Why Green isn’t only the colour of money

Ecology Building Society has been conducting a campaign against the supermarket discounter, Aldi. On the last week of the campaign, Co-operative News visited their head office – a purpose...

Ecology Building Society has been conducting a campaign against the supermarket discounter, Aldi. On the last week of the campaign, Co-operative News visited their head office – a purpose built eco-building in West Yorkshire to find out more.

The proposed site of Aldi’s new store, next to Ecology’s offices, was home to a 250-year-old tree. Ecology objected to the retailer removing the tree to build its store and, with building work about to begin, was in the middle of a media campaign to draw attention to Aldi’s behaviour.

It is hard to imagine many financial institutions getting involved in this kind of battle but, for Ecology, it is no surprise.

Ecology’s chief executive, Paul Ellis, says the building society is “very much rooted in the political ecology movement, the green movement, that surged in the 70s.”

The society was proposed at the conference of the then-Ecology Party (now Green Party) because there was no green financial organisation, and founded in 1981.

Anna Laycock, Ecology’s head of ethics and external affairs, says “the starting point was, how do we bring about environmental change, and that is still the thing that unites members.”

Ecology has 9,000 members today, and offers ethical financial services to individuals and organisations. It provides individuals with ISAs and savings accounts that support environmental initiatives, and it offers mortgages for eco-buildings and retro-fits, and mortgages for ethical organisations, including a number of co-operatives.

One of its latest initiatives is to partner with the Plunkett Foundation to provide bespoke mortgages for community-owned shops. Under the scheme, it donates 25% of the application fee to a fund to support new community shops. The first of these mortgages, a new community shop in Bradwell on Sea in Essex, has just completed.

It’s a niche financial organisation, and the model appears effective. Ecology has had 30 consecutive years of profitability, making a £400,000 profit last year with assets totalling £125m.

Despite the concern among some players in the wider mutual sector about the knock-on effect of events at the Co-operative Bank, Ecology says it has not had a negative impact. In fact, Ecology is working to strengthen its relationship with the movement, in part to the fill the gap that the Bank may leave.

“There were a small number of Ecology customers who were nervous about the Bank,” says Mr Ellis, “and whether it implied the collapse of the whole model. But that was the exception. Generally, it’s been positive […] the lending has gone up. The issue, if anything, is having to dampen the flows of money to us simply because we’re not equipped to take in so much.”

This increase of demand is largely from individual savers – and to a lesser extent small community organisations and charities – moving over from the Co-op Bank.

Ecology’s greater engagement with the co-operative movement is not just pragmatic, however; Ecology is a vocal proponent of the mutual model.

“We can do things we could not do if we weren’t a mutual,” says Ms Laycock, a viewed echoed by her chief executive.

“The mission we have is enabled by the fact that we don’t have to be thinking about providing shareholders with a high dividend,” says Mr Ellis.

At board level, Ms Laycock says  “there is very much a sense of the role of the board trying to balance the views of different stakeholders […] and that in itself is reflective of a culture in which mutuality goes right down to the way we perceive ourselves as an organisation.”

This is reflected among staff by a pay-ratio policy in which no member of staff is paid more than five times more than any other.

In terms of wider membership, the society emphasises its engagement levels. For Mr Ellis, “since the very early days we’ve made quite a play of our annual general meeting, and tend to put a kind of day around it […] to make it a gathering of the members. The AGM sits within the gathering and the gathering is the more important in many respects.

“It’s an opportunity to hear directly from the members, and to put questions back.”

Ms Laycock says she is struck by “the sense of ownership the members feel at Ecology. When we’re at the AGM people refer to the society as ‘us’.”

Ecology’s membership vision goes further, says Ms Laycock: “My ideal state would be, rather than the society being a hub and spoke for connecting members, they spontaneously connect with each other, independently from us. That’s very different from a traditional bank’s approach to customer service – that’s probably their idea of hell!”

This discussion of membership and governance raises the question of how Ecology views the co-op movement’s current challenges. Mr Ellis says he does “not want to overstate the problems”, but points out “when we look at co-ops, the one thing we think could be improved – and perhaps the Co-operative Bank demonstrates this – is that there is a danger that governance arrangements aren’t adequate to allow it to fulfil its potential and mission.

“You often get quite convoluted board compositions. There is a danger around the over-representation of strands of influence which suggests that in some of these organisations there’s  all sorts of people you have to buy off for representation.”

They stress that this problem in no way reflects the co-operative movement as a whole, which Ms Laycock describes as a “dynamic, vibrant movement,” adding that Ecology is becoming increasingly evangelical about it.

“It’s really important to emphasise that the co-operative model, the mutual model, can work,” she says.

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