The FINANCIAL -- Gilbert Hie, Bank Republic (BR) CEO is going to chair the upcoming business forum organized by the United Nations in Georgia to be held on October 26, 2007. BR was the pioneer local bank to succeed in becoming a pilot company to take part in the IFC’s Corporate Governance enhancement project in 2004. Since then BR has been cooperating with the International Finance Corporation (IFC). With assistance of the Canadian Development Agency, IFC is running projects aimed at supporting the development of business in Georgia.
The main aspect of this cooperation is the development of a Corporate Governance system. A number of important steps to create and implement a Corporate Governance system were taken in 2003. The FINANCIAL interviewed Gilbert Hie, BR CEO regarding the bank’s vision of CSR on behalf of BR and Societe Generale (SocGen) Group, the prominent international group the bank has belonged to since 2006.
Q. Being chairperson of the Global Compact CSR forum organized by the United Nations in Georgia, what’s the mainstream message you’d like to deliver to the business community and the attending audience on behalf of both BR and SocGen?
A. The main message I’d like to deliver to the audience during the forum concerning CSR consists of very simple things. CSR is not only charity or sponsorship from the rich people and those with money running sound businesses. It’s a basic concept, though not something complicated or even a sophisticated adventure, it’s a basic notion of being attentive to your fellow human being, considerate of the environment, watching other’s behaviour, and listening to people. To sum up, CSR is about taking care of the developments around a business, sharing ideas and values with people and respecting each-other.
CSR on one hand is something to be organized, but on the other hand is a day-to-day way of life in terms of private, professional, and corporate life.
For an international company, CSR is about global behaviour considering, for instance, the staff working for the company, the way employers are treating them and establishing the rules accordingly. At BR we have a code of conduct guiding staff how to behave in very simple words. It should also be taken into consideration how you treat the suppliers, customers and shareholders as well. All these social aspects are very important for a company where people should support and encourage each-other and work together both within and outside the company.
CSR should be a day-to-day value in the banking industry as well where we have a special role and responsibility financing the country’s economy. Consequently, banks play a social role in the local economy. Indeed, it’s essential that banks pay attention to people in need of resource. In this regard, BR is involved in micro-lending activities in favour of very small businesses and start-ups, we’re also engaged in issuing student loans, and mortgage loans enabling people to have decent houses and live in comfort at acceptable prices.
CSR is also about not doing things which are socially unwelcome. Banks should not lend to industries linked to weapons, arms, drugs, or pollution. More simply I believe that banks should not encourage the financing of old or used cars imported illegally because they’re dangerous on the roads and there is an increased risk of accidents, even kill people.
On the deposit side we also have important developments going on, concerning anti-money laundering. We should be very careful of the way we’re treating the transactions because they can directly serve to money laundering.
To summarize, I would say that we should never do things blindly. We should never accept doing any kind of work blindly as corporate life is a part of individual life. This is an area where the private sector in Georgia could be very important and the role of the companies and their leaders is crucial in improving the conditions of social life.
I think the CSR forum is coming at the right time in Georgia and it’s very good that the Global Compact platform can be the vector of CSR development in Georgia.
Q. Bank Republic is the oldest commercial bank in Georgia, founded during the ‘90s of the previous century. A number of important steps to create and implement a Corporate Governance system were taken in 2003. The same year SocGen became a member of the UN Global Compact, has further enforced CSR commitment. What’s the group’s CSR policy in emerging countries like Georgia and mature markets like France?
A. CSR is directly dependant on the area where you live, the habits of the country, its culture and civilization, the education and finance level. CSR is definitely not treated the same way in poor countries as it is in developed ones.
SocGen Group policy, being presented in 80 countries worldwide, is different in mature and emerging markets. In western countries CSR is probably not very important in the fields linked to human rights, war, and corporate governance but is more oriented at environmental issues, climate changes, sustainable development, pollution, and carbon issues. Whereas in emerging markets like Georgia, corporate governance should be a priority, also human resources like training, education, ethics, practices and social behaviour. Indeed anti money laundering issues are very important for the local banking sector.
As a member of the SocGen group, I personally have sensitivity to CSR globally but it’s also a part of my job as BR CEO to keep on implementing CSR at the bank even though it already existed at BR before the French group took interests in BR capital. The time has come to structure it and Global Compact is giving us an excellent opportunity, as a catalyzer, to organize CSR in a better way.
Q. In 2006 SocGen focused on two more specific priorities: the fight against climate change with the signing and application of the Carbon Disclosure project and the signing by SGAM, of the principles of Responsible Investment. What actual impact could theses developments have on the group’s CSR activities in Georgia?
A. They won’t have a significant direct impact on CSR policy by SocGen in Georgia. It will be not included in the main priorities in Georgia though it will come later on.
However in BR we’re already thinking about how to treat garbage paper, not to print too much and think twice before printing e-mails. We really need to save paper. Part of the Carbon Disclosure project is to save trees.
Q. Societe Generale offers a number of CSR products and services worldwide: climate change, ethics, charity loans, green financing, disabled people, socially responsible investment, group charity work, - which of the above mentioned aspects is the group developing in Georgia?
A. We are already directly involved in many related activities. First of all we are looking at ethics; before SocGen took control of the bank’s stakes BR was already involved in a corporate governance project. We have a code of conduct at the bank, we’re working on anti money laundering issues, and lending with selectivity- these are the current major ethics at BR.
The human resource factor is also a priority for BR and we are conducting various projects in terms of educating and training our staff. We pushed hard for the Georgian Banking Training Center.
BR is engaged in sponsoring schools, sports, also cultural heritages. We have established a charity foundation Tsiskari that helps poor families among many other duties. BR in cooperation with Red Cross is running a project for the disabled people. Every year we have a CSR report. Last year it was part of our annual report.
Q. In September 2007, SocGen announced about adopting Equator Principles, a voluntary set of guidelines for managing environmental and social issues in project finance lending. Introduced in 2003 under the aegis of the World Bank and the International Finance Corporation (IFC), this initiative has been adopted by around fifty international banks. Recently BR received a loan of USD 20 million to support the bank in the expansion of its small and medium enterprise, mortgage, and educational lending programs. How are you going to further develop business relations with IFC and other international organizations?
A. The IFC loan is a multipurpose facility for financing: mortgages, SME, micro lending, student loans. This refinancing facility is also encouraging CSR.
We cooperate actively with other international organizations including the EBRD, and KfW. These institutions have strong requirements that the money they lend should not be used for financing arms and weapons, alcoholic products and drugs. These are values that we share a hundred percent in the financing sector.
Q. On 31 January 1999, Davos, Switzerland, the United Nations Secretary-General Kofi Annan called on the world's leading businessmen to initiate a global compact of shared values and principles, "which will give a human face to the global market." Do you regard the 10 principles of the compact to be equally universal for all markets worldwide? How could you define the “human face” of CSR in Georgia?
A. As for the 10 principles of the Global compact program, of course they’re equally universal for all the countries. Out of the 10, 3 are related to human rights, 4- working conditions, 3- environment, and 1- corruption.
I think in Georgia, being an emerging market country, we can reverse the priorities. One of the most important principles for Georgia could be the fight against corruption and this is what the local Government’s been developing over the last few years. The second issue is environmental protection by introducing new technologies. Working conditions are also important though not particularly in the banking sector as we have already taken care of the subject. Last but not least is human rights, but I don’t think we have any fundamental problems regarding this topic in Georgia. It can be different in Africa and other poor regions.
Q. According to the Forbes June 2007 article: The world's business schools should be more proactive in promoting corporate social responsibility in their teaching programs, according to the United Nations Global Compact initiative. Considering the SocGen global experience, how prepared is the local market for the implementation of CSR principles? Do business schools in Georgia give adequate education?
A. The Corporate Social Responsibility of a bank is run by individuals, it’s very important that people after graduating from the universities have already developed the behaviour needed for getting employed at a company.
I had the pleasure to learn that the major schools in Georgia: Caucasus University, Georgian-American University and ESM-Tbilisi are working on the subject. I know that Caucasus School of business, for instance, is running CSR education for its BBA and MBA students and it’s very important that the youth already have the appropriate behaviour that will then contribute to CSR development in the country.