Banks - the good and the damn right despicable
A collection of climate stories mostly
Courtesy of Newcastle Libraries
When I arrived at Newcastle University in 1979, the most popular place for a fresher’s grant cheque, aside from behind the bar, was Barclays Bank. Politically unaware first years, followed their parent’s advice and opened an account with the closest branch to campus, one less thing to think about, me included.
The Barras Bridge Barclays is long gone. It’s now The Grand Cafe, an annex of the reinstated, Grand Hotel I presume? Students supping flat whites and cappuccinos who’ve never used or needed a cheque book, probably opened their neobank accounts, the term used for digital only banks like Monzo, Starling and Revolut from the comfort of their bedroom, months if not years before their UCAS forms were boldly populated.
Barclay’s behaviour has sadly remained reassuringly consistent. They might have distanced themselves from South Africa because of apartheid protests in the 1980s, but now they’re under increased scrutiny from War on Want, Campaign against Arms Trade and the Palestine Solidarity Campaign, who have uncovered the bank’s investments worth over £1 billion, in companies supplying weapons and military tech to Israel. Another apartheid situation with strong returns for the lender.
Ethical consumer
I’ve been digging into Ethical Consumer, a new subscription for me, started late last year, just in time for their most popular ethical consumer topic, retail banking. It’s what piqued my interest.
It’s not the first time I’ve written about banks. As recently as October 2022, The Last Tree highlighted HSBC’s greenwashing poster campaign, a complaint brought by Robbie Gilbert (Ad Free Cities), which was upheld by the Advertising Standards Authority, ASA. It resulted in the ads being banned.
Where we choose to bank is one of the most important ethical choices we can make. It’s a choice which also now comes without the pain and inconvenience you might have remembered or experienced years ago because government regulation has made it easy to change. Banks have been forced to ensure that switching is quick and easy. It also has to be completed within seven working days.
The regulation is designed to create choice, yet four out of five UK current accounts belong to one of the following seven banks or building societies below.
Barclays
Lloyds
Halifax
Santander
Natwest
Nationwide
HSBC
Only the Nationwide Building Society, listed here, passes the Ethical Consumer’s tests. The other six score badly and are listed as banks to be avoided.
It’s a high benchmark. Of the 31 current accounts assessed, only 4 are deemed worthy. It’s not who you might expect at the top either. It doesn’t, for instance, include the digital banks, steadily growing in popularity, like Monzo, Starling and Revolut.
I was disappointed, having opened several Starling accounts in the last 12 months, including a jointy with Mrs H, which replaced my First Direct account, a subsidiary of HSBC.
What does ethical banking mean?
It’s what you might already expect. Banks with a moral compass avoid investments in fossil fuels, weapons, gambling, tobacco, nuclear weapon production, animal cruelty and any other unsavoury activities you can think of. Some also take a positive stance with our hard earned cash and invest in renewable energy and other climate saving projects.
The areas under scrutiny are climate, environment, director’s pay and avoiding tax. The goblins in these institutions and elsewhere internationally, wield enormous power in the world because of the choices they make with their loans and investments. The worst performing banks are still entirely focused on economic factors, ignoring that they might be reshaping industries while destroying communities and ecosystems at the same time. The quickest way to change such behaviour is to play to their economic obsessions and take your business somewhere else.
Chase
If you were wondering who the voice was behind the latest Chase (J.P. Morgan) current account adverts, it’s our trusted old friend, The Doctor (David Tennant), back for a second time in the popular BBC series, Doctor Who, this autumn. Presumably he’s unaware that Chase is as toxic and destructive as the Daleks.
In 12 months, Chase has attracted more than one million UK customers. That’s more sign-ups than Monzo and Starling combined in their first 12 months of trading which is not surprising given the size of the beast.
Chase has 56 million digital customers in the US and a parent company with trillions of assets. The average UK Chase saver account contains £27,000, they have £10 billion of customer deposits and are the third worst bank in the Ethical Consumer’s table.
Chase (scoring 2/20) and its parent is the world’s biggest investor in fossil fuels 2020 and 2021, providing $81 billion in financing to this industry according to research by InfluenceMap.
Despite Chase and many others agreeing climate targets in line with the Glasgow Financial Alliance for Net Zero, they remain members of other associations which continue to oppose EU disclosure requirements and environmental, social and governance (ESG) investing as part of their duties in the US.
Digital banks
The neobanks (Monzo, Starling and Revolut) scored significantly better than the six high street UK banks listed above. Starling’s score (11.5/20), was half a point away from an ethical recommend. They lost half a mark for anti-social finance, paying one director over £250k per year, which is regarded as excessive compensation.
All three brand themselves as a breath of fresh air, a significant improvement on the traditional high street banks with richer, better functioning banking apps. My personal experience with Starling bears this out. Their app is a pleasure to use and significantly better than anything First Direct ever offered me.
These banks have avoided problematic industries as you might expect, but their ESG policies reported on their web sites are patchy and often only highlight the good bits they want us to see.
With Monzo having six million customers and Starling over three million, the question is whether they will continue to behave better ethically than much of this sector, if their customer base continues to grow?
Wishy washy promises
The neobanks need to be careful that they don’t fall into the same trap that NatWest (3/20) and HSBC (1.5/20 and last place) have done.
The NatWest’s ESG policies, prohibits financing some activities while others are only restricted. Restricted activity investment is still okay, provided they carry out due diligence audits every year? Activities on this list include, non-harmful child labour and depleted uranium weapons.
Would a restricted activity have included the $24 million invested in Cargill Inc, 2015-2020, whose subsidiaries have now been implicated in the seizure of indigenous lands in Brazil and Indonesia?
HSBC pinky swore in 2017 that they would stop financing deforestation. In 2021, Global Witness estimates they received over $20 million from deforestation linked investments. The world’s local bank, continues to love profit more than hectares of rainforest.
Rays of sunshine - the winners
Triodos (14.5/20), a bank you’re unlikely to have heard of unless you’re one of their 747,000 customers retains top spot. It’s web site, is simple, uncomplicated and shows clearly how their investments are all about positive change.
Co-op Bank (Smile) (13/20), a familiar high street ethical bank also scores well, especially as no single US hedge fund now owns over 25% of the business.
Nationwide (12.5/20), a big building society with ethics a plenty, was the biggest surprise to me. But as they state on their web site, they’re not a bank, they’re a building society, a mutual, owned by their members who bank with them.
The same can be said for the Cumberland Building Society (12/20), another mutual with an ethical reputation.
I checked the meaning of the word mutual. It’s a partnership based on respect and understanding. No room for exploitation. There’s a thought.Start writing today. Use the button below to create your Substack and connect your publication with The ZIPster