Welcome to this newsletter coming to you in the dog days of summer from the Customer Union for Ethical Banking, the independent union for Co-operative Bank customers.
No external audit for 2018 Values & Ethics Report
The Co-op Bank’s Values & Ethics report 2018 came out just as we were finalising our last newsletter. This report is the bank’s main means of accounting for how it implements its Ethical Policy, and as a Customer Union dedicated to making sure the bank sticks to this policy it’s important to us to read this closely.
The first thing we noticed about this year’s report is that it is much shorter than in previous years – at just 12 pages, compared to 35 last year. However the report does a good job of packing in the essential information to this condensed format, and is scattered with links to supporting information on the bank’s website, which will be added to through the year. It is clearly structured according to each of the five ‘pillars’ of the bank’s Ethical Policy: ethical banking, ethical products and services, ethical business, ethical workplace and culture, and ethical campaigns.
The second thing we noticed was more concerning. The statement at the back of the report from the bank’s external sustainability auditor seemed to be … missing. This external audit is important because it provides assurance that the bank’s ethical policy implementation is being checked by experts from outside the bank. It is the reason we tend to take the bank at its word when it says it turned down four businesses for ethical reasons in 2018, although it doesn’t name the businesses. It creates trust that the bank actually does avoid financing companies that supply arms to oppressive regimes, even though it doesn’t publish a full list of its corporate and business banking customers (like some other ethical banks, including Triodos). After the bank’s near-collapse and rescue by private investors, the trust generated by this external audit of the ethical policy is more important than ever.
The bank is, or was, fully aware of the significance of external auditing. Its Values and Ethics page boasts, “we're also independently audited every year, to make sure we keep our commitments and maintain an Ethical Policy that reflects our customers' values.” Elsewhere on its website the bank notes, “We were the first bank in the world to produce an independently verified sustainability report in 1998, and we have led the way in reporting ever since.” Could it be that the bank is celebrating 20 years since this ground-breaking achievement by, er, ditching it? We contacted the bank and they confirmed our fears that, yes, except for its greenhouse gas data, this year’s report was not subject to an external audit.
The bank said in a statement to us:“We would like to reassure customers that the verification and audit process prior to publication was extremely thorough. The greenhouse gas data included was subject to external audit by the Bank’s auditors, EY earlier this year, and much of the data regarding volunteering, fundraising and campaigning was included in our annual report and accounts, and so was subject to verification by the Bank’s finance, legal and audit teams. As a final check, the Bank’s Internal Audit team reviewed and verified the Values and Ethics Report prior to it being approved for publication. We will take on board your feedback about a third party audit as we continue to evolve the reporting in the future. As I mentioned, our intention is to integrate our ethical policy data points more fully into our general financial reporting and so the data would be subject to verification as part of that process. If you have feedback from your members about the report and content overall we’d love to hear it so we can reflect in future developments.”
"If you have feedback from your members ... we’d love to hear it..."
We are deeply concerned that the bank has seen fit to drop this vital element from its Ethical Policy implementation. Internal checks are of course important, but the bank’s ethical policy needs assurance by specialist sustainability auditors – this is a different skill-set to auditing the bank’s financials. The bank’s comment that it will take on board our feedback indicates it may be willing to change its stance on this, but we need to see a clear commitment by the bank to reinstate specialist auditing of its Ethical Policy implementation at a reasonable level of assurance for its 2019 Values and Ethics report, and if possible a commitment to audit the 2018 report retrospectively.
We will be contacting the bank to seek such a commitment, and we encourage you to write to the bank or contact them via Twitter or Facebook to let them you share our concerns about this. We will keep you posted on our next steps if no such commitment is forthcoming.
Four ethical policy declines in 2018
The bank’s V&E report also reveals the four potential customers turned down by the bank in 2018 for Ethical Policy reasons. These were:
- “a consultancy business involved in advising the government of an oppressive regime on defence issues, including arms brokerage services”;
- a personal customer with a “close association with members of the political system of an oppressive regime”;
- “a jewellery business directly linked with the sourcing of gemstones from a region where there is evidence of poor human rights and labour standards”, with no sign of ethical sourcing policies; and
- “a farming business which failed to meet adequate standards of animal welfare”.
We’re writing this newsletter in the midst of a dangerous heatwave that has set records across Europe for the hottest temperatures ever recorded, and the link to man-made climate change is clear. Leadership in demanding urgent action to keep fossil fuels in the ground has come from the youth climate strikers who have skipped school on regular Friday strikes, but the time is coming for all of us to join in.
A global Climate Strike is being organised on 20thSeptember, so take part if you can. According to the FT, a German ethical bank, GLS, says it will close on September 20 so all employees can join in. We hope the Co-op Bank offers its employees similar support if they wish to go on strike, particularly given the bank’s pioneering stance on not financing fossil fuels. And, if you work for the bank, you can help organise your colleagues to join in and come out onto the streets for climate justice.
Other news from the bank
When we contacted the bank regarding its Values and Ethics report, they took the opportunity flag up some developments you might be interested in.
- The introductory offer of free banking for SMEs has been extended to 30 months:
- The bank has become one of the first to sign up to the Government’s Investing In Women initiative, which seeks to ensure support for female entrepreneurs.
- And it is pioneering a new advertising media, Good Loop, described as “an ethical alternative to YouTube”. By using Good Loop you can donate money to Amnesty, Refuge or Centrepoint when you view the bank’s ads.
Customer Union membership and renewals
We’re entirely independent of the bank, and rely on income from membership fees and donations to operate the Customer Union and hold the bank to account on ethics and ownership. If you are not yet a member of the Customer Union - why not join us now? For just £12 per year can help us sustain and grow the world's only customer union co-operative.
If you are a member of the Customer Union, please do look out for your membership renewal email - sent out automatically by our system. If you have any questions about membership just email us at email@example.com.
With best wishes
The Save Our Bank team
Have you joined the Customer Union yet? It costs £12 a year to be a member of the first ever customer union co-operative, and help us ensure the Co-op Bank sticks to its principles. It only takes a few moments to sign up here.