Banks face the flak
Demand for ethical lending policies is growing, says Dido Sandler
Sunday 03 March 1996
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.
- 1 Howard Jacobson: Let's see the 'criticism' of Israel for what it really is
- 2 Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
- 4 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Jennifer Lawrence face palms Emma Watson at Christian Dior show in Paris
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
Mick Jagger denies being World Cup curse and reason for Brazil’s embarrassing defeat
Gingers face extinction due to climate change, scientists warn
Sustained immigration has not harmed Britons' employment, say government advisers
British jihadist calls for 'flag of Islam' over Downing Street and Buckingham Palace
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...
£60000 per annum: Harrington Starr: A leading provider in investment managemen...
£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...
£30000 per annum: Harrington Starr: A global leader in trading platforms and e...