Ethical banking

About our Ethical Policy

It's no secret that financial services providers are in business to make profits. One way they do this by taking your money and lending it to someone else at a higher rate of interest. But what they rarely tell you is who they lend it to.

With other banks and insurers, you have no say in where your money is invested and how these companies behave. For example, your money could be loaned to companies involved in the fur trade, arms dealers who supply oppressive regimes, or multi-national companies with poor environmental records – and you wouldn't know a thing about it.

That's where we're different

We have given our customers a say in what we do with their money. In 1992, after a long consultation with our customers, The Co-operative Bank launched its Ethical Policy – a first amongst UK high street banks and still unique today. The Policy ensures that we will always stand up for the issues that our customers feel passionate about. We allow you to have your say on the issues that matter to you, such as human rights, animal welfare, fair trade and the environment. So simply by being our customer, you're helping us change the world, little by little, every day.

Since its launch in 1992, The Co-operative Bank has withheld over £1.2 billion of funding from business activities that its customers have said are unethical. Whilst at the same time, increasing commercial lending sixteen fold to almost £9 billion.

Extension to The Co-operative Insurance

Since 2011, The Co-operative Bank's Ethical policy has been extended to cover the investments underpinning our home and motor insurance products. As a result we do not purchase bonds issued by organisations that do not meet the criteria of the Policy.

Don't just take our word for it

Many financial services organisations produce social and environmental reports but few, if any, subject their core business activity – the provision of finance – to open, independent scrutiny. Alongside a host of internal controls, every year we invite an independent auditor to comment on the implementation of our policies and publish the findings in The Co-operative Group Sustainability Report.

Human rights

Human rights abuses are closer to home than you think

In the last review of The Co-operative Bank's Ethical Policy, we asked customers to tell us which ethical issue they would prioritise above all the others. Human rights issues came out as the single highest priority.

Yet here in the UK, human rights issues can seem quite remote from our everyday lives, even though the organisations that abuse human rights frequently have links to the UK. Just as individuals choose to invest in businesses, so do governments. In this way, businesses all over the world, including UK businesses, continue to support oppressive regimes. Furthermore, certain extremist organisations abuse the right of freedom of speech and advocate discrimination and incitement to hatred against sections of the community.

Our position on Human Rights is based on the Universal Declaration of Human Rights. By banking with The Co-operative, you can be sure that your money will not be used to finance governments and businesses that fail to uphold basic human rights or to support organisations that advocate discrimination and incitement to hatred.

The Arms Trade is a loaded issue

The Arms Trade generates a wide range of opinions. Some oppose the manufacture of arms full stop; some consider the use of certain types of weapons, such as cluster bombs, that have a disproportionate affect on civilians should be restricted. Others see the arms industry as a necessary evil, believing that every country has a right to use armaments in order to defend itself. The picture is perhaps further complicated when you consider that we live in a country that's one of the world's largest arms exporters.

In 2002, we campaigned with Landmine Action in an effort to influence UK government and U.N. policy on the manufacture and use of cluster bombs. Read more about our campaign, Cluster Bombs: the Great Clear-up Operation. 

Our policy on human rights

We seek support the principles of the Universal Declaration of Human Rights. In line with this, we will not finance:

• any government or business which fails to uphold basic human rights within its sphere of influence;
• any business whose links to an oppressive regime are a continuing cause for concern;
• any organisation that advocates discrimination and incitement to hatred;
• the manufacture or transfer of armaments to oppressive regimes;
• the manufacture or transfer of indiscriminate weapons, eg cluster bombs and depleted uranium munitions;
• the manufacture or transfer of torture equipment or other equipment that is used in the violation of human rights.

International development

We live in a world of globalisation, and many of the goods we consume are produced overseas, where labour is often cheaper to secure. When undertaken fairly, trade has an unparalleled capacity to lift people out of poverty and enhance the quality of lives across the world. When international trade is conducted unfairly, however, it can actually undermine development.

To reflect the concerns of our customers, we expect businesses to respect the Core Conventions of the International Labour Organisation on issues such as child labour and freedom of association, and we will withhold finance from those that do not.

Development in the poorest countries in the world can be undermined by lack of access to basic medicines for diseases such as Malaria, TB and HIV/AIDS, and lack of access to clean water. We will withhold finance from organisations who systematically impede access to basic human necessities, eg safe drinking water or vital medicines.

In addition, we will withhold finance from businesses using irresponsible marketing practices in developing countries. For example: practices relating to tobacco products, breastmilk substitutes or pharmaceuticals

One of the most effective ways that businesses can contribute to poverty reduction is to pay income tax in developing countries. The exploitation of tax havens by multinational corporations operating in least developed countries is particularly harmful. We will withhold finance to those businesses that avoid paying tax in the least developed countries through the use of tax havens.

On the flip side, we seek to invest in Fairtrade businesses and are committed to solutions such as Micro-finance that enable people to work their way out of poverty and become self-sufficient. So, your money may be helping small-scale Fairtrade farmers, or small businesses in the developing world to thrive.

We have a history of campaigning on this issue. Our new Grow Co-operatives campaign, in partnership with Oxfam, calls for increased international investment to help smaller farmers and co-operatives feed the world sustainably.

In 2005, we campaigned in partnership with Christian Aid for Trade Justice and in 2000, our Rip It Up, Write It off - Drop Third World Debt campaign joined forces with the Jubilee Debt Campaign to cancel the debts of the world's poorest countries. Find our more about how we're tackling global poverty as part of our Ethical Plan.

Our policy on international development

We will seek to support poverty reduction. In line with this, we will not finance organisations that:

• fail to implement basic labour rights as set out in the Fundamental ILO Convention eg avoidance of child labour, or that actively oppose the rights of workers to freedom of association, eg in a trade union;
• take an irresponsible approach to the payment of tax in the least developed countries;
• impede access to basic human necessities, eg safe drinking water or vital medicines;
• engage in irresponsible marketing practices in developing countries, eg with regard to tobacco products and manufacture.
• Furthermore, we will support fair trade and the provision of finance to the working poor in developing countries via micro-finance.

Ecological impact

Supporting a climate of change

Every year, millions of tonnes of fossil fuels, (such as oil, gas and coal), are burned, producing large volumes of carbon dioxide (CO₂). The accumulation of CO₂ in nature has been identified as the primary agent behind global climate change.

Our commitment to fighting climate change goes back to 1998 and in line with our customers concerns, we have had an Ethical Policy commitment not to invest in businesses whose core activity contributes to climate change through the production or extraction of fossil fuels.

The wider landscape: tackling other green issues

Climate change is the central green issue of our time, but we haven't lost sight of our customers' concerns about other environmental issues. For example, we're also taking a stand on the unsustainable harvest of the world's natural resources - timber and overfishing being specific areas of concern.

Investing your money sustainably

As part of our Ethical Plan, we have committed £1bn to fund energy efficiency and renewables. As part of this, we will dedicate £100m to small-scale community renewable projects.  

Campaigning on Climate Change

We are calling for a Clean Energy Revolution. The UK can no longer afford to rely on increasingly expensive and environmentally damaging fossil fuels. Instead, we need to accelerate the development of a clean and efficient energy future. By harnassing our vast natural resources of wind, water and solar power, and improving our energy efficiency, the UK will be greener and our energy future more secure.

We have a history of campaign on climate change. In 2006 and 2007, our Combating Climate Change campaign joined forces with Friends of The Earth's 'The Big Ask' for a strong Climate Change Bill.

Our policy on ecological impact

We will not finance any business whose core activity contributes to:

• global climate change, via the extraction or production of fossil fuels (oil, coal and gas) with an extention to the distribution of those fuels that have a higher global warming impact (eg tar sands and certain biofuels);
• the manufacture of chemicals that are persistant in the environment, bioaccumulative in nature or linked to long-term health concerns;
• the unsustainable harvest of natural resources, including timber and fish;
• the development of genetically modified organisms where there is evidence of uncontrolled release into the environment, negative impacts on developing countries, or patenting (eg of indigenous knowledge);
• the development of nanotechnology in circumstances that risk damaging the environment or compromising human health.

Furthermore, we will seek to support:

• businesses involved in recycling and sustainable waste management;
• renewable energy and energy efficiency;
• sustainable natural products and services (including timber and organic produce;
• the pursuit of ecological sustainability.

Animal welfare

The Co-operative Bank's customers lead the way on animal welfare. In 1992, our customers voted overwhelmingly that we should refuse to invest in businesses involved in blood sports - 13 years before the Government's fox hunting ban. Our customers also said no to animal testing of cosmetics or household products. The EU will soon follow suit, banning animal testing for cosmetic purposes from 2013.

Great apes are highly intelligent, emotional creatures and their use in experimentation is banned in the UK. However, in some countries, the use of great apes in experimentation is still permitted. The Co-operative Bank will not finance any organisation involved in the exploitation of great apes through experimentation or general commercial use.

Furthermore, to reflect another area of our customers' concerns, we will not invest in businesses involved in intensive farming, such as caged egg production. Instead we aim to support free-range farming methods that offer better conditions for animals.

 Our policy on animal welfare

We will not finance any organisation involved in:

• animal testing of cosmetic or household products or their ingredients;
• the exploitation of great apes, eg in experimentation or general commercial use;
• intensive farming methods, eg caged egg production;
• blood sports, which involve the use of animals or birds to catch, fight or kill each other;
• the fur trade.

Furthermore, we will seek to support:

• businesses involved in the development of alternatives to animal experimentation;
• farming methods that promote animal welfare (eg free range farming).

Social enterprise

Investing in a stronger, healthier and more stable society

The bank has a long history of investment and support for social businesses, and over the years has extended a great deal of support to co-operatives and credit unions.

We do this because we know our customers want to see their money being used to support organisations or charities that are run for the good of the community (often referred to as 'social enterprises').

Our policy on social enterprise

We will seek to support charities and the broad range of organisations which make up the Social Enterprise sector, including:

• co-operatives;
• credit unions;
• community finance initiatives.

How we manage our Ethical Policy

The policy at work

Putting our Ethical Policy into practice involves a lot of work behind the scenes.

To make sure nothing slips through the net, we have integrated Ethical Policy compliance systems into our everyday banking procedures.

We check the profile of every new business customer

On applying for banking services with The Co-operative Bank, all business customers are required to complete an Ethical Policy questionnaire. These questionnaires are passed through to a Business Relationship Manager, and/or a member of the bank's New Business Centre, who assesses the proposal against our Ethical Policy.

When something's not right

If an issue of concern or potential policy conflict is identified, the business is referred to the bank's Ethical Policy Unit for further investigation.

The Ethical Policy Unit reviews the business application against the policy statements and against the 1,700 plus case studies held on file. Where appropriate, further in-house research will be carried out and appropriate external sources consulted before a decision is taken.

Giving the green light

We will only offer a business banking facilities when we are confident that there are no conflicts with our Ethical Policy.

The potential financial gain to our business is never a factor in the decision.

We're not afraid to say 'no' when there's a conflict with our Ethical Policy

Since the launch of our Ethical Policy in 1992, we've turned away loans totalling £1 billion. It's a substantial amount - but we think it's a price worth paying to run a business that our customers can feel proud of.

Ultimately, everything is independently audited

We want our customers to have complete confidence that our ethical policies are being properly implemented, and to this end, we are committed to providing you with the information you need to judge for yourself.

That's why, every year, we invite an independent auditor to comment on the implementation of the Policy. We then publish these findings in The Co-operative Group Sustainability Report..