Co-operative Bank

Case study:
Management of climate change and biodiversity within a stakeholder approach.

Introduction:
The Co-operative Bank has a distinctive stakeholder ethos and positioning, encapsulated in the 'Partnership Approach' announced in 1997. The bank works to serve the interests not just of shareholders or of customers, but of all seven partners involved in the bank's activities: shareholders, customers, staff, suppliers, local communities, national and international society and past and future generations of co-operators. This approach runs right through the organisation.
The bank's investment decisions are governed by an ethical policy which sets out exactly where the bank will and will not do business. A comprehensive performance measurement and reporting regime includes an externally verified social and environmental Partnership Report. A key feature is the Co-op's effort to comprehensively measure the business benefits and costs of this ethical and ecological stance - which is estimated to have contributed around 20% of the bank's profitability for 2001.

The issues of climate change and biodiversity are considered within this overall approach. In response to feedback from customers the bank now declines to invest in any business or organisation that, as a core activity, relies on the extraction or production of fossil fuels, or which engages in the unsustainable harvest of natural resources. The bank has significantly reduced its emissions of global warming gases - and encouraged similar behaviour from its customers, and also invested in habitat restoration.

Carbon dioxide emissions from bank operations have reduced by 83% per customer account since 1997 and 98% of electricity is provided from renewable sources. The combined global warming potential of air conditioning and fire control systems have reduced by 90% since 1998.

The amount of land, almost 350 hectares, with significantly increased biodiversity as a result of bank initiatives is seventy-five times greater than the land occupied by its operations. Projects range from reforestation in Uganda to the conversion of arable to wetlands in East Anglia.

Processes:
The Co-operative Bank has a distinctive stakeholder ethos and positioning, encapsulated in the 'Partnership Approach' announced in 1997. The bank works to serve the interests not just of shareholders or of customers, but of all seven partners involved in the bank's activities: shareholders, customers, staff, suppliers, local communities, national and international society and past and future generations of co-operators. Since 1998 the bank has produced a comprehensive social and environmental Partnership Report.

The management of climate change and biodiversity, recognised as important issues, are captured by this approach. Since 1992 the bank's investment decisions have been governed by an ethical policy developed with customers which sets out exactly where the bank will and will not do business. The bank does not invest in any business or organisation that, as a core activity, relies on the extraction or production of fossil fuels or which contribute to global climate change and acid rain or the unsustainable harvest of natural resources, such as timber clearance. An additional ecological mission statement sets out a longer term vision. This overall approach permeates right through the organisation - including the performance assessment of all staff.

As part of the partnership approach, performance against targets is reviewed during annual auditing and reporting cycles and for the past three years the bank has benchmarked its performance against Credit Suisse Group, because the investment bank's environmental report is one of the few in which data is externally verified. At the Co-op an ecological audit in 1996 is driving the bank's indicators and targets via an ecological steering committee chaired by an executive director. Teams assesses the ecological impact of products and services and the ethical and environmental profile of the company making the product or services. For example 350 products and/or services were screened during 2001 and 147 potential corporate customers were assessed, of which 52 were declined, foregoing gross annualised income of over £2.5m. Policies are regularly updated via ballots for example sent to over two million bank customers in 2002, arguably the largest ecological consultation exercise ever in the UK.

Business in the Environment's 6th Index of Corporate Environmental Engagement ranked the bank first amongst financial institutions and sixth overall. The German rating agency Oekom gave the bank the highest ever rating for a UK company.

The annual Partnership Report is externally verified and conforms to the social accountability standard AA1000. Summaries are mailed to all customers and staff. The 2001 report was the outright winner of the UK Social Reporting Awards, and the joint-winner of the UK Environmental Reporting Awards.

Impact:
Since announcing the partnership approach the bank's profitability has more than doubled, and customer account numbers have increased by over 30%. After the launch of the core ethical policy, profitability has increased from £5.2 million (1993) to £107.5 million (2001). The bank has researched how ethically motivated customers, ie those who join because of the ecological and ethical brand, contribute to the bank's profitability. These customers are more likely to have more than one product, to recommend the bank and be more satisfied. The vast majority of customers support the bank's position on biodiversity. The bank's policies are similarly important for business customers. Overall the Co-op calculates its ethical and ecological positioning delivered around 20% of the bank's profitability in 2001.

In 2001, the bank was rated for the second consecutive year, as one of The Sunday Times' '100 Best Companies to Work For' in the UK compiled including staff feedback on company philosophy and culture. Staff turnover is substantially below the industry average.

As a result of the increased use of renewable energy, the bank's net emissions of CO2 have fallen by 77% compared with a 1997 baseline, and emissions per customer account are now down by 83%. The annualised additional cost of this 'green' electricity is £67,000.

Prior to 2000, the bank's air conditioning systems were dominated by conventional ozone depleting organochlorines. The systems are being replaced with water, ammonia, lithium bromide or hydrocarbon technology and the global warming potential has reduced by 61% since 1999, at an additional cost of £623,100 for 2001. Similarly previously the majority of the fire control systems utilised halons, again potent ozone depletors and global warming gases. These systems have been replaced reducing the global warming potential by 90% since 1998. The bank has also tackled transport CO2 emissions by introducing small diesel vehicles to the company car fleet and reducing mail freight.

The restoration of natural habitats has been a particular focus. The amount of land with significantly increased biodiversity as a result of bank's initiatives is seventy-five times greater than the land occupied by its operations, and is now just under 350 hectares. As a recent initiative the bank re-entered the mortgage market in 2000. Every year that a customer holds a mortgage, the bank pays to offset the CO2 emissions arising from household electricity use. Total offset for 2001 was 1,163 tonnes of CO2. To date, all monies have supported rainforest restoration in Uganda. Other programs in the UK have converted landfill sites or open cast mines into woodlands, and a visa credit card scheme supports wetland conservation.

Back to Celebrating Success main page or visit Business in the Community's Awards for Excellence 2002 which includes case studies from the 11 other categories.