With the publication of its 2013 annual results, the Co-operative Bank said its reputation could be impacted if its ‘co-operative’ name is withdrawn, either by the Financial Conduct Authority or by Vince Cable, as minister for the Department of Business, Innovation and Skills.
The use of the co-operative name and how its future ethical policy would look was an area of concern for many co-operators, with some setting up an advocacy group, Save Our Bank, last October.
Shaun Fensom, a Bank customer and co-founder of the group, said: “If the customers act together with one voice they become a force to be reckoned with. I would like to see the campaign protect the values and ethics of the Co-op and ultimately help return the Bank to mutual ownership.”
In an effort to ensure its ethical reputation remained intact, the Bank said it recognises the importance of ethics and values for its customers and remains committed to upholding them.
The Bank’s constitution includes a commitment to act in line with the principles and values associated with the co-operative movement, and a values and ethics committee has been established to oversee this.
Over the next two months, the Bank will launch a public review of its official Ethical Policy. The Policy was launched in 1992, and stated refusal to do business with organisations it deemed unethical. This included those that manufacture or transfers arms to oppressive regimes, or any business that contributed to climate change, through, for example, extracting of fossil fuels. The Bank estimated that since its launch, the policy has turned away around £1bn of new business.
The Bank’s Ethical Policy has been renewed and expanded in line with customers’ views on four separate occasions since its launch.
Among ten areas of risks for the Co-operative Bank – which were published in its annual report – is the belief that its reputation could be affected by not being wholly-owned by the Co-operative Group. The mutual/ethical reputation of the Group could also conflict with the profit-focused objective of its shareholders, as well as the board’s duty to these shareholders.
The Bank also said in its report that it owns the trademark rights to the Co-operative Bank brand under a joint agreement with the Co-operative Group, which governs the use of trademarks containing ‘co‑operative’ or ‘co-op’. This will remain in place until any “trigger events” occur, which includes the removal of the values and ethics provisions in the Bank’s Articles of Association.
The role of the values and ethics committee is to recommend to the board for approval and adoption the co-operative values of the Bank. It will also advise the Board on matters concerning the interests of customers, suppliers, employees and other stakeholders in their dealings with the organisation.
Its extended remit includes the monitoring of customer satisfaction levels (with a focus on service levels and on products in the light of the Bank’s Ethical Policies), as well as ensuring its customers and employees are aligned with the ethical policy.
In addition, it will oversee the corporate social responsibility, community investment, environmental and other projects and activities of the Bank, and the establishment of a clear ethical policy and ethical strategy informed by a customer consultation that will be launched in the coming months.
The committee, which first met on 29 January and will meet twice-yearly, is currently chaired by Co-operative Bank chair Richard Pym, alongside five other directors. However, the board has stated that it has started its search for an independent director to chair the committee.
A statement from the Bank, said: “We believe it is important that we maintain our differentiated characteristics and ethos, continuing to adhere to the values of the wider co‑operative movement under our new ownership structure.
“Values and ethics are therefore central to the success of the Bank in the future and remain at the heart of our business. Therefore for the first time we have embedded in the Articles of Association of the Bank a pledge that requires us to act in line with the principles and values associated with the co-operative movement.”