Last updated: December 2013
Keep calm and carry on with the Co-op
It’s not the been the best of times for either the Co-op Bank or any other co-op for that matter has it?
With the media vultures still picking over the unfolding Co-op debacle, Charles Middleton, the managing director at the ethically-focused Triodos Bank speaks for many in his response to the crisis: “It is clear from the reaction to the Co-op’s problems how important ethics are to so many people and how disappointed they are at what has happened,” says Middleton. Hear, hear.
However the good news is that Middleton doesn’t think that the current crisis at the Co-op will have any lasting impact on the ethical finance movement: “There is no good reason why this should cast a shadow on ethical banking or ethical business more broadly. There has been huge progress in recent years, largely led by consumers using the power of their money to drive forward
Ethical Consumer’s Rob Harrison is equally upbeat about the likely impact on ethical banking: “Sure, the Co-op’s taken a reputational hit but things didn’t go wrong because of its ethics, they went wrong because of a bad business decision to buy the Britannia Building Society,” says Harrison. “There’s no evidence that it was anything to do with the bank’s ethical policy.”
Harrison firmly believes that ethical finance still has a prosperous future. “Ethical finance is bigger than the Coop Bank,” says Harrison emphatically, a sentiment that Olivia Bowen from Gaeia ethical financial advice agrees with: “The ethical financial sector is very resilient,” says Bowen. “People who want to invest ethically and who care where their money is held will stick with it and won’t sell out, out of their own personal values.”
Plus let’s not forget that ethical investment is now a credible alternative to mainstream investment. Just this August new research revealed that ethical and sustainable investment funds have generally performed better financially than their mainstream counterparts in the last 12 months.
A need for ethical banking
Ed Mayo, secretary general of Cooperatives UK, the trade body that promotes co-ops, believes that events at the Co-op Bank haven’t changed the need for ethical banking: “The case for a better system of banking and finance has never been greater. In a tough economy, there is a growing need for ethical and social finance and those who provide it can thrive,” says Mayo.
“Credit unions in particular are attracting widespread support, from the Archbishop of Canterbury to cabinet ministers, and can play a big part in empowering local communities and rebuilding our economy.”
The effect on mutuals
So whilst many believe that ethical finance should emerge relatively unscathed from the Co-op’s recent calamity, what about the effect of the fallout on the wider co-op and mutual movement?
“The co-operative movement has historically found new strengths in adversity and, alongside the deeper learning that is required, I do believe that this is what we are now seeing,” replies Ed Mayo, referring to the newly appointed management teams at both the Co-op Bank and Co-op Group.
Rob Harrison agrees with Mayo that talk of the death of mutuals is greatly exaggerated: “The story of mutuals and co-ops has been one of consistent growth for the past 20 years,” says Harrison. “The current set of bad headlines is its first significant setback and will, in future, be seen as just a blip.“
There are lots of factors within the mutual business model that makes it resilient in recessions. It is also good with social impact issues like environment and social justice. These long-term needs aren’t going away just because a banker made a bad decision,” continues Harrison. “The overall trend is still one of growth.”
Mayo concludes by pointing out the current size and importance of the co-op economy: “Let’s not forget that in the UK today there are more than 6,000 co-operative businesses, meeting the needs of millions of people, supported and championed by their 15.4 million members,” says Mayo. “Co-operatives and mutuals are core to an ethical, inclusive, alternative to mainstream business.”
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