Ethical history an asset for a potential Co-op Bank buyer

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When Good With Money applied for its Co-op bank account, we had to answer dozens of questions about what we sold, what we bought, the industry we were in and the industries we invested in.

Luckily, we aren’t arms and tobacco dealers. In fact our site is about everything the Co-op Bank aspires to: making finance more responsible, redirecting money to noble activities – social enterprises and renewable energy, instead of oil, tobacco, arms and big pharma. We were a shoe-in for an account.

This application was made after the Co-op Bank had been rescued by hedge funds and after the disgrace of its former chairman, Paul Flowers, who seemed more interested in his weekend party plans than the bank’s balance sheets.

So at the time of our account opening one year ago, despite everything that had been in the papers; despite morale at the bank being at an all-time low and the enormous strain on its senior execs, the Co-op continued to maintain some level of commitment to its ethical principles in the everyday ways it always had.

The bank didn’t fail because of its ethical stance – but for multiple other reasons – poor management and poor decision-making are much higher up the blame list than a refusal to engage with businesses profiting from net negative activities, even if this did limit its universe of options at times.

Any organisation setting itself up as a bastion of morality is setting itself up for criticism and for the prospect that it will always fail to achieve its perfect ambitions and always let some people down in the acutely subjective arena of ethics.

Any organisation that prioritises impact over or even equally alongside the business of making pure profit is going to attract suspicion that its executives are soft in the head, incapable of delivering on both because the two aims are fundamentally at odds.

They are not.

It is entirely possible to deliver on values and value, profit and principles. Look at Charity Bank, Ecology Building Society and Triodos. Look at Nationwide, WHEB Asset Management, Impax Asset Management, Aviva, Standard Life… all organisations that are serious about making money without making a mess of the world in the process.

They might not manage it all the time – and they shouldn’t be strung up for every failure.

“I’m only human, after all”, the Rag & Bone man sings. And any organisation is the sum total of the humans in it.

The 4.1 million customers of the Co-op Bank, many of whom signed up to the better vision of what banking could do in the world, should not give up on the idea that it is possible to put your money somewhere that matches your world view. Triodos is planning to launch a current account later this year. Many of the digital challenger banks, such as Starling and Tandem, are starting with a laudable set of intentions and clean sheets.

But those that remain with the Co-op should not yet despair of it, either. A lot of good, well-meaning people still work at the Co-op. Just as a lot of good, well-meaning people work at the big banks that might be tempted by the price tag.

The Co-op Bank, in its new incarnation, could potentially give up its “values” or retain them, under any buyer. As a brand, the ethical association still has value, even after Mr Flowers, with his drug-fuelled binges, almost destroyed it.

The Co-op is synonymous with the movement to direct the flow of capital into better business. But the Co-op’s fate does not denote the failure of this movement. On the contrary, responsible investment is having a moment. Big, traditional financial institutions are investing more than ever in Environmental Social Governance (ESG). Some think it is about to go mainstream. Imagine that? Imagine a world where every financial institution attempts to have a net positive effect on the world. Imagine they actually achieve that. It’s the direction of travel of the investment industry, thanks to the work of organisations such as Share Action, the divestment movement and the Church of England. Impax Asset Management says that when it started investing in 1999, there were 250 stocks that met its environmental standards. Last year, there were 1,100.

The sale of the Co-op Bank might be sad – but in the new financial world order of profit with principles, an enlightened buyer of the bank will seek to capitalise on the ethics (although the word these days is responsibility – less judgmental) of the brand. Its history of high ideals is an asset in a polluted, corrupted world. It would be a shame to give it up because of the actions of one, so-called Crystal Methodist and a bunch of hedge funds.

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Rebecca O'Connor

Rebecca O'Connor, a financial journalist, is co-founder and director of Good With Money. Formerly a staff writer at The Times, she covered personal finance and business for eight years before going on to spend three years as communications director at Trillion Fund, a renewable energy crowdfunding platform. Rebecca writes about personal finance regularly for The Times and The Spectator and has written articles for The Observer, The Guardian, Huffington Post, The Ecologist, Moneysupermarket.com, Energydesk, Moneywise, BusinessGreen and Ethical Consumer.

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