Comment: tugging at heart and purse strings can be dangerous

Written by Rebecca O'Connor on 13th January 2016

The court case in which Co-operative Group’s sacked former procurement head Kath Harmeston is suing the group for £5 million makes intriguing reading for its do-gooder customer base (ourselves included).

The Times report yesterday states that: “When she took up her position in April 2014, she claimed she discovered a culture of “cover-up, concealment and collusion” that went right to the top. She suggested that more than 70 per cent of the ethical society’s £1.5 billion budget failed to comply with it’s own procurement policy.”

It goes on: “In her witness statement, Ms Harmeston said: “I had grave concerns that I was being held to account by an executive team which itself holds double standards, exerts poor judgment and allows continued breach of procurement policy for significant consultant spends. I stated that it was difficult not to conclude that the suspension was being used as a device to avoid transparency.”

Avoids transparency.

70% of procurement by an ethical organisation failed to comply with its own policy.

These two elements of her statements stand out as highly depressing for those who have placed a lot of faith in the Co-op to act out their values for them.

If they hadn’t lost their faith already through the activities of the former Co-op Bank chairman Paul Flowers, this court case could be enough for them to seek ethics from another provider.

It should be said that the Co-op denies all of these allegations.

Nevertheless, the airing itself calls into question the very notion of a truly ethical business.

It might sound strange coming from us, but this is a totally valid concern.

In the case of the Co-op, based on all of the surprisingly tawdry tales that the last few years have revealed about the organisation’s top tier, it seems the problem is more one of management than policy.

Its ethical status may well have provided a handy veil beneath which it could get away with practices that other organisations not pretending to be something they are not would perhaps not get away with for so long. Ethical-wash, if you like.

It’s one reason financial journalists are so immensely sceptical of any product that purports to be anything other than financially beneficial – tugging at heart strings as well as purse strings can be dangerous – and in the case of many mis-sold investments, deliberately misleading people straight into bad deals.

But being too sceptical also unfairly discredits the genuinely decent and thorough amount of work going into such policies at investment funds and other providers around the country.

The Co-op’s ethical mandate is not just marketing. It is a well-thought through policy that is drilled into staff.

Anyone that has tried to open an account with the Co-op Bank would know: its checklist is immense.

The concerning thing is its alleged inability to stick to an ethical mandate on procurement when this was so much a part of everything the bank did.

It’s hard to extrapolate too much until the case concludes. But it does raise questions.

Is it that in this imperfect world of “tough choices”, to borrow one of David Cameron’s favourite phrases, it is actually not possible to meet such a stringent ethical mandate? Or is failing to meet them in a world where the number of companies taking responsibility seriously is growing every day just laziness?

Is trying enough? What does policy mean if it isn’t enforced? We’d love to know what people in the industry think about this issue, or anyone else for that matter, so if you have a view, please do drop it in the comments below.