Corporate social responsibility – one of prerequisites for sustainable development in the banking sector
2017
Licite, L., Latvia Univ. of Agriculture, Jelgava (Latvia) | Smertjeva, A., Latvia Univ. of Agriculture, Jelgava (Latvia) | .
The sustainable development of entrepreneurship is influenced by an organisation’s image, the loyalty of its clients and employees and its financial performance. To ensure it, nowadays an increasing number of organisations integrate the corporate social responsibility approach in their operation. The banking sector’s performance was considerably influenced by the 2008 financial and economic crisis that caused a decrease in the trust of clients. Therefore, the banks were forced to integrate social responsibility principles in their operation, implementing sustainable and socially responsibility financial policies. The research aim is to examine Latvia’s banking sector’s experience in corporate social responsibility that is necessary for sustainable development. A case study conducted showed that the banks implemented their corporate social responsibility through four areas: the environment, their employees, the economy and the general public. The banks focused their corporate social responsibility activities on the environment and the public, as Latvia’s legal documents stipulated strict requirements for enterprises in respect to environmental protection as well as the implementation of the activities by the banks allowed them to reduce their costs. However, their corporate social responsibility programmes oriented towards raising the public’s wellbeing contributed to the loyally of their clients and employees, which was an essential prerequisite for the sustainable development of the banks. As regards employees, Latvia’s legal documents regulate the relationship between the employer and the employee, yet the banks assumed extra responsibilities, introducing a motivation system for their employees in order to attract highly qualified and motivated employees. The sustainable development of banks is directly associated with their profits. In recent years, Latvia’s banking sector grew fast and reported stable financial performance; in 2015, the banking sector’s profit reached EUR 416 million and it paid in taxes EUR 141.5 million, thereby economically contributing to the country’s development.
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