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Time to put your money where your morals are?

Plant growing out of money

The Co-operative has launched a corporate social responsibility programme, setting a new standard for the industry. Is it time to put our money where our mouth is and switch to an ethical provider?

In November last year I asked the question ‘Can we afford to care about ethical finance?’

My conclusion at the time was to separate the issues, splitting my efforts between hunting out the best finance deals and renewing my efforts to improve my wider environmental and social impact.

Your responses made me question if I was trying to have my cake and eat it. Arthur Jones made the observation that ‘While you’re supporting conservation with your offset projects, your money is being invested in the companies which are destroying rainforests and woodlands around the world – unless you’ve made a specific effort to ensure otherwise.’

He’s right. It’s both refreshing and promising that it was a financial services provider that finally made me take action.

The Co-op plan

The Co-op’s new three-year plans are definitely welcome in my book. They include:

  • Ethically screening its general insurance products
  • Increasing its financial support for renewable energy and energy efficiency projects to £1 billion
  • Launching a new £20m international Co-operative Development Loan Fund
  • Expanding its community investment to include £5m a year to help tackle poverty around its stores and branches

These are all positive steps and mark the first time that a major high street bank has sought to fully align its ethics with its operational objectives.

The Co-op is already well known for its firm ethical stance. Their targets are ambitious and, if successful, will act as a benchmark for other retailers and banks.

The good guys of banking

There are some financial services providers who are setting the ethical standards for the whole industry. The Co-op, Charity Bank, Triodos Bank and the hundreds of credit unions around the country are amongst those that stand out.

I’m lucky insofar as I can afford to take a small hit on my savings rate, or pay a bit more on my credit card, without endangering my wider finances.

Charity Bank and Triodos, for example, both pay a respectable 2% on their cash Isas, while the Co-operative is a Which? Recommended Provider for savings accounts, credit cards, car insurance and current accounts.

Only by transferring our banking to the ‘good guys’ will other banks and building societies listen and change their own practices. For my part, it’s time I put my money where my morals are.

Keith Martin says:
23 February 2011

Recently, the esteemed Co-op took over Britannia Building Society; a meeting of minds we were told. Yet, when our with-profits endowment mortgage came to an end, we were told there was NO lump sum AND a shortfall on the mortgage. We appealed, claiming that this was in contravention of guarantees given at the time of its inception. Britannia claimed it had “lost” the relevent documentation: fortunately, I’d retained a copy of these in the loft! Accordingly, they DID right off the mortgage shortfall, but we still failed to get ANYTHING by way of a lump-sum. What do you think are the chances of me investing with them (under any guise or name) in the future, or indeed of recommending them to others? Integrity is more than just a word: it SHOULD be a way of doing things.

Sophie Gilbert says:
3 March 2011

I remember answering your question, Martyn, can we afford to care about ethical finance, by asking another one, can we afford not to. I still think we can’t.

However, the Co-op Bank have only one branch in Scotland, in Glasgow, and I live in Edinburgh. At the moment it isn’t practical for me to switch to them from RBS, however despicable a bank it is.

Joan says:
7 June 2011

No need to visit the Branch Sophie – I’ve only been in once, to open the account. (It’s by Central Station). I do everything on-line or on the phone, and have always found service to be friendly (on the phone) efficient, and helpful.

Polly says:
9 March 2011

How about Which publishing a league table of banks which will allow customers to work out the balance between casino style investment activity and retail banking in each bank/building society. It is no good wringing our hands about fat bonuses and hoping the government will do something . Why aren’t we using consumer power. What sort of salaries/bonuses does the Coop pay? if we don’t like loss-making banks paying millions of pounds in salary should we all be switching to banks who pay less? The green movement has had some notable international successes mobilising consumers against companies not acting wisely . Banks have no incentive to change if we keep banking with them.