Values and Ethics reportAt the end of May, the Co-op Bank published its Values and Ethics Report for 2017. This report is the bank’s main way of accounting for how it has implemented its Ethical Policy though the year, and importantly it is externally audited, which helps provide assurance that it has been compiled thoroughly and without leaving anything out.

As a Customer Union dedicated to holding the bank to account for its ethical promises, we want to make sure we scrutinise this report carefully each year, and also give you our summary of what we see as important, and where it falls short or could be improved. We’ve also got some questions we’re sending to the bank. Take a look at the report here, and let us know if you have questions that you think we’ve missed.

Ethical banking: 148 customers reviewed, five declined

At the centre of the bank’s approach to ethics is its commitment not to finance companies and organisations that conflict with its customers’ ethical values, as set out in the Ethical Policy. In 2017 the bank declined finance in five cases due to breaches of the Ethical Policy. These were:

  • “banking facilities for a feminist group that actively denied the rights of members of the transgender community … in breach of our position on human rights, equality, and our diversity and inclusion policies”
  • “banking facilities for a charity directly linked to an organisation which was classified as a cult outside of the UK, and whose members had been denied basic human rights”
  • “a personal customer whose links to the government of an oppressive regime and whose association with human rights violations were considered to be a continuing cause for concern”
  • “banking facilities for a business involved in the sale of mobile pump units, controllers and valves to a subsidiary of a Middle-Eastern oil company” and
  • “an existing customer found to be involved in the online retail of luxury accessories, including the sale of mink scarves.”

This kind of ethical screening and reporting is a big part of what makes the bank unique. We’re particularly pleased to see the bank defending the rights of transgender people, in the grand tradition of the stance it took against the anti-gay evangelicals Christian Voice, way back in 2005. But we’d also like to know more about the seller of mink scarves found to be in breach the bank’s policy on the fur trade. We understand it will always be possible for some unethical businesses to slip through the net, but we would like to see more details on how long this policy breach went undetected for, and what if anything can be done to prevent it happening again.

We would also like to see more analysis of why the number of businesses turned away for ethical reasons is so much smaller than in the years before the bank’s troubles hit - around 3% of businesses screened, compared to around 10% before in 2011 and 2012. We assume this is related to the bank’s shift away from larger-scale corporate banking, but would like to see if the numbers bear this out.

Risk management closures dwarf ethical closures

As well as closing five accounts for ethical reasons, the bank reports it closed 503 accounts for reasons of ‘risk management’. The bank reports that 24 of these cases were referred to the bank’s new Exit Forum. Last year the bank reported that 116 accounts were referred to the Exit Forum and 59 were closed, but this year it only reports that 24 cases were referred. We assume that all these resulted in account closure, but the report could be clearer on this point.

The bank’s Exit Forum was developed following controversy about the bank’s closure of bank accounts for branches of the Palestine Solidarity Campaign and other human rights defenders. We expressed our surprise last year that the bank did not mention its engagement with Amnesty UK and Save Our Bank on this issue, and this year’s report mentions that engagement, belatedly, saying “In our Values & Ethics Report 2016, we published details of this kind of account closure for the first time. This followed discussions with Amnesty and the ‘Save our Bank’ customer union and we are committed to doing so in this and future reports.” This is a positive sign that the bank is listening.

However we also said last year that we would like to see more detail on the decisions taken by the Exit Forum, like types of groups reviewed and issues raised, rather than just the number of cases reviewed. We’re disappointed the bank has not acted on this, and urge them to consider what additional details they might report on this next year.

Where are the ethical campaigns?

As the bank’s report points out, it has a long history of campaigning for important causes - we covered many of these in our run-down of what we called the bank’s Greatest Hits. However the campaigning chapter of this report is the shortest, running to just two pages. It reviews the continuing impacts of the ‘My money, my life’ campaign with Refuge, launched two years ago, on financial abuse in intimate relationships. And it talks about the bank’s strategic partnership with youth homelessness charity Centrepoint, which will continue over the next two years.

The bank has raised over £450,000 for Centrepoint in 2017, with the help of staff and customers, which is impressive. Both these campaigns support great organisations and address important issues. However the partnership with Centrepoint falls more into the bracket of philanthropy rather than campaigning, at the moment at least. The philanthropy should continue, but where are the campaigns that look to change public policy on issues core to the bank’s Ethical Policy, like human rights, the environment and animal welfare? With the UK continuing to arm Saudi Arabia as it continues its bombing of Yemen, fracking for shale gas said to be about to ‘begin in earnest’ this year, and even the Daily Mail running front-page campaigns about plastic pollution, we can think of a few areas that could benefit from the bank’s attention. We hope the bank’s next Ethical Policy review, due next year, is accompanied by a report on how the bank is returning to this kind of work.

Other points in the report that caught our eye:

  • Building more co-operatives through The Hive: The bank has worked with Co-operatives UK to set up The Hive, a business support programme to help people start and grow cooperatives and community enterprises. The bank reports that The Hive “supported over 355 groups and co-ops with expert advice worth over £100,000” in 2017, up from 86 groups last year. It’s great to hear this initiative is growing.
  • Managing environmental impact: The bank continues to be ‘beyond carbon neutral’, souring ‘the majority’ of its electricity from renewables and offsetting all its greenhouse gas emissions, plus an extra 10% for good measure. It also reuses or recycles over 80% of its waste, and only issues bank cards which are PVC-free. This has all been business as usual for the Co-operative Bank for many years, but it is good to see and be reminded that the bank is still at it.
  • Improving gender diversity: The number of women in senior roles increased in 2017 by 2% to 34%, and the bank says it is on track to meet its 2020 target of 40%. They are also supporting staff through Career Confidence and Parental Workshops, which are targeted at women but open to all colleagues. As we reported earlier this year, the bank was one of the earliest reporters of data on its gender pay gap, and has one of the lowest gender pay gaps of high street banks.
  • Closure of charity credit cards: the bank has reported on its decision to close its charity credit cards product “due to changes within the UK credit card market, combined with falling usage (making the charity credit cards unsustainable)”. The bank now offers customers the chance to donate their payments under the Everyday Rewards scheme to charities including Amnesty International, Refuge, Hospice UK, Oxfam and the Woodland Trust, and £175,000 was raised for these charities.

Our questions for the Co-operative Bank 

As part of our mission to make sure the bank continues to implement its customer-led ethical policy to the highest standard, and to hold the bank to account on behalf of our members, we will be putting the following questions to the bank and seeking a response.

  1. In 2011 and 2012, before the bank’s recent financial problems were revealed, the percentage of finance opportunities declined by the Ethics team averaged 10% of those reviewed. This year, around 3.5% of business opportunities reviewed were declined, and the average in the five years from 2013 to 2017 has also been around 3%. Can the bank comment on the reasons for this change, and can it provide details of the percentage of ethical policy applications received and declined by type over this period, e.g. for small business banking vs larger corporate loans?
  2. The Values and Ethics Report notes that an existing customer was declined as it was involved in the fur trade. This indicates the Ethical Policy was breached in this instance - although this has been rectified, and we understand that no system can be 100% watertight. Can the bank provide more information about how long this business had been a customer of the bank, and when the businesses moved into a position of breaching the ethical policy? Does the bank consider that changes to process are needed to avoid such breaches occurring in future?
  3. Can the bank consider providing more detail in next year’s report on customers turned away for reasons of risk management, particularly those reviewed by the Exit Forum? For example, type of business or organisation, type of issue raised, type of reason for account closure.
  4. The report’s auditors, DNV, provide a ‘limited level’ of assurance, rather than a ‘reasonable level’ of assurance. Can the bank comment on whether a ‘limited level’ of assurance is sufficient to reassure stakeholders that the ethical policy is is being implemented to the highest standard, and on the implications of requesting a ‘reasonable level’ of assurance in future?


I am seriously concerned that in July the Bank appointed its fifth Chief Executive Officer in seven years and in August was looking to appoint its fifth Chief Finance Officer in three years each of which suggest that “all is not well” at the Bank which is unable to recruit, retain and motivate the two most senior executives to lead the organisation. Could the Customer Union please ask the Bank to explain why this is the case and whether the turnover of senior executives should not be a source of serious concern?

Well, clearly the bank has had its challenges. But isn't it simply the case that following a very succesful recapitalisation, the chair could say 'job done', and the bank enters a new phase? The existing CEO stays at least until the new chair is settled in before handing over to a new CEO to pick up the new challenge, similarly the CFO? Shaun