Barclays’ latest report looks good but lacks strategic direction
To use an automotive analogy, Barclays’ latest sustainability report is like a fine luxury car, but one with an undersized engine under the bonnet. The report – the bank’s ninth in as many years – features all the bells and whistles that we expect of veteran reporters. But it lacks strategic focus, particularly on the company’s future commitments, and so fails to inspire stakeholder confidence.
If this report is any indication of what is happening internally at the bank, then perhaps Barclays’ sustainability efforts are sliding – much the way its stock price did in 2008.
The structure of the Barclays report is arguably one of its strengths. The signature piece is a succinct, 24-page sustainability review, which highlights five themes – customers and clients, inclusive banking, environment, diversity and people, and responsible global citizenship. Shorter and more manageable than in past years, this summary review lives in a convenient library of reports dating back to 1999 and is supported by additional web content for ease of reference and navigation.
The tone, however, leaves something to be desired. Take chief executive John Varley’s quote on the introductory screen: “At a time when it has never been more important for banks to focus on the things that support their sustainability agenda, we have never faced so many distractions from doing so.” Not exactly reassuring that key efforts, such as cutting the bank’s carbon footprint, are charging forward.
Considering how dismal the year 2008 was for the financial services industry, one might expect a laser-sharp focus on stakeholder engagement – particularly with key groups such as customers, regulators and employees. Barclays does not quite deliver in this regard. Barclays describes its mechanisms for engaging with customers, consumer groups and regulators only briefly and vaguely. Tangible examples of how the bank is responding to specific stakeholder concerns are few and far between.
Barclays’ reporting on employee engagement is only marginally better. Barclays acknowledges that employee engagement was a challenge in 2008, given the turbulent market conditions. It is encouraging to see that 91% of employees working in the company’s global retail and commercial banking and the group centre responded to this year’s employee opinion survey.
Barclays might improve on two fronts in 2009 by including stakeholders directly in the materiality analysis process. Deloitte, the consultant Barclays engaged to assess materiality, merely examines the issues from stakeholders’ perspectives as reported in the media rather than engaging stakeholders directly. A materiality analysis that employs direct stakeholder engagement would be better informed and more accurate and would have the added benefit of strengthening stakeholder relationships.
For a veteran reporter, Barclays presents a disappointingly short-term view of its metrics and targets, making it difficult for readers to ascertain how the bank has progressed over the last, say, five years and where it intends to be five years down the road. While the list of key performance indicators is comprehensive and fairly well balanced, this report’s figures are compared only with 2007 data, even though data from previous years is, in most cases, available. The library of past reports may be convenient, but it is not convenient enough to enable readers to cross-reference data from one catalogued report to the next.
Barclays’ forward-looking targets are equally short-sighted. Most of the targets expire at the end of 2009, although a few extend beyond. Just as troubling is the lack of quantitative targets. Of the 40 or so targets outlined in this year’s report, half a dozen are quantitative. This shortfall will make it increasingly difficult to assess Barclays’ progress come the end of 2009.
In sum, it seems that Barclays lacks a long-term strategic focus. Enhanced and direct stakeholder engagement, a more inclusive materiality analysis, and longer-term targets could help to change this perception. The question is, what is holding Barclays back?
To use another auto analogy, perhaps it is time to switch drivers. Without question, sustainability is integrated throughout Barclays’ business. The board of directors has oversight, the business units are on board, and the chief executive has the primary responsibility for implementation. But this last detail might very well be the problem.
Now is the time for Barclays to hire an executive solely in charge of sustainability. This responsibility has been in flux for the past several years. The right person would go a long way towards bringing Barclays’ sustainability strategy into focus, not to mention strengthen its reporting.
Follows GRI? Yes: B+ application level and the financial sector supplement.
Materiality analysis? Yes
Stakeholder input? Yes
Seeks feedback? Yes
Key strengths: Format is easy to read and navigate.
Chief weaknesses: Lack of strategic focus.
Pleasant surprise: Timeline puts business in the context of key world events.