Co-op blocks loans on ethical grounds
The Co-op bank has adopted stricter rules on lending to firms involved in animal testing and environmental damage after demands from customers to extend its ethical banking policy.
Pharmaceutical firms that use monkeys for testing medicines as well as cosmetics will be barred from borrowing from the bank along with oil companies that dig tar sands, the bank said.
The policy revamp is expected to increase the number of loan applications turned down by the bank. Last year it passed the total of £1bn in rejected loans since its ethical policy was launched 17 years ago.
Executives at the bank said the policy combined with its long-standing mutual status was proving a boon in the recession as customers from rival banks flocked to open current accounts. It said retail deposits had jumped 40% since the beginning of 2008 while the number of current accounts had jumped 65%. The increase in savings allowed the bank to boost lending to customers by 15% to £4.4bn.
In the next few weeks Co-op financial services is expected to complete the £1.7bn takeover of the Britannia building society, which will take the organisation’s assets to £70bn and the number of customers to nine million.
David Anderson, the bank’s chief executive, said more than 80,000 customers responded to a survey asking them for their views on the bank’s ethical policy. Most customers wanted the bank to refuse loans to oppressive regimes. Next on the list were companies that damaged the environment by extracting and producing fossil fuels, followed by companies that sold arms to oppressive regimes.
The bank’s head of retail, David Parkhouse, said customers wanted stricter policies so companies involved in the manufacture, distribution and sale of unethical goods were caught by the rules. “It means we are not only excluding fossil fuel production and manufacture, but also the transport companies that distribute them,” he said.
Its ban on companies involved in animal experimentation is also to be extended. “Under the new rules we will not lend to any organisation that conducts experiments on great apes,” he said. “Previously the ban was only on firms that tested household products and cosmetics on them.”
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February 2nd, 2009 at 11:15 am
This is reassuring. Often these “ethical” funds are watered down, but Co-Op seem to be drawing a line in the sand. I guess they can afford to with business coming to them at the moment.