Co-operative turns away over £700m of loans since launch of ethical policy

In the 15 years since the Co-operative Bank launched its famous Ethical Policy, figures released today (16th July) show it has declined loans totalling more than £700m for ethical and ecological reasons.

An analysis of the Co-operative Bank’s business lending record since 1992 clearly shows it is prepared to turn away business that conflicts with its customer mandated Ethical Policy.

However, the Bank believes its ethical positioning is a positive driver for business. Its total corporate loan book has grown by 250 per cent from an average of £571million in 1992 to £1.997 billion in 2006 and research shows that many customers join purely for ethical reasons. In 2006, Corporate Banking profits increased by 11.7 per cent from £49.3m to £55.1m, with a major expansion programme recently announced which will see the number of its Corporate Banking Centres double to 22 over the next five years.

The analysis of loans declined for ethical reasons since 1992 shows that ecological concerns (£325m) were by far the main reason why loans were declined. This included loans refused to companies whose core activities contribute to climate change, through the extraction or production of fossil fuels (£109m), as well as companies that manufacture harmful chemicals (£64m) or are involved in unsustainable fishing or deforestation (£30m). Animal welfare issues (£147m), including the fur trade, animal testing of cosmetics, blood sports and factory farming, were the second largest cause of refused loans, followed by the transfer of arms to oppressive regimes (£71m).

The Bank’s Ethical Policy, which has been the subject of three major reviews since it was launched in order to ensure it remains a contemporary reflection of customers’ ethical concerns, clearly states who the bank will and will not do business with.

Co-operative Financial Services (CFS) Chief Executive David Anderson said: “Over the last 15 years, our Ethical Policy has acted as a barometer of public opinion. Issues that our customers have expressed concern about have gone on to be reflected in wider societal changes. We’ve witnessed the end of cosmetic testing on animals in the UK; the introduction of legislation to phase out the manufacture of the most harmful chemicals; and fairtrade - something our customers have supported since 1995 - is now a mainstream brand. Of course, major challenges remain, and going forward we will continue to press for change on the issues our customers care about.”

Jonathon Porritt Founder Director of Forum for the Future "After fifteen years, the Co-operative Bank's Ethical Policy remains at the leading edge of corporate ethics, and has provided a clear challenge to the rest of the sector that there are certain lines that should not be crossed. To have declined £325 million of loans based on customers' ecological concerns, of which the largest portion concerns saying 'no' the extraction and processing of fossil fuels, is noteworthy at a time when we all need to consider the enormous changes that will be required to challenge climate change."

"There is still something quite counter-intuitive in a bank regaling you with the details of gross income foregone as a consequence of prospective customers being sent packing for failing to meet that bank's ethical and sustainability criteria. I was hugely impressed by this fifteen years ago and I still am today."