mainstream
commercial credit assessments is an area where Barclays has demonstrated
genuine leadership.
We have been a member of the Equator Principles since their inception,
and currently chair the Steering Committee for the group of Equator banks.
We continue to assess our environmental and social impact beyond the
project finance remit of these principles (see table on page 73) and are
working to include climate change and human rights risks. We now have
ten briefing notes for all lending covering a wide range of social and
environmental risks. These notes set out an overview of the risks facing
different sectors, and the ways they can be mitigated, as well as the
legislative and regulatory environment applicable to that industry.
A good example of this process in practice in 2007 is Absa’s involvement
with the Bujagali Hydropower project in Uganda. A rigorous social and
environmental assessment was carried out, and the results were
incorporated into the final plans.