The Co-Operative bank is a part of the Co-Op group which is involved in several areas of business, some of which include; insurance, food retailing, farm care, food services, property and development, funeral services, and manufacturing.
The bank itself was established in one form in 1872. It is now a large bank with well over a hundred stores nation wide; it is now also involved in Internet banking with www.smile.co.uk. The following time line, taken from the company’s website, shows the history of the company, including the introduction of their ethical policy.
The main aim of the policy is for the bank to decide what types of businesses the bank will and won’t lend money to, as decided by the customers. The policy has several key areas of focus. These all come under 5 headings:
Human Rights:
The bank will not invest in:
- An organisation that takes away an individuals rights.
- An organisation that is involved in manufacturing equipment that is used for the violation of human rights.
The Arms Trade:
The bank will not invest in the manufacture, sale, production or brokerage of arms to any oppressive country.
Trade and Social Involvement.
The bank will encourage:
- A business that promotes Fair Trade.
N.B. ‘Fair Trade’ is an organisation that buys products from foreign farmers at a reasonable price and then markets them in English retailers.
- Customers or suppliers who take a stance on ethical dealings with a third world country.
- Organisations such as co-operatives, charities ect…
- Suppliers with the same sort of ethical policy.
In addition, the bank will insure their customer’s money will not finance any of the following:
- Money laundering for drug trafficking, terrorism or any other crimes.
- The trading of currency in developing countries for non-productive purposes.
- The manufacture of tobacco products.
Ecological Impact:
The bank encourages customers who take responsibility for their own environmental concerns and companies who avoid damage to the environment.
They will not invest in any business that directly relies on:
- The extraction and use of fossil fuels that adds to the problem of acid rain and globule warming.
- The production of chemicals that accumulate in food chains or assist the depletion of the ozone layer.
- Any actions that as a result cause deforestation.
Animal Welfare.
The bank does not provide finance for:
- Cosmetic products tested on animals.
- The excessive use of factory farming methods.
- The use of animals in sport where they are used to catch, fight or kill one another.
It is key in the objectives of the scheme that customer consultation should be high, and the bank should act in the interests of it customers rather that its management. For this reason all areas of the ethical policy are voted for by the consumer.
The main evidence of the banks ability to fulfil its aims comes from sanctions it has imposed to insure any company, funded by the bank, fits within its ethical policy.
However there is evidence to support their ideas about encouraging investment in charities.
The bank has a scheme called ‘Customers Who Care:’
- This is a policy in which every £100 spent on the customers Co-Operative credit and debit cards, the bank will donate 1.25p to the scheme.
- Each scheme tries to tackle a different issue, and allow the customers to choose which of the selected charities/organisations will receive a % of the money.
- The money will be focused in raising awareness about each specific issue.
The attached document shows the current campaign, ‘Opportunities for Young People,’ attempting to reduce derivation in the working class areas of Britain, as well as the latest campaign to fight against, and help clean up unexploded bombs. Other campaigns include:
- Refugees- The Real Story
- Changing Minds about Mental Health.
- Rip it Up, Write it Off. Ect…
This section will analyse the profits and share prices of the bank.
This graph shows the share price for the last 12 months, it shows that after a slump last year, things are picking up again, and are staying within a small boundary.
This table shows a massive increase in gross profit.
These three charts show the relationship between operating costs and operating profit, in terms of the % ratio. It shows a large decrease in the cost/income ratio, meaning they are getting more net profit from their sales revenue, i.e. they are more productive.
The chart to the right shows a decrease in the number of stores closing; this is a sign of a successful company.
The Co-Operative Bank is well known for its ingenuity and its ability to execute new ideas. They were the first UK bank to implement an ethical policy. But the question remains, can they remain profitable?
The evidence in the previous section is quite conclusive; the bank has had record profits constantly for the last 5 years. It has managed to decrease its cost/profit ratio, reduce store closure to one, and has had no voluntary redundancies.
The reasons for this could partially be a result of the ethical policy. As described on page IV, the productivity of the banks employees could be increased by the ethical policy, as demonstrated by their internal satisfaction surveys, (Right)
Another reason in this case would be that it helps maintain customer loyalty.
It has also been used as a unique selling point to try and attract new customers.
The ethical policy of this bank is very effective in insuring it has a good public image, coupled with the policy in which customers decide the areas their money is invested in.
Evidence for this comes in the form of customer loyalty towards the policies.
Personally, I think that a company’s ethical policy will become more and more important in the future as people become more aware of ethical issues, and increasingly search for a morel alternative. This also acts to a response to the debate as to whether businesses are ethically minded, or are merely out to make profit. It would suggest that businesses will have to become ethically minded in order to remain profitable.
The Co-Operative Banks ethical policy is very successful in addressing these concerns. They have manufactured their policy to be productive as well as insuring they will remain profitable in the future.
I also think that the Government should take more action to force large companies to have an affective ethical policy, to stop negative externalities, human rights abuse ect…
I also question the intention on the management, whether this policy was derived to help the world, or to increase profits. If it is the latter, then the true extent of investment into chartable organisations is likely to be minimal, but amplified by the company’s public relations team. This could be proved by the huge profits the company has made, more of which could be invested into these charitable organisations, especially when comparing to the amount of money actually invested into them.
The company’s ethical policy has been a success. This is show by:
- The development of an ethical policy by the consumer, for the consumer
- The implementation of the ethical policy into:
- Preventing inappropriate investment,
- Funding charitable organisation.
- The way in which the staff are treated.
- Increasing profit
- Arguably as a result of the policy
- Maintaining good customer relations.