In September, the team of Save Our Bank published its view of the Co-op Bank’s latest Values and Ethics Report released earlier in the summer. It compared its performance against its ethical commitments over 2016. To read their article go to https://saveourbank.coop/ethics-report-2016-review.
196 organisations were referred for review and the bank reports that seven were declined banking services for failing to meet its ethical criteria:
- Three of these were companies providing specialised services for oil and gas extraction, which breaches the bank’s climate change policy.
- The bank also declined a business involved in designing tanks which were sold to oppressive regimes,
- and a business involved in irresponsible marketing of alternative medicine.
Save Our Bank says it’s worth reflecting that no other high street bank reports business turned away on ethical grounds in this way, as none comes close to matching the bank’s comprehensive policy.
2016 was the first year of The Hive, a new business support programme from Co-operatives UK and The Co-operative Bank, for people wanting to start or grow co-operative or community enterprises.
The project has so far supported 86 groups and co-ops with £74,600 worth of expert advice. In addition, the bank lent £30 million to co-operatives and mutuals. In total, loans to social and environmental organisations accounted for 41% of the bank’s business (£177 million).
The Save Our Bank team was keen to see how the bank reported on what we saw as the bank’s biggest ethical misstep for many years – the mishandled closing of accounts for several human rights charities working in Palestine and elsewhere.
The report covers these account closures in a page on “managing our customer risks” (page 10), which details the bank’s processes “to ensure we meet our regulatory and legal obligations”. This concedes that in 2015 the bank “received criticism for the way it communicated the closure of a small number of accounts that belonged to unregistered charities or charitable organisations who made payments to ultra-high-risk countries”, and admits its communication “fell short of customer expectations and was not aligned to our Ethical Policy commitments.”
However this is only part of the picture. The account closures weren’t limited to “unregistered charities and charitable organisations who made payments to ultra-high-risk countries” – the bank also closed accounts for organisations that do not send any money abroad, and for registered charities (e.g. Sheffield Palestine Women’s Scholarship Fund).
To address this problem, the bank has set up an Exit Forum, which reviews account closure activity across the Bank and discusses “actions that may be in conflict with the Bank’s values and ethics.”
The bank provides data on the number of accounts referred to the Exit forum since it was established in April 2016 (116 accounts were referred, of which 59 were closed). This reporting is welcome, although we would like to see more reporting on decisions taken, beyond a simple numerical breakdown.
Last year Amnesty UK, a Co-op Bank customer, investigated the bank’s approach to account closures for human rights groups, after a resolution at its annual meeting.
Amnesty held a discussion meeting with affected groups and other experts, organised with Save Our Bank and the Fund for Global Human Rights, and released a report in April 2017, making several recommendations to the bank, to which the bank responded. Save our Bank comments that this high-level, critical but productive engagement between the bank and the country’s leading human rights organisation should warrant a mention in the bank’s reporting, adding “It’s good practice in the banking sector to report on all significant engagements with civil society organisations, as the Dutch co-operative bank, Rabobank, does, for example”.
Save Our Bank also reviewed the bank’s 2015 Values and Ethics report, noting the issue of executive pay. The current report also includes little on this topic, other than a line stating that “pay and rewards for our senior executives are market-based, fair and responsible, and linked to individual and company performance.” This issue has become much less acute for the bank since the departure of its previous CEO, Niall Booker, whom the bank intended to pay almost £5 million in 2015. In the end he cashed £3.8 million that year, declining to a mere £2 million in 2016, with no bonus.
The current CEO’s base salary for 2016 is under half that of his predecessor but Save Our Bank stresses that executive pay has an ethical dimension as well. It hopes that the bank will recognise this in future and report on the ratio between the bank’s lowest and highest paid staff.