Social responsibility

Whose ethics
Co-operative Financial Services' Partners have indicated that value should be delivered to them in a socially responsible manner - a business approach that fits well with that of CFS' parent, the Co-operative Group. The Co-operative Group aims to act honestly, openly and responsibly, as originally envisaged by the Co-operative movement's founders in the nineteenth century. However, unlike ecological sustainability, there is little consensus regarding what constitutes a socially responsible business. Therefore, prior to addressing the question of 'what ethics to embrace', an organisation needs to decide 'whose ethics to embrace'.

Developments - Ethical Policy
To seek an answer to this dilemma, the bank has repeatedly balloted customers on a series of ethical issues since 1992. The bank chose to ballot customers, not only because they are numerous (in excess of two million) and represent a good cross-section of society, but also because it is generally their money that is being used. As described below, in 2003 a project was initiated which will establish a customer-mandated Socially Responsible Investment Policy for CIS. The final results of the bank's most recent Ethical Policy ballot (2001) are described here. The bank's Ethical Policy is unique in UK retail banking, in so far as it contains clauses that restrict the provision of financial services to certain activities and sectors. The bank has previously provided a detailed annual breakdown of all instances where business has been declined as a result of the Ethical Policy. The complete Ethical policy is described here. For the first time this year, an ethical and sustainability analysis is provided of the bank's corporate and business banking lending and deposits balance sheet. This is designed to assess the extent to which the bank's products and services support organisations that, in the bank's view, make a particularly positive contribution to society.

Developments - Responsible Shareholding
CIS announced its Responsible Shareholding approach in 1999. The approach is based on engagement with the companies in which shares are held, with the aim of realising improvements in financial, and social, ethical and environmental performance. CIS was the first UK investor to put its entire voting record on its website (November 2002) and is committed to exercising its voting rights at every available opportunity in each company in which it invests. This Report provides, for the first time, a detailed analysis of CIS' voting and engagement activity. To date, the focus of corporate engagement has been, predominantly, on issues of corporate governance and executive remuneration, but it has also embraced the ethical and sustainability performance of companies. In 2003, a project was developed that will establish a clear customer mandate for CIS' Responsible Shareholding policies, much as bank customers currently guide its ethical investment. Follow this link for further details on the customer mandate for CIS' Responsible Shareholding policies. It is planned that, following extensive customer consultation during 2004, CIS' new Socially Responsible Investment Policy will be launched in early 2005.

Developments - Public Policy disclosure
Groups such as SustainAbilityi and Green Allianceii have recently pointed out that, time after time, proposals for protective ethical sustainability legislation are blocked, or delayed, by business resistance. Furthermore, some businesses are enthusiastic supporters of sustainable development in public, but in private they use their influence within the 'corridors of power' to lobby against the development of the more robust regulations needed to promote more sustainable business practice. In this Report, under the banner of 'Influence and action', details are provided of instances where CFS has sought to influence the social, ethical and environmental dimensions of various legislative proposals during 2003. In particular, there has been a significant amount of work in and around the area of European chemicals legislation, more commonly known as REACH.

Corporate Social Responsibility
In addition to areas directly related to the bank's Ethical Policy and CIS' Responsible Shareholding programme, CFS reports on further issues that should be of concern to a socially responsible business, including diversity, health, safety and welfare, and community investment.

Assurance
An assessment of the degree to which CFS succeeds in delivering value to its Partners in a socially responsible manner is provided here by David Grayson, Director of Business in the Community,iii. For further details, please contact Jayne Beer, Manager, Sustainability Reporting and Diversity (jayne.beer@cfs.co.uk).

i www.sustainability.com/programs/janus/index.html
(This link will open in a new window)
ii www.green-alliance.org.uk
(This link will open in a new window)
iii www.bitc.org.uk
(This link will open in a new window)