In 2013, the Bank separated from the Co-operative Group following a £1.5bn capital shortfall. The Group still retains a 20% stake in the organisation; the rest is held by institutional and private shareholders. The Bank became a member of Co-operatives UK in its own right in May 2014.
The new ethical policy built on the agenda the bank has been developing since 1992, when it became the first bank in the UK to have a customer-led ethical policy based on the principle that it would not lend customers’ money to organisations that went against their values. The 2015 update extended its commitment not to finance companies or organisations that do not responsibly pay tax, or that are involved in irresponsible gambling and payday loans.
“Despite all our challenges, we are very mindful that the Co-operative Bank has always been part of the co-operative movement with values and ethics at its heart,” says Niall Booker, chief executive of the Co-operative Bank, in his introduction to the report.
“Without values and ethics we could become just like any other bank and our customers have told us that’s not what they want.”
During the Bank’s transition of ownership, co-operative values and ethical policies were written into its Articles of Association, and it created a board committee with a new independent chair, Laura Carstensen, to ensure values and ethics remained at the heart of the organisation.
“We are mindful of the mistakes the Bank has made in the past and know we still have much more to do to turn the business around,” says Ms Carstensen. “Our values and ethics continue to differentiate us and reporting back to customers on our ethical policy in action is an important step in our continued fightback.”
The report, which covers the 2014 calendar year, addresses five pillars of ethical responsibility: banking; products and services; business; workplace and culture; and campaigns.
On ethical banking, the organisation highlights its specific commitments that restrict the provision of banking services to certain business sectors. “Since the policy was launched in 1992 we have turned down more than £1.4 billion of lending to businesses,” reads the report. The Bank has a long-established system that ensure customers comply with the policy, which screens new non-personal customers against the criteria of the ethical policy. Now commercial banking customers with a turnover of over £1 million are also directly investigated for ethical compliance, it adds.
The report also details how the Bank has introduced a new overdraft charging structure on its current accounts, developed in consultation with customers and consumer group Which? as part of its efforts to provide ethical products and services. This includes a simpler overdraft that reduces some fees and abolishes the unpaid item fee, which, according to the publication, will help customers who occasionally use an informal overdraft.
In addition, the report highlights how the Bank continues to support co-operatives, through its associate membership of Co-operatives UK, providing bespoke banking packages to co-operative organisations, and providing banking facilities for around 60% of the credit union movement. “We are working with Co-operatives UK to identify ways in which we can demonstrate our support for the co-operative sector that reflects our commitment to co-operative values and ethics,” it reads.
Helen Barber, secretary of Co-operatives UK, believes the report demonstrates the Bank’s “aspiration to remain an ethical leader under its new structure”.
“The Bank’s ethical policy is unique, not only because it is so wide-ranging and pledges support for co-operative and community enterprises, but because it is informed by the input of more than 70,000 customers,” she says. “With new additions, like its accreditation as a Living Wage employer, the Bank is demonstrating its commitment to the ongoing development of its ethics and ensuring they are at the core of the new business.”
Last year the also Bank raised over £1 million for charity through affinity credit cards and sourced 99% of its electricity from renewables. “The Bank has offset 104,000 tonnes of carbon since 2006,” says the report, adding that the organisation reused or recycled 70% of the 2,165 tonnes of waste it produced during the year.
Correction: This article was amended on 3 August. A previous version stated that the Group retained a 30% share in the Bank, rather than 20%.