Sustainability Assignment: Impact Of COVID-19 On Commonwealth Bank

Question

Task:
Students must choose an ASX listed company to prepare this sustainability assignment demonstrating the understanding of the impact to the sustainability of the corporation by Covid-19. You are required to critically analyse the reporting by the corporation (by reference to the general -purpose financial reports and other published material from the corporation and other related sources) of those risks identified by them. Your aim is to identify and apply theories and models in accounting to the disclosure or non-disclosure of risk by management in the presentation of general-purpose financial reports by corporations.

Answer

Executive Summary
The current sustainability assignment explores the overall negative impact of Covid-19 that has led to massive impact across every industry and sector. The sustainability practice of every company has undergone immense change owing to it. The aim of the report is to study the change of sustainability practice by Commonwealth bank due to the pandemic. The report initiates with the introduction followed by different approaches of bank to serve the society such as more emphasis on customer, deferment of loans and society concern. The sustainability drive was to deliver the government stimulus initiatives and support the economy.

Introduction
COVID-19 has an unprecedented impact on the global economy, business, government, and society. The spread of the virus has transformed the global health crisis into a worldwide economic shock, which has become the most vulnerable. Millions of peoples have already lost their jobs, the livelihood of millions is in danger, and a predictable 130 million people live in poverty of catastrophe. COVID-19 epidemic has shaken global trade and development. Many banks are taking essential steps purposes various programs to support customers in this challenging time. The report aims to briefly describe how COVID-19 may affect substantiality in the Commonwealth bank. The Commonwealth Bank continued the progress through appropriate strategies that helped the bank deliver even during the pandemic times. The bank sustainability measures were impacted by Covid-19, where the focus of the bank shifted towards customer support followed by the response to climate change, diversity, and introducing inclusion strategy or the Reconciliation Action Plan.

CBA sustainability
Higher emphasis on customers
Covid-19 hugely impacted the bank's sustainability measures. The bank's focus shifted to customer support following a challenging time and response to an inclusion strategy or a reconciliation action plan. The bank continued to develop through appropriate methods to help consumers even in times of epidemic. Commonwealth Bank has been aiming to serve all its business consumers. For instance, it is offering enhanced flexibility to small businesses by decreasing their rates of interest. This program is specially framed to support such medium and small companies amidst such pandemics. Through Emergency assistance for customers affected by bushfire and Covid-19, the bank spends more than $100 million in insurance claims, restructured small business loans, deferred loan repayments, and relinquished plenty of fees (Commonwealth Bank 2020). At the peak of the crisis, the bank automatically postponed repayments on the eligible small business loans and rapidly rescheduling requests for home loan customers.

The bank continues to progress its strategy to work with retail and business customers to give adequate support that addresses their challenges and conditions for going forward (ComfortJones & Comfort 2020). Support measures include pause on Loan repayments, wave off the dues and charges, and access to a confidential telephone counseling service, and even more than 250 million personal messages were sent that provide COVID support. In addition, they are effectively working with small commercial customers to transform their firm online rapidly. The noteworthy features that were observed here were:

• The sustainability measures were changed owing to the threat caused by Covid-19. The bank ensured higher emphasis on the deferment of more than 250000 home, business, and personal loans and even sent more than 250 million personalized messages that offer COVID support (Commonwealth Bank 2020).
• 800% increment in calls to provide financial assistance (Commonwealth Bank 2020 2020)
• Team worked with small business customers to quickly transform their business online
• It helped the customers by delivering the debit master card to customers who only relied upon the passbooks to withdraw their money. This was done to ensure the industry-wise response remains intact and that the Australians have an alternate banking option present with them while the lockdown and social distancing are in force.
• It even supported the tracing app of COVID named COVID safe and helped the customers download it.

Deferment of loans
Covid-19 affects disruptions in the domestic and global economies. Covid-19 adversely impacts many businesses; people are unable to pay their loan installments. It has been found that many companies face trade deficits, high customer defaults due to unemployment, and slow growth. One of the major highlights was to develop a new automated process in nature for the customers who access deferral of home loan repayment (Leal et al, 2021). To support business customers; commonwealth bank purpose various measures to provide support. For a small business, the bank providing additional flexibility by reducing interest rates. The management and risk practices of the bank have also assisted in delivering several relief packages so that businesses and individuals can be easily backed up (Barreiro-Gen, Lozano & Zafar 2020). With these facilities, the bank aims to enhance its risk culture by bringing out necessary and significant changes applicable to the people as a whole (CBA 2020). The program is designed to support small and medium-sized companies in the current COVID-19 environment. This includes repayment for at least the minimum monthly repayment amount. About 154,000 home loans, banks defer their customers to help with this uncertainty. Bank's risk management practices and resilient systems also offer various relief measures to backing individuals and businesses. All these efforts are being made to improve the bank risk culture and bring about meaningful changes. The Commonwealth Bank has provided repayment on loans to customers to manage the challenges of COVID-19, approximately 250,000 individuals, and business loans (Commonwealth Bank 2020).

In addition to repayment deferrals, the bank has provided customers with a freeze on home loans to owner-businessmen and a new money management facility in the CommBank app - Coronavirus Money Plan, with other support measures (Parliament of Australia 2020). Further, Coronavirus Money Plan provides clients with the convenience of offering modest, practical, appropriate, and actionable supervision and tools for better planning and managing their funds (Sarkodie & Owusu 2021). As a result, the plan helps thousands of customers to save more in credits, bills, and other government payments. From the perspective of sustainability, it can be commented that the Commonwealth acted rationally and helped the customers from the financial crunch (Parliament of Australia 2020).

The major highlights in this segment were:

• 154000 home loans deferred
• Business loan deferred at peak

Concern towards society
Commonwealth bank believes it is their responsibility to improve society's financial well-being and positive measurement in contributing to the environment. They are sourcing 100 percent electricity from renewable energy for their operations. The bank also has a procurement policy, necessitating all workforces to avoid needless consumption and manage demand and implement strategies to backing socially accountable people and adopt ethical applies. Further, they offer many programs to support education for students (CBA 2020). This year schools were closed due to a pandemic; Commonwealth bank created Start innovative digital to facilitate students into Online classes (Castka, Searcy & Fischer 2020). Over 10000 students have attended online learning sessions. The bank gathers donations from customers and employees to help people from bushfires.

Moreover, this year, the bank implements many safety measures like social distancing and proper sanitation to keep customers and employees safe. The pandemic gave a formidable challenge to the bank to operate the sustainability drive (Zhan & Santos-Paulino 2021). Hence, the focus spread to the betterment of society in a different manner and with the inclusion of the internet as the primary tool.

• Sourcing of 100 percent electricity from the renewable energy
• Financial aid for education. Creation of Start Smart Digital to take facilitator into online classroom
• Participation of more than 11000 students
• Steps to start smart digital facilities so that students can take advantage from the online classes.

In short the entire sustainability focus shifted to the betterment of customers, employees and society at large (Hafiz Syed et al 2021). Commonwealth Bank was again rewarded as Australia's Most Sustainable Business on the Global 100 Index.

Analysis of the Bank
Strength

• The bank is one of the Big Four banks and hence able to undertake the panic created by Covid-19.
• Strong revenue with increasing profit thereby able to launch different initiatives for the sustainability in a new context supported by the ethical social choice theory

Weakness

• Higher reliance on off shore borrowings
• Geographical diversity is questionable

Theory that guides sustainability
The theory that guides sustainability of the bank is the ethical social choice theory. Here sustainability is defined by efficiency and equity as ethical axioms and links to the grading principle of the bank. The technologies are use for the productive sense by the CBA. This indicates the usage of the technology for the efficiency and equity which is highly acceptable.

Recommendation/Conclusion
It has been summarised from the above research that Commonwealth bank provides many programs and funds to support customers and society to combat this difficult time. Due to COVID-19, people had to struggle a lot to manage their finances; they cannot repay their debts. After knowing the situation, Australia's largest bank suspends loans for small and medium enterprises. In addition, it has been observed that the Commonwealth Bank contributed a lot to society and the people by introducing intelligent classes for the student, creating a coronavirus money plan, bringing flexibility to repay loans, fines, and many other supportive policies by lowering interest rates. Hence, altogether, the bank's priority was to do whatever it can to support and help society in terms of financial and business impact. However, it is recommended to the bank that it should bring different schemes after the Covid-19 which will help the bank to recover money with ease. People have suffered losses in the wake of pandemic and hence, the bank should draft different loan recovery plans that will help it to function smoothly.

References
Barreiro-Gen, M., Lozano, R and Zafar, A., 2020. Changes in sustainability priorities in organisations due to the COVID-19 outbreak: Averting environmental rebound effects on society. Sustainability, 12(12), 5031.

Castka, P., Searcy, C and Fischer, S., 2020. Technology-enhanced auditing in voluntary sustainability standards: The impact of COVID-19. Sustainability, 12(11), 4740.

CBA, 2020. Helping our customers understand the options available to them. [online] Available at: https://www.commbank.com.au/latest/coronavirus/guiding-you-through-hardship.html [Accessed 7 May 2021]

Commonwealth Bank., 2020. Commonwealth Bank 2020 Annual report. [online] Available at: https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/results/fy20/cba-2020-annual-report.pdf [Accessed 7 May 2021]

Hafiz Syed, M. A., Xu, X., Sun, C., Ullah, A., Gillani, S and Muhammad Ahsan, A. R., 2021. Impact of COVID-19 pandemic on sustainability determinants: A global trend. Heliyon, doi:http://dx.doi.org/10.1016/j.heliyon.2021.e05912

Jones, P and Comfort, D., 2020. A commentary on the COVID?19 crisis, sustainability and the service industries. Journal of Public Affairs, doi:http://dx.doi.org/10.1002/pa.2164

Leal, F. W., Azul, A. M., Wall, T., Vasconcelos Claudio, R. P., Salvia, A. L., do Paço Arminda and Fernanda, F 2021 COVID-19: The impact of a global crisis on sustainable development research. Sustainability Science, 16(1), 85-99.

Parliament of Australia., 2020. COVID-19 pandemic - Response by Banks. [online] Available at: https://www.aph.gov.au/Parliamentary_Business/Committees/House/Economics/FourMajorBanks/COVID-19_pandemic_-_Response_by_Banks [Accessed 7 May 2021]

Sarkodie, S. A., and Owusu, P. A., 2021. Global assessment of environment, health and economic impact of the novel coronavirus (COVID-19). Environment, Development and Sustainability, 23(4), 5005-5015.

Zhan, J. X., & Santos-Paulino, A., 2021. Investing in the sustainable development goals: Mobilization, channeling, and impact. Journal of International Business Policy, 4, 166-183.