The financial services sector has undoubtedly had much to contend with in recent years. Following the collapse of Goldman Sachs in September 2008, growth stumbled to a halt and the banks became whipping boys for the media and politicians - perhaps not totally undeservedly - for their role in the financial crisis.

Today, rebuilding stakeholder trust combined with enforcing stricter financial regulations are top priorities for all banks.

Corporate Social Responsibility (CSR) has emerged as a critical tool for organizations to protect reputation, empower employees and rebuild trust with its stakeholders. Multiple industries are continuing to embrace the benefits of CSR, but the financial services sector is still lagging behind.

A committed CSR policy acts as a self-regulating mechanism enabling a business to monitor and ensure it is compliant with the rule of law, adopting ethical standards and ensuring transparency.

The 2012 100 Best Corporate Citizens List (http://www.thecro.com), recently published by Corporate Responsibility Magazine, provides an index of top corporate citizens ranked on seven categories to determine the annual ranking – employee relations, human rights, climate change, philanthropy, governance, environmental and financial performance.

This year's list was topped by global pharmaceutical giant Bristol-Myers Squibb, while the technology sector was well represented with IBM, Microsoft and Intel taking the next three spots. The top ten also included companies as diverse as Accenture, Campbell Soup and Nike.

However, not only were there no banks in the top ten, there were none in the top 50. The highest ranked financial services company, ranked 56, was JP Morgan Chase & Co. Only two others made the top 100, Wells Fargo (80) and State Street Corp (83).

This illustrates how the financial services industry has been slow to embrace CSR and recognize the benefits it can bring. Banks have traditionally placed greater emphasis on compliance and issues posing a 'direct risk' including being held liable for polluting the environment.

The industry has only recently begun to appreciate the importance of more 'indirect risks', such as reputation and the responsibility of banks related to lending activities (client's solvency/continuity or collateral). Risk management is no longer just about the potential financial risks, but increasingly the environmental and social consequences of lending money to clients with dubious sustainability performances. With everything that the financial services sector has endured in recent years perhaps it isn't surprising that CSR hasn't been top of mind in the boardrooms of many financial institutions but that is a mistake that banks simply can't afford to continue to make.

A notable company is Bank of America, which updated it core values and operating principals after adopting a CSR approach. The company published it first CSR report last year and its progress was recently recognized with a PR News award. The report details its socially responsible initiatives, which are now part of the bank's overall strategy. These include:

Funding solar power and energy efficiency programs
Supporting the revitalization of neighborhoods across the US
Lending and investing in small businesses that are the backbone of the economy
Encouraging employees to volunteer over a million hours in nonprofits and community organizations
Funding innovative arts and culture organizations

"The progress reflected in this report demonstrates our commitment to creating opportunities that help the economy move forward through responsible business practices, lending, investing and charitable giving," said Anne Finucane, Bank of America's global strategy and marketing officer.

While Bank of America represents how CSR is starting to make an impact in the financial services sector, the Best Corporate Citizens List demonstrates how the industry as a whole needs to step up to the plate. CSR is an important opportunity for banks to take responsibility for their actions and positively impact stakeholder groups.

If the banking sector is to truly succeed in rebuilding its battered reputation there needs to be a more serious commitment to becoming socially responsible and engaging with the key issues that stakeholders demand. Is your company doing enough?

Posted by Sam Taylor.