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the big picture
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Enlightened self-interest Once again, our commitment to running a profitable and responsible business has provided a firm foundation for success - making 2002 another record year for The Co-operative Bank. The year saw the bank building on its strong reputation for delivering value to a range of partners in a socially responsible and ecologically sustainable manner. Profit before tax was £122.5 million, higher than 2001 by 14%. Average retail customer lending grew by 11% and average retail customer deposit balances by 12%. As can be seen from the analysis presented in the Delivering Value section (follow this link to the ethical and ecological value analysis) the bank's ethical and ecological positioning has once again made a sizeable direct
contribution to the bank's profitability. Our commitment to sustainability is affirmed in the bank's strategic plan, which sets out our clear market position: 'The Co-operative Bank is a modern bank that goes about its business in an ethical manner', as well as our customer proposition: 'Customer led, ethically guided', which is communicated throughout our advertising and promotional activities.
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Mervyn Pedelty, Chief Executive.
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Co-operative Financial Services In
April 2002, Co-operative Financial Services (CFS) was
created to bring The Co-operative Bank and Co-operative
Insurance Society (CIS) under common leadership.
Co-operative Financial Services Limited is an Industrial
and Provident Society and is the holding company for
these two major businesses.
Following my appointment as CFS' first Chief Executive,
one of my key objectives has been to focus on the
range of products, services and channels offered to the
customers of both organisations and to explore how
these can be developed and brought closer together
to provide our joint customer base with a more
comprehensive, convenient and co-operative financial
services offering. I am also keen that the best ethical
and ecological practice of each organisation should
become the norm going forward. So, for example,
virtually all of the premises of both organisations are
now supplied with green electricity, placing CFS
amongst the top ten purchasers of renewables in
Europe. By the end of 2002, the benefits of this new
co-operation were already beginning to emerge. For
example, CIS financial advisers have had considerable
success in selling the bank's 'green' mortgages to CIS
customers - ensuring that even more UK households
are increasingly climate friendly and that reforestation in
Uganda has increased even further. Follow this link for more information on the bank's green mortgages.
The formation of CFS has inevitably led to a
reorganisation of the bank's Board and Executive
Team. The new management structure is now virtually
complete, including several key executive appointments,
with my colleague Sheila Macdonald appointed to the
role of Chief Operating Officer of the bank. I continue
as the bank's Chief Executive.
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Award winning approach Over the years,
The Co-operative Bank has built a strong reputation for
prioritising ethical, social and ecological issues.
However, the past twelve months have probably been the best yet in terms of awards and recognition, as
described on the bank's website i. A
Queen's Award for Enterprise, in the Sustainable
Development category, was conferred on the bank in
April 2002 in recognition of our Partnership Approach
to management. We were also honoured to receive the
Special Judges' Award for Overall Corporate Social
Responsibility Performance at the prestigious New
York-based Global Corporate Conscience Awards,
making us the first UK company to be named as the
world's most socially responsible business in the
award's seventeen years. In March 2003, our
Partnership Report was declared to be the Best
Sustainability Report in the UK at the Association of
Chartered Certified Accountants (ACCA) UK Awards
for Sustainability Reporting 2002 and, in April 2003, it
went on to be declared as the Best Sustainability
Report in Europe at the European Sustainability
Reporting Awards 2002. These achievements followed
global recognition in 2002 when the United Nations
Environment Programme and SustainAbility ranked the
bank first in their biennial Global Benchmark of
Sustainability Reporting (and to be a world leader in
terms of 'Environmental Performance' and 'Accessibility
and Assurance'). I am also pleased to note that our
sister business, CIS, is also recognised as one of the
UK's leading sustainability reporters, and in 2003 their
Environmental Report was declared to be runner up in the UK Environmental Reporting Awards and their Social
Accountability Report was declared to be runner up in
the UK Social Reporting Awards. However, neither
organisation has any intention of resting on its laurels.
Not only is there much room for improvement in ethical
and ecological performance but also as outlined in our Partnership Approach section, (follow this link to find out more about our Partnership Approach), more and more businesses are recognising
the benefits of embracing corporate social
responsibility and sustainable development. Outlined
below are some of the major initiatives the bank
launched in 2002 and early 2003.
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In 2002, the bank received international
recognition, becoming the first UK company to
be named the world's most socially responsible
business at the seventeenth Global Corporate
Conscience Awards. The bank was also
declared as the best Sustainability Reporter in
the world during 2002 by the United Nations
Environment Programme.
In March 2003, Minister for the Environment, the Rt Hon
Michael Meacher MP, presented Ken Lewis, Resources Director,
Co-operative Financial Services, with the award for the Best
Sustainability Report in the UK.
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People I am delighted to say that The Co-operative
Bank has been recognised for the third consecutive
year by 'Great Place to Work' as one of the 'UK's Best
Workplaces 2003' (follow this link to find out how the bank seeks to deliver value to staff). The outstanding
commitment of our staff is a major contributory factor to
our excellent customer service and success. In every
staff survey conducted, we find high levels of pride in
the bank as an employer and as a leading promoter of
ethical business practice. In the 2001 staff survey,
along with clear positive signals about pride, job
satisfaction, teamwork and empathy with customers,
concerns were expressed by some staff about the
opportunities for career progression and about the
increasing pressures at work. In 2002, we continued to
focus on these areas through a number of initiatives.
Our new 'work/life balance' policies include provision
for flexible working, maternity, paternity and adoption
leave, and childcare vouchers. These policies recognise
the wider commitments of our staff and, in partnership
with our new 'well-being' policy, are a key part of our
drive to address stress in the workplace. The impact of
these policies has yet to be seen in responses to the
staff survey (follow this link for details of the staff survey), but I hope to see improvements
in this area in future years as more employees make
use of these provisions. I will also be looking for further
improvements in the bank's recruitment and retention
of staff from ethnic minority populations, which I am
pleased to say improved in 2002 (follow this link to Diversity: Staff), and an extension of the project to provide information in a
variety of languages, following the success of our
experiment in 2002 (follow this link for details of developments in our reporting).
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Community involvement The bank's
social and ecological ambitions involve all staff, in
much the same way as do our endeavours to provide
top quality customer service. As shown in previous
Partnership Reports, our staff have always engaged in
community projects and activities whilst representing
the bank. However, involvement levels have varied.
Early in 2002, we formally announced our intention to
grant staff up to three days paid leave to contribute to
their local communities, as long as they match this with
time of their own (follow this link for details of the staff volunteering programme). This initiative, together with
the bank's 'Green Genie' groups (follow this link for more information about the bank's environmental action groups) and its
'Ethical Advocates' programme (follow this link for more details of the Ethical Advocates programme), demonstrates
our belief that the pursuit of sustainable development
requires the active involvement of our employees at all
levels. In 2003 I look forward to seeing how staff
involvement in a range of new programmes (follow this link for details of the staff volunteering programme) impacts positively on local
communities. The Co-operative Bank, and CIS, have
always been amongst the most generous corporate
givers in the UK in terms of community investment as a
percentage of pre-tax profits. Indeed, when considered
together as part of Co-operative Financial Services, it
is probable that our contributions in 2002 were
amongst the most generous of major financial services
organisations in the UK.
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Bank staff help improve the grounds of a local community venue which provides holiday breaks for poorer families.
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Ethics in action 2002 was a notable
anniversary for us, being ten years since we first
surveyed our customers on a range of ethical issues
and published our Ethical Policy. That first poll provided
us with an overwhelming customer mandate for a
policy which has provided a distinctive co-operative
point of difference in the marketplace. The results of
our fourth customer ethics poll (follow this link for details of the Ethical Policy Review) have given us
clear direction once again. This time the survey results
were collected not just via a postal questionnaire, but
also through web-based and branch-based 'polling stations'. With regard to
the application of the new Policy, I am proud to report that the bank's social
auditor, ethics etc..., has confirmed once again that it is confident the bank's
Ethical Policy has been fully implemented, overriding any economic factors.
The bank upheld its strong campaigning tradition during 2002 with the latest 'Customers Who Care'
initiative, which drew attention to the humanitarian
impact of cluster bombs. The campaign calls for an
international agreement that places a requirement on
the users of explosive weapons, including cluster
bombs, to be responsible for the clearance of
unexploded ordnance once a conflict is over. In June
2002, the bank and its campaign partner, Landmine
Action, published a report to document the social and
humanitarian impacts of unexploded ordnance. The
report continues to be a key tool for our partners as
they lobby the United Nations to adopt a new
international protocol on the post-conflict clearance of
unexploded ordnance. A detailed independent analysis
of this campaign is provided in the Campaign Analyses section, (follow this link for the auditor's assessment of the Cluster Bombs Campaign).
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Cluster Bombs campaign
launched in February 2002.
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Ecological sustainability This year's
Partnership Report shows that, once again, the bank
has significantly reduced its ecological impact over a
number of years. Almost two thirds of our waste is now
either reused or recycled (follow this link for details of the bank's recycling activities), carbon dioxide
emissions from our buildings have reduced by 90% per
customer account since 1997 (with 98% of all electricity
used now being from renewable sources) (follow this link for details of the bank's energy use)
and water consumption has fallen by 42% per
customer account since 1999 (follow this link for details of the bank's water consumption). During 2002,
paper purchased across the bank decreased by
12.8%; compared with 1997, paper purchased per
customer account has now fallen by 59% (follow this link for details of the bank's usage of paper and print).
The amount of land with significantly increased
biodiversity as a result of the bank's initiatives is ninety
times greater than the land occupied by its operations,
and is now 417 hectares (follow this link to land occupied and biodiversity impact). Furthermore, the
switch of the majority of the bank's company car fleet
from petrol to diesel, combined with a reduction in
business mileage, has reduced transport carbon dioxide
emissions by 16% per customer account during 2002
(follow this link for more information on transport and emissions to air). In 2003, we will review further our paper
purchase activities and I will also be looking for further
net reductions in the bank's carbon dioxide emissions,
particularly in the area of transport.
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Innovation The bank continued to innovate with
its products and services in 2002. We expanded our
residential 'green mortgage' product portfolio with the
addition of several competitive fixed-rate and other
offers, enabling our customers to benefit from current
low interest rates. New variable rate mortgages
included a three-year discount product and a five-year
tracker mortgage. In keeping with our wider values and
principles, all our mortgages combine value for money
with a range of environmentally-friendly features. As
described in the ecological sustainability section (follow this link for details of the bank's tailored ecological products and services), each year, throughout the
lifetime of a mortgage, the bank will make a payment to
Climate Care - a scheme that seeks to offset carbon
dioxide emissions through reforestation programmes
and other schemes. We have also remained active in
the credit card market - in September 2002 we
launched a Gold Fixed Rate Visa credit card, which
provides customers with a fixed rate offer until 2008.
We also re-launched our Platinum Advantage card,
with an initial interest-free period for purchases and
balance transfers, and introduced a Platinum Base
Rate Tracker card, which we believe is a unique offer in
the credit card market. Cardholders are guaranteed an
interest rate that is fixed at 5% above the Bank of
England's base rate, with a six month introductory
period where the rate is equivalent to the base rate.
Our longer-term savings product range was extended
during 2002 with the re-launch of our Fixed Term Deposits
and a first issue of the FTSE4Good Guaranteed Stock
Market Bond. We have also continued to build
relationships with our affinity partners, perhaps notably
through the introduction of a number of new Platinum
Visa credit cards, which generate donations to the
affinity group each time they are used by the cardholder
(follow this link for more information on the bank's affinity cards). In total, the bank's affinity cards
raised more than £1.38 million for our partners during
2002, providing much needed funds for a variety of
important projects.
During 2002, we developed a number of new services
for smile customers. For example, working in
partnership with 'Self Trade', one of the UK's fastest
growing online stockbrokers, we developed smileinvest
sharedealing, a quick, easy and low cost way for
customers to buy and sell shares, 24 hours a day. A
new smile credit card was also launched in July 2002,
offering customers many 'best buy' features. An
important element of our corporate and business
banking activities in 2002 was our focus on small and
medium-sized enterprises (SMEs). In October, we
relaunched our Business Direct account as 'Business
Directplus' - a 24-hour telephone, Internet and postal
banking service offering 18 months free banking to all
new SMEs, as well as competitive in-credit interest
rates on current account balances (follow this link for details of the Business Directplus account). An
existing partnership that has strengthened and
developed over the last year is that between the
European Investment Bank (EIB) and ourselves. In
November 2001 the EIB Loan scheme was created to
help finance the growth of businesses in EU-assisted
areas of the UK. At the same time, our profile within the
Local Authority sector placed us in a strong position to
participate in the Affordable Warmth Programme in
partnership with Transco and EIB. Again, we
developed a new loan scheme, which is being used to
assist local authorities and social housing landlords
finance the installation of energy efficient heating
systems, thus reducing energy costs and improving
comfort levels for their residents (follow this link for more information about the EIB loan scheme).
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Rainforest restoration in Uganda, one of the
carbon offset projects supported by the bank's green mortgages.
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The Co-operative movement Our
co-operative heritage continues to inform everything
we do - it is reflected in our strategies and in our
products and services, in our community involvement
programmes and in our brand values. 2002 saw a
concerted effort to strengthen the relationship between
the Co-operative movement and the growing UK social
enterprise sector. The bank chaired a cross-movement
group on these issues, which led to a major
Co-operative and social enterprise event at the
Department of Trade and Industry in February 2002,
and a meeting between the Prime Minister and key
representatives from the Co-operative movement and
the social enterprise sector.
Following the recommendations of the Co-operative
Commission, which published its findings and
recommendations in 2001, a new foundation -
Co-operative Action - was launched in April 2002. This
organisation has been established to assist
communities to develop co-operative, mutual or social
enterprises, through the provision of grants and loans.
Co-operative Action has been created from donations
made by co-operative businesses and individual
members throughout the UK. The bank has been
proud to take a key role in this venture, contributing
£500,000 towards the establishment of the foundation
and encouraging staff involvement in both the
foundation's management team and its Board.
We continued our programme to install cash machines
in Co-operative retail stores throughout the UK. This
initiative continues to bring banking facilities into areas
that often had none and, as such, is an important part
of our continuing work to promote financial inclusion. It
is also an excellent example of co-operation in action.
In May 2002, this partnership brought about the launch
of the new Co-op Dividend Visa credit card. Having
revived the famous 'Divi' through its Dividend card, the
Co-operative Group can now offer customers not only
the chance to earn extra Dividend at its own stores,
but also an additional Dividend at any outlet accepting
Visa cards.
2003 and beyond Looking ahead, I am
confident that the bank's belief in its ethical, social
and ecological responsibilities - combined with
investment in our people, our customer focus and
product innovation - will continue to serve us well. The
UK banking sector is now operating in an environment
of significantly increased competition and greater
regulation. With the economic prospects for the UK
and many other countries being currently somewhat
uncertain, I can only be cautiously optimistic that 2003
should be another rewarding year for The
Co-operative Bank. The recent establishment of
Co-operative Financial Services is an important event
that will help us to bring the benefits of the Co-operative
approach to an even wider audience. As the two
businesses of The Co-operative Bank and CIS work
increasingly more closely together, the benefits of a
broader range of products and services for our
customers should be considerable.
Feedback I hope that this Partnership Report
2002, is both informative and interesting. The
feedback we receive from our Partners is essential to
the ongoing development of both our Partnership
Approach and the management of our 'triple bottom
line' of ethical, ecological and economic sustainability.
The bank's executive and senior management team
use the indicators, data and targets presented in the
Report in their management of the business and to
inform further improvements in our performance. Once
again, I would be delighted to receive your feedback;
please do use the pre-paid postcard attached at the
end of this Report, or e-mail your comments to Paul
Monaghan, our Head of Sustainable Development
(pmonag@co-operativebank.co.uk). I look forward to
receiving your comments.
- www.co-operativebank.co.uk/ethics/ecology_awards.html
To follow any of the links mentioned within the Partnership Report 2002, please visit the links page.
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Mervyn Pedelty, Chief Executive
April 2003
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The above data and commentary has been audited by ethics etc... |
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