Banks face the flak

Demand for ethical lending policies is growing, says Dido Sandler

LAST WEEK saw demonstrations up and down the country to protest against Midland Bank's involvement in financing the export of defence equipment to Iraq in the lead-up to the Gulf War. Groups from the student campaign Lloyds and Midland Boycott (Lamb) dumped replica arms on the doorsteps of Midland branches to publicise the bank's alleged "continued financing of arms to oppressive regimes".

The demonstrations followed a move by Christian Aid to switch its account from the Midland to the Co-operative Bank the day after the publication of the Scott Report. "We invited the banks to tender for our business. Midland's products and services were good. But they failed in the areas of arms sales and Third World debt. This shift just after Scott is our way of signalling that there are alternatives being developed to the financial mainstream," said Paul Tyler, Christian Aid's finance director.

The World Development Movement (WDM), an anti-arms trade organisation that came to prominence when it successfully sued the Government over the Pergau Dam affair, has logged the involvement of the big banks in the international arms trade. It focuses on companies that support what Amnesty International describes as "oppressive regimes" and highlights Midland Bank for criticism. It claims that the bank was lead lender in hundreds of millions of pounds of lines of credit to Iraq backed by the government's Export Credits Guarantee Department during the 1980s.

Up to 20 per cent of this was allowed to be used to buy "non-lethal" military equipment.

Equipment classified as non-lethal by the DTI included radio systems for the president's office, night-vision range finders and jet engines.

A Midland Bank spokesman said: "We never financed sales of arms to Iraq ... We've never made a secret of our involvement in financing the export of defence equipment. You can only do this by getting a special government licence - in so doing we followed government policy."

Barclays, Lloyds and NatWest are also criticised by WDM for exporting finance to oppressive regimes. However, unlike the other three banks, NatWest does not take government licensing as the linchpin of all lending policy. It says: "A government export licence does not automatically guarantee the bank's support."

Banks have long been criticised for their lending policies. Last year, Maxim magazine invented four bogus companies to test the ethics of the big four. A racist political party, a pornographic magazine with paedophilic leanings, a magazine for drug dealers and a chemical weapons manufacturer - all these "projects" were offered accounts by at least one of the four.

Demand certainly exists among consumers for more ethical choices - research by Mintel shows ethical awareness is most acute amongst the 15 to 34 year- olds, and among the ABC1 socioeconomic group. This young, upmarket segment has the greatest future earnings potential, and the banks are particularly keen to win its loyalty at an early stage. Having chosen, people tend not to switch from bank to bank.

At the moment, though, Lamb says there is no clear mainstream contender for the ethical vote. NatWest is making strides in its environmental policy. The Halifax is wooing student groups, and a representative from Lamb is set to present to its head office in the near future.

Lloyds, Barclays and Midland also say they are making an effort in the environmental sphere. Rob Harrison of the Ethical Consumer Research Association and Ethical Consumer magazine says as yet the only largish bank with a coherent ethical policy is the Co-operative - which has been capitalising on the Scott Report aftermath, with ads featuring landmines plastered across the national press.

The Co-op Bank has a 13-point ethical mantra covering environmental impact, Third World equitable lending, arms export and human and animal rights.

Mr Harrison says there are two types of ethical savings institution - those that proactively seek out ethical areas in which to invest, and the companies that are ethical more or less by default, or avoidance. The Co-op Bank belongs to the latter group.

Before 1992, when it first introduced its policy, the Co-op never had much to do with ethically questionable companies. A lot of its corporate business came from local authorities. Some of the Co-op's products are market-beating, others are average. It, along with the other deliberately ethical institutions, is keen to stress that customers do not lose out financially through its investment policies.

In terms of lenders which seek to fund positively ethical projects, there are a paltry few in this country. The Triodos Bank only lends to projects with social and environmental roles - "linking money with people's values" - as the bank puts it. For example, it invests in Cafe Direct, a coffee company that trades ethically - paying growers fair prices, and the Henry Doubleday Research Association, which develops organic agriculture techniques.

News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features staging of a playground gun massacre
Travel
travel
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
PROMOTED VIDEO
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
News
i100This Instagram photo does not prove Russian army is in Ukraine
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
News
Morrissey pictured in 2013
people
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
filmReview: Sometimes the immersive experience was so good it blurred the line between fiction and reality
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
art
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
Sport
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
News
Field of broken dreams: Andy Bell visits Passchendaele
news5 News's Andy Bell visited the killing fields of the Great War, and his ancestor - known only from his compelling war diary - came to life
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In my grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

How are institutions tackling gallery rage?

Art galleries around the world are experiencing a rise in admissions but this comes at a price, according to The New York Times's Rachel Donadio, who said soaring attendance had turned museums into crowded, sauna-like spaces
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service