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
people
News
people
Arts and Entertainment
Armstrong, left, and Bain's writing credits include Peep Show, Fresh Meat, and The Old Guys
TVThe pair have presented their view of 21st-century foibles in shows such as Peep Show and Fresh Meat
Arts and Entertainment
Keys to success: Andrew and Julian Lloyd Webber
arts + entsMrs Bach had too many kids to write the great man's music, says Julian Lloyd Webber
PROMOTED VIDEO
Sport
footballMan City manager would have loved to have signed Argentine
News
i100
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site on Friday

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
News
i100
Sport
Enner Valencia
footballStriker has enjoyed a rapid rise to fame via winning the title with ‘The Blue Ballet’ in Ecuador
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

The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Day In a Page

Bryan Adams' heartstopping images of wounded British soldiers to go on show at Somerset House

Bryan Adams' images of wounded soldiers

Taken over the course of four years, Adams' portraits are an astonishing document of the aftermath of war
The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities