Wells Fargo Corporate Social Responsibility

free essayWells Fargo is a financial services company with assets amounting to approximately $1.9 trillion. It was established in 1852 with headquarters in San Francisco. In fact, it has about 269000 employees in 42 countries and territories across its more than 90 businesses (CNN Money, 2017). It offers different services, such as insurance, banking, investments, mortgage, and consumer and commercial financial services through over 8,600 locations, 3,000 ATMs, online web site, and mobile devices (CNN Money, 2017). It conducts business with around seventy million customers and one in three US households. The company’s main objective is to gratify the financial needs of their customers and help them prosper financially.

CSR at Wells Fargo

Corporate Social Responsibility (CSR) at Wells Fargo is based on a decision to care for the communities that have assisted in the company’s growth and prosperity for more than 160 years. CSR has also enabled the company to succeed in the present and the coming years by cosidering the economic, social and environmental challenges (Wells Fargo, 2017). In April 21, 2016, Wells Fargo pronounced an incorporated and organization-wide CSR policy aimed at undertaking global economic, social, and environmental challenges for the coming 5 years via organizational operations and culture, its product/services offers, and corporate philanthropy (Wells Fargo, 2017). CSR is an important element of Wells Fargo’s business strategy.

In addition, Well Fargo has developed new CSR goals, including support of local governments’ environmental efforts, lending money to small-scale businesses, investments in the community, efficient organizational operations, and philanthropic efforts by 2020 (Wells Fargo, 2017). The approach, which was disclosed as the 2015 CSR publication by the company, reveals the following objective. The firm will center its attention in the near future on recognizing and reacting to three significant priorities, such as the cultural and demographic adjustments occurring in the society, the financial requirements of poorly served communities and individuals, and the effects of global warming and conservation of natural resources.

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Wells Fargo’s plan reveals the company’s sturdy commitment to offering hands-on solutions to the problems faced by the communities and its customers. The incoming 2020 CSR objectives are based upon Wells Fargo’s preceding objectives, most of which have been attained prior schedule, including supplier diversity, community progress funds, volunteer hours, and environmental financing (Wells Fargo, 2017). With regard to philanthropy, the firm anticipates to provide over $665 million dollars by the year 2020 to cater for economic, social and environmental needs (Wells Fargo, 2017). The major CSR commitments at Wells Fargo concern diversity and social inclusion, economic empowerment, and environment sustainability; all of them are discussed in the subsections below.

Inclusion and Diversity

The company has developed 2020 CSR program concerning social dedication that seeks to improve its capacity to address the requirements of the progressively diverse market base in order to promote a culture of inclusivity. In addition, the company focuses on increasing the chances for diverse customers, talents and suppliers. Wells Fargo has adopted numerous initiatives to achieve diversity and inclusion. Frist, the company has set aside $100 million to cater for vital social needs, such as social inclusion and women development (Wells Fargo, 2017). Secondly, Wells Fargo is investing in promising technologies as well as innovative solutions in order to help meet the needs of its customers. Thirdly, the company is spending at least 15% of its procurement funds with suppliers drawn from different backgrounds (Wells Fargo, 2017). Lastly, Wells Fargo is aiming to increase opportunities available to women in its staff composition (Wells Fargo, 2017). Overall, these strategies show Wells Fargo’s commitment to promote inclusion and diversity.

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Economic Empowerment

Economic empowerment is the second important component of CSR strategy at Wells Fargo. In fact, the company has engaged in numerous activities to achieve economic empowerment of the societies where it conducts its operations. First, the company donates $500 million towards significant economic needs, including inexpensive housing. Secondly, it allocates around $150 billion to help fund mortgages for the minorities. Thirdly, it offers education to homebuyers and down payment support to over 4,000 low-income buyers (Wells Fargo, 2017). Forth, Wells Fargo is assisting in the development and improvement of about 1000 homes in the next three years, as an act to promote affordable housing schemes serving both moderate- and low-income households. In addition, the company devotes around $75 million to assist various small business owners in accessing capital and technical aid (Wells Fargo, 2017). Finally, the firm offers credit scores to customers to help them manage their finances (Wells Fargo, 2017). Through these activities, Wells Fargo has been able to empower communities economically.

Environmental Sustainability

A crucial part of the company’s CSR is environmental sustainability. The company focuses on enhancing its operational efficiency and making investments in the development of clearn energy (Wells Fargo, 2017). Moreover, it has prepared several initiatives to enable the achievement of environmental sustainability. First, Wells Fargo donates about $ 65 million to charitable organizations dealing with environmental conservation, education, and clean energy. Secondly, the company is acquiring renewable energy technology for powering its operations as of 2017. In addition, the company focuses on decreasing the usage of water by around 65%, on growing its energy efficiency by almost 40%, and minimizing carbon emissions by about 40%. Furthermore, the company engages in permanent funding and investment in viable business opportunities and is involved in the development of novel solutions and products geared towards addressing environmental needs (Wells Fargo, 2017). Therefore, through these approaches Wells Fargo provides an opportunity for the communities it serves to enjoy a sustainable environment.

From the 2015 CSR report, the company documented crucial CSR milestones. First, Wells Fargo has provided about $ 281 million to 16300 not-for-profit organizations to support acute community requirements (Wells Fargo, 2017). Second, the company has cut its water usage by almost 47% and improved running energy efficiency by almost 26% during 2012-2015 period (Wells Fargo, 2017). Third, Wells Fargo donated over $52 billion to useful environmental businesses since 2012 (Wells Fargo, 2017). In addition, the company made an investment of $7.6 billion to cater for community development initiatives (Wells Fargo, 2017). Moreover, Wells Fargo employed over 1500 veterans (Wells Fargo, 2017). The company has also allocated 12% of its procurement budget to suppliers from diverse backgrounds (Wells Fargo, 2017). These accomplishments are among the many more that have to be attained by Wells Fargo in the near future.

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Incidences at Wells Fargo

Wells Fargo has experienced several incidences. The most recent scandal concerns the creation of fake accounts. This was revealed by a dozen of Wells Fargo employees who confessed to CNN Money that the outrageous tactic, according to which employees opened unauthorized accounts to cater for unrealistic sales goals, had been ongoing for a longer period than the bank realized (CNN Money, 2017). Susan Fischer, a former Wells Fargo branch manager, who worked at the bank for a period of five years since 2004, claimed that these practices started before 2011, though she was not certain how far back the fake account scam proceeded, nor how extensive it was.

Americans were astonished to find out that Wells Fargo workers had opened as many as two million fake accounts since 2011 with 5300 credit cards (CNN Money, 2017). In fact, the workers transferred funds from existing customer accounts into newly formed ones without their approval. Customers were therefore levied for inadequate funds or overdraft since there wasn’t enough money in their original accounts. Furthermore, Wells Fargo employees also handed in applications for 565443 cards without their customers’ authorization (CNN Money, 2017). Estimates suggest that almost 14000 of those accounts suffered over $ 400000 in tolls, including interest charges, annual levies, and overdraft-protection fees (CNN Money, 2017). The bank contracted to pay $185 million in fines, where $100 million will go toward the CFPB’S Civil Penalty Fund, $35 million to the Office of the Comptroller of the Currency, $50 million to the City and County of Los Angeles, and $5 million to refund customers (CNN Money, 2017).

These fines served as a penalty for Wells Fargo and as a corrective measure for the fraud accounts incidences.

The Occupational Safety and Health Administration (OSHA) also ordered Wells Fargo to pay the main whistleblower award to an individual in the agency’s history. They insist that Wells Fargo must compensate and restore immediately the former manager, who worked in Los Angeles, and was terminated in 2010 (CNN Money, 2017). According to the agency report, Wells Fargo retaliated against the worker after he disclosed distinct incidents of alleged mail, bank, and wire fraud by two bankers under his supervision. This also came as a strike to Wells Fargo’s image as a whole.

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Recommendations to Wells Fargo

There are several recommendations that foster the development of Wells Fargo. Wells Fargo should carry on with the implementation of relationship-based banking, and despite its present scandal, this characteristic would remain its competitive advantage. Moreover, relationship banking has verified to lead to high customer retention, even though larger banks are often unable to be implement it (Wen & Song, 2017). Most concentrate on transactional banking thus allowing Wells Fargo to gain a large market share unlike its competitors. Therefore, with a wider market at its disposal, Wells Fargo economy is certain to prosper.

In addition, project compass is a cost effective initiative that will enable Wells Fargo to survive the major challenges facing the industry, including persistent tightening of credit standards, increased regulatory capital standards, litigation among others (Paul, 2017). The initiative is anticipated to cut down noninterest expense without deterring hiring process and further development. Instead, it will advance its strong capital position and will enable further increase of dividends and share repurchases as regulators continue to permit.

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Conclusion

Wells Fargo, as a leading global financial services company, pays a keen interest in the social, economic, and environmental challenges knowing that the success of the customers and communities they serve is in their best interest. They strive to achieve this through such key factors as economic empowerment, diversity and social inclusion and environmental sustainability. Though Wells Fargo has been hit hard by the previous events that have befallen the company, such as the fraudulent accounts incident, which baffles masses, Wells Fargo has managed to retain most of its clients. This was achieved through various corrective measures such as payment of the fine, compensation to the affected customers, and apology to the public. Furthermore, with implementation of the recommendations including project compass and relationship-based banking, its advancements are anticipated to reach greater levels.

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