Ethical stance pays off for Co-op

NEARLY £100 million of business was turned away by the Co-operative Bank last year on ethical grounds.

• Tim Franklin says bank will continue to turn down business that does not meet its ethical criteria. Picture: Complimentary

But the Co-op still provided 800m of finance to UK companies in 2009, according to a report out today.

The mutually-owned bank, which last year launched a corporate banking centre in Edinburgh, has provided 8.3 billion of finance to UK firms, its annual ethical audit shows.

Co-op Bank claimed it had significantly increased its support for UK businesses last year. Companies with an ethical, environmental or co-operative ethos accounted for 25 per cent of loans and overdrafts and more than half of the commercial deposits held with the bank.

However, the report reveals that in 2009 the Co-op turned down 20 financing opportunities to businesses that fell foul of its ethical criteria on human rights, including 16 companies that failed to meet its guidelines on environment impact.

A further four prospective corporate clients breached its animal welfare policies.

The lender also declined to supply funding for missile equipment destined for oppressive regimes, banking services for a manufacturer that tested its cleaning products on animals and lending for two new UK coal-mining operations.

Tim Franklin, chief operating officer at the Co-operative Financial Services, said: "These figures clearly demonstrate that there has been no relaxation in the implementation of the bank's ethical policy and we continue to turn business away that conflicts with our customers' concerns.

"Despite these actions, the bank's corporate business goes from strength to strength, with a growing proportion of corporate customers coming from sectors that make a positive contribution to society."

The Co-op has also experienced a post-credit crunch boom in the individual market as consumers have sought an alternative to the biggest high street brands.

The bank reported a 38 per cent rise in new current accounts opened in 2009 as the number of people switching from rival banks increased by more than one-fifth.

The bank's ethical policy was overhauled last year after a consultation with account holders on their attitudes towards issues including human rights, ecology and animal welfare.

The Co-op – which has committed to lending 200m to organisations in the renewable energy sector this year – recently announced that it was setting up a team dedicated to Scottish renewable power projects after experiencing increased demand for funding for smaller-scale projects. The five-strong team will be based partly in the Co-op's office in Edinburgh.