Our belief that businesses should play a role in society is reflected in the Bank's support for a very wide range of charities and voluntary organisations.

This support takes a number of different forms, from straightforward charitable donations, through active involvement in various good causes, to ongoing fund-raising schemes, such as Customers Who Care and our many different affinity cards.

But how can we be sure that the time and money we devote to the well-being of society at large is being used to maximum effect? Do we give enough? And, given that it's impossible to respond positively to every appeal for help, are we fair and consistent in dealing with the many requests we receive?

These are the questions addressed in the following section.

[ Determining society's priorities and measuring our performance ]
The Bank's Mission Statement commits it to "act as a responsible member of Society, behaving at all times with honesty and integrity". In this we have the undoubted support of the majority of our customers, but do we have the support of the rest of society? Or, would the majority rather that we just got on with the job of wealth creation?

In order to find out, in 1997 we commissioned QCL Market Research to carry out 500 face to face interviews with members of the public in order to ascertain their attitudes towards banks and in particular the way banks invest customers money. Of those interviewed, 7 in 10 said that it was important that banks have a clear Ethical Policy, and a similar number stated that as customers they should be consulted on how their money is invested. Thus, it would appear that the majority of the public agree with our customers about ethical investment, although the depth of support amongst customers of the Bank goes much deeper, with 9 in 10 supporting our Ethical Policy. In order to ascertain what the specific issues of ethical concern were for our customers, we conducted detailed research in 1991 and 1994 , which is reported on in this section under the banner of Social Responsibility (pages 72-79). Here, we also provide details of how the Bank developed its Ethical Policy, and the integrity of the policy implementation process.

Another issue that has been highlighted as important by members of the public is corporate charitable giving. Research conducted by MORI in 1997 found that not only did the public consider it desirable for business to make charitable donations, but the vast majority (89%) said it was important that this support was communicated effectively. Therefore, early in 1998 we undertook an analysis, overseen by Business in the Community, of the performance of our sponsorship and donations schemes; and commissioned Nunwood Consulting Limited to conduct research into the quality of our request handling processes. We have also provided details of what we call our 'affinity relationships', where our support goes much further than merely financial aid, and to illustrate the point a number of independently verified case studies are described.

1a) Scale of charitable aid

[ Existing commitment ]
The Co-operative Bank has a policy to support organisations which seek to contribute to the well-being of society, particularly those involved in ethical, ecological and co-operative ventures. Support can take many forms, ranging from simply donating money to providing sponsorship, equipment or professional expertise.

[ Performance ]
The Co-operative Bank contributed a total of £1.95 million to charitable causes during 1997. These monies were provided via a number of different avenues, as described below:

[ By comparison ]
In 1986, Business in the Community established the 'Per Cent Club' and made the call for business to donate a minimum percentage of pre-tax profits to charitable causes. The target investment measure is currently 0.5% of UK pre-tax profits with the aim of raising this to 1% for the new millennium. This scheme now has over 300 members and is widely considered to be the benchmark for corporate giving in the UK.

With reported pre-tax profits of £55m for 1997, our £1.95 million of charitable aid corresponds to a donation of 3.55% of pre-tax profits. By way of comparison, in 1996 (latest public data available) NatWest and Barclays Bank donated 1.34% and 0.49% of pre-tax profits respectively, and these two are considered to be market leaders in this area.
 

[ Comment ]
On the basis of cash alone The Co-operative Bank performs extremely favourably in terms of charitable giving. However, not included in these figures is an estimate of in-kind contributions, such as staff time and equipment gifts. An audit was conducted in 1996 of all in-kind contributions and their value put at £224,242. It is reasonable to believe similar figures would apply for 1997, which would raise the sum of our donations to £2,180,331, and give a figure of 3.96% for donations as a percentage of pre-tax profits.

[ Future objective ]
We will continue to be a leader in our sector not only in the extent of financial support to charitable causes, but through working with like-minded organisations in joint initiatives.

SIMON WILLIAMS Head of Corporate Affairs 

1b) Allocation of funds to different charitable causes

The Co-operative Bank receives over one thousand requests for support each year, but with a limited budget it is impossible to respond to them all in a positive manner. Therefore we have taken the decision to focus our charitable giving in a restricted number of areas.

[ Existing commitment ]
The Bank has developed a set of guidelines for sponsorship and donations in order to channel the available budget into areas which complement the Bank's Ethical Policy and commitment to social responsibility. These are the areas of ethics, ecology, urban regeneration, education, social welfare and co-operation.

[ Performance ]
The Co-operative Bank provided some £1,956,089 as sponsorship and donations in 1997. For the purpose of this report we have considered all donations allocated by Head Office and the branch network in three parts: national recipients (Society), local recipients (Community) and co-operative causes (Past & Future Generations). Each of these portions corresponds to a particular Partner and is reported on accordingly. Donations arising as a result of Customers Who Care and Affinity Cards are considered separately.

Of the 56% of monies allocated to Society, the following four areas dominate:

[ Comment ]
Customers of The Co-operative Bank strongly support the Bank's policies on ethical and ecological matters and its wider positioning as a socially responsible organisation. Therefore it is appropriate that the bulk of our support should be directed to such causes. The reason for the fourth category, urban regeneration, may not be immediately apparent. However, The Co-operative Bank has its Head Office in Manchester and is therefore aware of the problems facing inner cities in Britain today. Urban regeneration is also at the heart of many economic development initiatives across the country, an area of active involvement for the Bank, and so we believe we are in a position to add real value. The figures presented above show that sums donated by the Bank to national urban regeneration initiatives are relatively small. However, the majority of our support is provided at a local level, and therefore is reported in the section on "Community".

[ Future objectives ]
i) The Bank is committed to developing a public policy on sponsorship and donations; one which outlines those areas in which we consider we can, and should, focus our efforts to the greatest effect. This will aid the Bank in making decisions, and provide guidelines to those approaching the Bank for support.

ii) Next year we will provide information on how much of our charitable giving supports causes in the developing world. Consideration will be given to the '0.7%' target set by the United Nations for developed nations. Although this target is currently calculated as a percentage of GDP for nation states, we will assess how feasible it is for a commercial organisation to adopt it as a percentage of pre-tax profits.

DAVID DICKMAN Head of Co-operative and Community Development 

CHRIS SMITH Group Public Affairs Manager 

1c) Quality of charitable aid request handling process

Due to the huge volume of requests for charitable support which arrive at the Bank (an average of 35 written requests per week), it is impossible to support every deserving case. However, it is important that all requests are treated promptly, courteously and fairly. Therefore early in 1998 we commissioned Nunwood Consulting Limited to conduct telephone interviews with 130 organisations who had requested support from the Bank during 1997. The sample consisted of approximately 25% of cases where money was provided in response to a request, and 75% where it was not.

[ Existing commitment ]
As laid out in our Mission Statement "we strive for excellence in all that we do", this includes the way we handle requests for sponsorship and donations.

[ Performance ]
Overall, the majority of applicants are satisfied with the manner in which the Bank handles requests for sponsorship and donations. This is despite the fact that the vast majority of requests were declined and two thirds of applicants had approached other financial institutions for support at the same time as approaching The Co-operative Bank.

Furthermore, the majority of those interviewed consider that the Bank dealt with their request fairly (and remember, 75% of the sample consisted of declines). However, 1 in 5 felt that they had been unfairly treated: 31% of those unhappy with their treatment said they had not been given an explanation for being declined; 21% felt they had been unfairly rejected and 7% said the Bank had not listened to their case fully.

However, the vast majority of applicants (84% ) were satisfied with the time taken by the Bank to respond to their request (most saying the response was very fast) and the degree of courtesy displayed (91%). But, 10% of these were unhappy that the Bank had used a standard method of response to make a refusal.

Overall, the treatment of applications was such that the majority of organisations (70%) said that they would be likely to approach the Bank again for support.

[ Comments ]
It is encouraging that such a high percentage of applicants felt that the Bank had dealt very quickly with their request and that this had been done in a fair and courteous manner. However, a number of organisations expressed concern as to the standardised nature of some of our responses. Unfortunately, the development of standardised responses is an inevitable consequence of the Bank receiving such a large number of requests for support, particularly as we are often in receipt of standardised correspondence ourselves.

The Bank always welcomes requests for support from organisations which are sympathetic to its ethical stance, and it is therefore a good sign that the majority of organisations would consider approaching us again. In terms of developing our Partnership Approach it is also promising that a significant proportion of organisations remain keen to develop an ongoing relationship with the Bank.

[ Future objective ]
We will seek to maintain the quality of our sponsorship and donations processes, treating applications with fairness, courtesy and speed.

CHRIS SMITH Group Public Affairs Manager 

1d) Affinity Partnerships

As a bank we are constantly developing new products and services for our customers, however, we are also committed to act in a socially responsible manner. Therefore, where possible, we strive to develop products and services which not only fulfil customer requirements, but also benefit society. To date, the principle vehicles for realising this objective has been our Affinity Cards and the Customers Who Care scheme.

1e) Affinity Cards

The Bank's Affinity Card scheme seeks to develop profitable business partnerships with major organisations, largely charities, and raise funds for good causes at the same time. Independent research carried out by 'Affinity Solutions Ltd' in 1997 found that 61% of organisations who had entered into an affinity relationship with a bank had done so primarily to generate income. However, some 14% had been motivated by image enhancement. For The Co-operative Bank, the choice of Affinity Partner is not based solely on the potential business benefit to the Bank, but also that it is complementary with our Ethical Policy and what we understand about our customers' values. For every affinity card account opened the Bank makes a donation to its partner organisation and further donations are based on the amount of customer spending on each account.

[ Existing commitment ]
We strive to develop products and services which not only fulfil customer requirements, but also benefit society.

[ Performance ]
During 1997, the Bank's affinity card base grew by a net figure of 28,646 to 168,623 (an increase of 17%). The total monies raised for good causes in 1997, via our affinity credit cards, came to £902,009 ( a rise of 22%).

This figure is the sum of monies raised for Amnesty International, Children's Aid Direct, Greenpeace, Help the Aged, National Association of Hospices, Oxfam, the RSPB, Save the Children, the Schools Card, and the Terence Higgins Trust.

[ By comparison ]
The Co-operative Bank is not the only bank to offer affinity cards, therefore it is appropriate to compare our products with those of other banks. From the point of view of raising money for affinity partners, independent research conducted by 'Affinity Solutions Ltd' found that only 25% of affinity card schemes on the market had generated over £50,000 over their life-time. By comparison, nearly half of the Bank's schemes (46%) had generated more than £50,000 for the affinity partner over the period 1995-1997 inclusive. In fact, virtually all the Bank's affinity schemes (92%) have raised a minimum of £10,000, whereas the industry average is just 52%. In 1997, for each card issued by The Co-operative Bank on behalf of an affinity partner, in 92% of cases a donation of £5 was made. This is slightly better than the industry average; where 40% of affinity partners receive a payment of £4 or less, 41% a payment of £5 and 10% a payment of £10.

[ Comment ]
Overall, the performance of our affinity card schemes compare favourably with others in the market, particularly in terms of monies raised. The Bank's ethical image is considered to be a factor in this. However, there is a wide variation in the success of the Bank's different cards. In the main, this relates to the size of the partner's membership base, and the strength of affinity the supporter base feels toward the partner.

In order to illustrate the way affinity partnerships operate, and the regard we are held in by partner organisations, ethics etc... were invited to interview any affinity partner and report on the comments arising. The case study chosen, Greenpeace, is presented in the section, Ecological Sustainability.

[ Future objective ]
The Co-operative Bank will maintain a variety of Affinity Partnerships where it is considered to be mutually beneficial.

NICK BOWYER Head of Product Development 

1f) "Customers Who Care" Scheme

The Customers Who Care scheme allows holders of Co-operative Bank cards a say in how money donated on their behalf is shared out. At no extra cost to the customer, during 1997 The Co-operative Bank donated 2.5p to the scheme for every £100 of expenditure on cards. However, the scheme now covers much more than making donations on our customers' behalf. Since the second half of 1997, it involved the development of strategic relationships with key campaigning organisations in order to raise public awareness on issues of concern to the Bank's customers and society at large.

[ Existing commitment ]
We strive to develop products and services which not only fulfil customer requirements, but also benefit society.

[ Performance ]
During 1997, the Customers Who Care scheme evolved from an initiative focused solely on channelling donations to charitable causes, to a scheme in which donations are directed into hard hitting public awareness campaigns.

As part of the old scheme, during the first quarter of 1997

£25,000 was divided amongst four charities (Macmillan Cancer Relief, Motability, Comic Relief and Tear Fund) on the basis of votes posted by customers.

In the second half of the year, the scheme was developed further and two high profile publicity campaigns launched. The Bank's contribution to each campaign comes to a total of £75,000, allocated as follows:

• £50,000 dedicated to awareness raising activities, which are organised jointly with an expert campaigning organisation;

• £25,000 made available for donation to charities and organisations associated with that campaign, the exact allocation of which is decided by customer votes.

Two 'Customers Who Care' campaigns were organised in the latter half of 1997, 'Disability' and 'Biodiversity'.

Disability Campaign

Disabled people are routinely portrayed in the media in a negative fashion. In fact, the National Disability Council (NDC) have identified this issue as the most serious challenge facing disabled people today. Therefore, when The Co-operative Bank was approached by the NDC in 1997 to become involved in a new campaign we had little hesitation in saying yes. With a number of other organisations, we joined the 'Employers Forum for Disability', which requires organisations to be positive about the employment of disabled people. We also staged a conference for the Institute of Charity Fund-Raising Managers, which aimed to encourage people from the advertising industry, business and the disability sector to debate and agree best practice. Following which, we ran a high profile cinema advertising campaign which challenged the negative stereotypes used to portray disabled people in the media. This campaign generated considerable media coverage during 1997.

Biodiversity Campaign

Conservation of the vast number of animal and plant species on the planet is important not only because many are pleasing to the eye, but also because the human race is dependent on countless species for survival. It is common knowledge that plants provide the oxygen that virtually all animals need to survive. But, scientists are now coming to understand that seemingly insignificant species can have a major impact on entire habitats, and thus humans. For example, a world-wide decline in bees and other pollinators is threatening the yields of major food crops. In recognition of this 'crisis', in 1997 we launched an advertising campaign in conjunction with the Royal Society for the Protection of Birds, focusing on the decline of certain native British bird species. Birds are of particular importance because they are visible on a daily basis and, being towards the top of the food chain, provide an indicator of the health of the wider environment.

[ Comment ]
The Customers Who Care scheme is considered to be an excellent example of how the Bank and its customers can be a force for good. The scheme provides essential funds for charitable and campaigning organisations and raises awareness amongst the general public on issues of ethical and environmental concern. We look forward to working with new partners on further issues during 1998.

[ Future objective ]
The Bank will continue to consult and work with charities and non-governmental organisations, large and small, to research and develop campaigns on issues which are of concern to the Bank's customers and to the general public.

JIM SINCLAIR Group Marketing Manager