During my well-deserved holidays, in the sunny beaches of my beloved Andalucia, I fell into a lull and – influenced by the temperatures, the smell of the sea, and attractive young ladies in summer dresses surrounding me – had some sort of weird delightful dream of a better and fairer world – better from my point of view, fairer by definition. If I’m honest, it was also influenced by the latest information I heard carried gently on the breeze from the radio, in which Banco Santander had doubled their profits, equaling their 2012 total in just the first half of 2013. But this is just one minor detail, please do not take this into account as you read this.
In my dream, unconsciously, I wondered if there is anything the EU could do. Putting together various strands of logic – that perhaps I would not have been able to do so awake – one by one I created the following idea:
1) The logic of the European Union: (let me take a breath…) is to transform – set up the “Smoke and mirrors scenario” – Private Banks as actors in the public interest just as the old Nationalised Banks were. Turning them into official providers of liquidity and credit in order to supply the demands of Governments, entrepreneurs, businesses and investors in order to run their activities, create employment and, in the end, serve as the engine of the overall economy, and thus overall society. By the way, I do not know if you have noticed, but thank you EU decision makers, you are doing an awesome job!
2) The logic of Private Banks: to seek profit through the lending of money to other actors that they trust, regardless of the purpose of said funds. In other words, to use absolutely at their own discretion. This converts the entire economic and productive fabric into them (the private banks) seeking benefits from subcontractors for their own ends, ensuring the system works for their own profit.
3) The logic of corporate social responsibility: a form of corporate self-regulation (CSR) integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm’s implementation of CSR goes beyond compliance and engages in “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.”
CSR is a process with the aim to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders – Wikipedia dixit!
This was most recently showcased and implemented in the garment industry in Bangladesh after the catastrophe in the Rana plaza building, in which multinational companies such as H&M, Zara and Mango, engaged in the so called “Accord on Factory and Building Safety”. This Accord, in addition to the schemes of building inspection and enforcement of fire and safety standards, requires that contracts by international retailers with Bangladesh manufacturers provide for adequate compensation to maintain safe buildings so as to prevent future accidents.
Now, back to my dreams of a fairer Europe, and summing up all the above logic, it would be reasonable to argue that Banks and other private credit corporations, under the current model, owes something to society. Maybe, just maybe, it is indecent to keep earning more while the economic and social fabric of certain regions of Europe is cracking.
The result of this addition would be that, as I said, banks should be the ultimate actors – prior to the political sphere – in taking subsidiary responsibility of the actions of private companies in events such as:
• Environmental damages caused by polluting industries financed by them;
• Unpaid Social Security quotas that their subcontractors could or did not want to pay;
• Take care of the possible negligence of housing contractors, when it comes to substandard building constructions;
• Debts of the subsidised bankrupted companies with public administrations; and
• Competition fines and sanctions that companies refuse to pay, by action or omission derived from mergers, anti-trust or cartel cases.
Banks cannot be free-riders in the society we are building and if, as I am afraid of, they are to keep going along with the roles assigned by the European Union, they should take over responsibility which has been lost during the process. Do not get me wrong, in the current situation I will always defend and support the role of the public. However, under the current circumstances, there is a necessity to strengthen the European economic and social fabric. To create a genuine solidarity between the different layers of society – productive sectors, member states and regions – to encourage responsible environmental behaviour, create Social Security structures more resilient to crisis’ and ensure healthy flows of credit and to avoid speculation of any kind.
I really hope this does not just end up being a simple summer night’s dream. Maybe not today, maybe not tomorrow, but I do not think it is such a difficult move on behalf our dear legislators, in comparison to other solutions. In any case, as you might be aware by now, I am fully discouraged from believing in such actors. I hope they come back to reason and logic before some daydreamer becomes violent and showcases their respect to whichever government or banking institution they come across first, before we live to regret not having acted sooner to prevent such a situation.