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ethical and ecological screening
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- Finance: ethical and ecological screening
- Finance: anti-money laundering [NEW INDICATOR]
Undertake an Ethical Policy review in 2001. TARGET ACHIEVED
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performance
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| (Source: Ethical Policy Unit 2002)
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| (Source: Ethical Policy Unit 2002)
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commentary
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Ethical Policy review The bank's Ethical Policy was launched
in 1992. Overseen by the bank's social auditor, ethics etc..., the
fourth Ethical Policy review commenced in early 2001. In the
February and May editions of the bank's Customer Newsletter,
customers were asked to comment on the current Policy and
suggest other issues which they would like to see included. An
Ethical Debate forum was established on the bank's website
where customer comments on Ethical Policy issues could be
posted. Genetic Modification (GM) arose as a key issue from
the letters and e-mails received from customers. To facilitate
comment and debate on this issue the bank commissioned the
Ethical Investment Research Service (EIRIS) to produce a
detailed report setting out the arguments for and against a
full range of potential applications for GM technology. Over
2,000 copies of the paper were requested by, and distributed
to, customers.
In June, MORI facilitated four customer consultation sessions,
where old and new issues were explored in greater depth. At
the same time, it was considered crucial that the bank sought
independent expert opinion on the detailed content and
implementation of the Policy. EIRIS and the Ethical Consumer
Research Association (ECRA) were asked to comment on
different aspects of the Policy. ECRA also provided in-depth
research and recommendations on a range of ethical issues.
Input was also sought from some of the bank's affinity
partners, such as the RSPB and Amnesty International (UK).
All comments were evaluated, and formed the basis of a
new Ethical Policy questionnaire. The questionnaire asked
customers to indicate how strongly they agreed or disagreed
with a series of Ethical Policy statements. It also asked
customers to raise any new issues to be considered for
inclusion in the Policy and to say whether they supported the
bank's Ethical Policy. The bank wanted to ensure that as many
customers as possible had an opportunity to participate in the
review. The questionnaire was sent to personal and corporate
customers with their December statements. Customers could
also participate in the review on the bank's and smile's
websites, in branches and by telephone request. Over 60,000
customers responded.
Ethical Policy launch The views gathered in the review
directed the development of a new Ethical Policy (follow this link to our new Ethical Policy),
launched in May 2002 - the tenth anniversary of the
introduction of the bank's first Policy. The results of the
questionnaire were analysed during February 2002 and a new
Policy drafted. The adoption of new issues within the Policy
required the bank to review its existing portfolio of corporate
customers and, where necessary, to disengage from
investment in certain corporate activities. This activity was
completed prior to the launch of the new Policy. A copy of the
new Policy will be sent to all customers. This will highlight the
new issues adopted, the bank's approach to those issues and
the level of support for each issue. Ethical staff advocates, who
act as points of information throughout the business, will
receive appropriate training on any new areas of activity.
Ethical Policy implementation During 2001, the Ethical
Policy Unit reviewed the acceptability of 147 potential finance
opportunities. Of those, 35% were found to be in conflict with
the bank's Ethical Policy. From the data presented, the
rationale for business decline is usually obvious. In the
following instances, further explanation is necessary:
- The bank was approached to consider finance for a major
UK engineering group involved in pipeline construction in the
Sudan. The level of concern over the ecological and social
impact of this venture meant that the bank was unable to
support those companies engaged in the project.
- The bank's policy on the nuclear industry extends to not
investing in any business which owns or operates a nuclear
power plant or is in any business supplying major products
or services for nuclear power plants. During the year, the
bank declined to be involved in two businesses supplying the
industry.
- The bank considers the acceptability of road construction
proposals on a case by case basis, taking into account the
specific ecological and social impact of each proposal.
During the year, the bank was approached to support a
major road construction project. It was unable to assist,
primarily because the project failed to respect a number of
Sites of Special Scientific Interest.
- The bank's policies on animal welfare meant it did not deal
with eight organisations during 2001. Five organisations
were involved in the production of cosmetics and household
products and did not have a satisfactory animal testing
policy. Two organisations were involved in intensive farming.
One organisation was involved in blood sports.
Anti-money laundering Money laundering is the disguising of
funds derived from criminal activity to give them legal
respectability. It has been estimated by the International
Monetary Fundi that such financial flows are equivalent to
between 2 and 5% of global Gross Domestic Product. With
effect from December 2001, the Financial Services Authority
(FSA) has assumed greater formal powers to supervise and,
where necessary, enforce corporate and individual compliance
with laws and regulations relating to money laundering. All
bank staff are obliged to report any transaction which they
suspect might be related to drugs, terrorism or other serious
crimes. Equally importantly, they are instructed not to reveal to
a customer that they are being investigated. The bank is in the
process of implementing additional awareness and training
measures to underpin its full compliance with FSA requirements.
Additionally, a money laundering helpdesk has been launched
to help staff with any queries. It is widely accepted that,
compared to other sectors of the economy, financial services
has more rigorous anti-money laundering management
systems. For example, of the 18,000 Suspicious Disclosures
made to the National Criminal Investigation Services (NCIS) in
2000, more than 60% were attributable to banks, whilst just
2% arose from solicitors and accountants.
- Financial Times, June 2001
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ethical and ecological value analysis
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- Estimated annualised gross income foregone for ethical
reasons. It should be noted that this figure relates only to
that portion of business declined where a referral was
made to the Ethical Policy Unit. There are many other
business opportunities foregone, where staff decline
business, without referral, knowing the business would be
in breach of the bank's Ethical Policy £2,528,000
- External research, audit and commentary, annual costs
relating to ethics and ecology £340,000
- Internal annual overhead associated with maintenance and
development of ethical and ecological management and
performance £398,000
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new targets
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- Review and revise screening systems to ensure consistent implementation of the new Ethical Policy.
Barry Clavin, Ethical Policy Manager
- Issue a money laundering staff handbook.
David Allsop, Money Laundering Operations Manager
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