Accessible Reporting |  Site Map |  Feedback |  Download |  How to Join  
*
The Co-operative Bank*
*
Explaining our Reporting |  Partnership Report 2002 |  Our Performance |  Home
*
**
*
Standards and
Guidelines >>
 Global Reporting Initiative
 Glossary
 Conversion Factors
 Audit approach
Financial Statements 2002
This site has been designed to enable visitors to change the size of the text that appears on pages by adjusting their browser settings. If the text on this page is too small: In Internet Explorer, click on 'Text size' in the 'View' menu and adjust accordingly or, in Netscape, click on 'Increase font'
*
Explaining our Reporting : Standards and Guidelines
*
standards and guidelines - consideration and engagement
This section is currently being revised and will be available on 27th October 2003. The previous version of the Standards and Guidelines paper is shown below.

Introduction

The plethora of standards putting forward sustainable development indicators raises challenges for those bsinesses who wish to be inclusive, but at the same time produce focused and concise sustainability reports. Challenges are created when, in addition to those indicators proposed by standard setters such as the Global Reporting Initiative (GRI), businesses strive to take account of stakeholder priorities. The first draft of the GRI guidelines (see below) proposed ninety-six potential indicators. In order to resolve this conflict, the bank has adopted the following broad strategy.
  1. For matters of Social Responsibility and Delivering Value, the bank will primarily take account of Partners declared priorities, as determined by AA1000 compliant processes (see below). In addition, the bank is actively investigating the applicability of sector-specific initiatives, such as SPI Finance (see below);
  2. For matters of Ecological Sustainability, the bank will primarily take account of standard setters such as GRI and the UK Government's Reporting Guidelines (see below);
  3. In addition, the bank will develop 'Leadership' indicators closely aligned to its declared business success model, as supported by the Centre for Tomorrow's Company1.
Standards/guidelines applicable to all business types

Social - AA1000 Launched by the Institute for Social and Ethical AccountAbility (ISEA)2 in 1999, AA1000 is a global social accountability standard. The bank became the first company in the world to integrate AA1000 with its 1998/99 Partnership Report. In 2000, the bank was elected onto the Council of ISEA. The bank has been involved in the development of a framework for the first international professional qualification for social and ethical accountants and auditors. AA1000 underwent revision in 2001/02 and a new AA1000 Series is scheduled for release in 2002. It will consist of five specialised modules in addition to a Core Standards module. The bank has been particularly involved in the development of the 'Quality Assurance and External Verification' module, providing both input and sponsorship. This module will also feed directly into the assurance guidelines of the SIGMA project and the Global Reporting Initiative. The auditor of the bank's Partnership Report, Richard Evans, is acting chair of ISEA, and each year provides assurance that the bank's partnership approach meets the expected standards set down within AA1000.

Ecology - Natural Step The Natural Step3 has, via a programme of scientific consensus, set down the minimum conditions for sustainable development. The Co-operative Bank was the first UK-based company to incorporate The Natural Step methodology in 1996, and considers it to have been a tremendous help in progressing its long-term aim of ecological sustainability. Currently, The Natural Step International is exploring whether it is also possible to agree the minimum conditions for social sustainability, and has established an international research programme. The bank awaits the outcome of this programme with great interest, but has expressed doubts as to whether it is possible to achieve consensus on matters of social sustainability, except at the most basic level, e.g. the golden rule - "do unto others as you would have done unto you." The bank has also expressed doubts as to the degree to which it is possible to look to 'nature' for answers to social questions. For more than 200 years, commentators on both the left and right of the political spectrum have 'observed' various behaviours in the natural world and used this to rationalise a wide range of political theories. It is the bank's opinion that the best way to approach social sustainability at an organisational level is via regular and extensive stakeholder dialogue. In this way, individuals are given a say in determining business policy on everything from blood sports to arms exports. In each Partnership Report, The Natural Step UK provides an assessment of the degree to which the bank delivers value to its Partners in an ecologically sustainable fashion.

Ecology - UK Government reporting guidelines In 2001, the UK Department for Environment, Food & Rural Affairs (DEFRA) produced general guidelines that set out how to produce a good quality environmental report4. The bank's 2002 Partnership Report is consistent with the proposed 'reporting process', and covers both those indicators suggested as being "relevant to all organisations" and those indicators considered to be additional extras. The guidance cites the bank as one of seven examples of good practice. Environmental targets in a whole range of areas have been influenced by the Government's 'Making a Corporate Commitment Campaign'5 whereby the bank has undertaken to at least match the levels of corporate performance being sought (and, in some instances, has already realised such targets). DEFRA has also published separate guidelines on how to measure and report on the three key impacts common to all companies: greenhouse gas emissions, waste and water use. Again, the bank's 2002 Partnership Report is considered to be consistent with these guidelines. In a further development, in August 2001, the Government consulted on the desirability of a quality assurance standard for consumer carbon offset schemes, such as those associated with the bank's green mortgage products. The bank responded positively, but emphasised that the support of well-respected NGOs would be crucial to the reception of any scheme.

Triple bottom line - Global Reporting Initiative (GRI) Convened by the US-based Coalition for Environmentally Responsible Economies, GRI6 aims to achieve the rigour and comparability for sustainability reporting in the 21st century that financial reports achieved in the 20th. GRI proposes a set of indicators across the environmental, economic and social triplebottom line. The environmental indicators are considered by GRI and others to be much more robust than the economic and social indicators. Therefore, as last year, the 2002 Partnership Report has been prepared taking account of the environmental indicators only. With regard to the development of sector-specific economic and social indicators in conjunction with GRI (see 'SPI - Finance' below). For a detailed analysis of the degree to which the bank meets the requirements of GRI (June 2000) visit here.7

Triple bottom line - Sustainability Integrated Guidelines for Management (SIGMA) In 1999, the UK Government, the British Standards Institute, Forum for the Future and ISEA launched the SIGMA Project8, an initiative designed to explore the development of a new generation of sustainability management tools. The Co-operative Bank is one of 19 organisational partners who have pledged to take the project forward, and the bank is the sole participant from the financial services sector. The bank has broadly welcomed SIGMA's proposal for a triple-bottom line rules base in which The Natural Step is a cornerstone of ecological sustainability, and AA1000 is the basis of social sustainability. The bank's auditor ethics etc... has been asked, as part of the 2001 Partnership Report, to provide assurance that the bank's partnership approach, policies and management systems are consistent with Project SIGMA's draft 'high level principles' and 'rules base'. The rules for economic sustainability still require much development.

Triple bottom line - UK National and North West Regional Sustainability Frameworks The UK Government and each of the regions have now developed sustainability strategies, including triplebottom line indicators 9. During 2000, the bank published a report showing the degree to which its indicators and targets supported these national and regional strategies. During 2001, the bank was a key player in the development and dissemination of the North West Regional Framework, via its membership of the North West Regional Assembly's Sustainability Strategy Group (where it represented business). In August 2001, the bank was amongst a group consulted as to the highest regional priorities for ensuring continued protection and/or improvement of the environment of the North West. Among other feedback, the bank suggested that 'reducing the emissions of persistent bioaccumulative chemicals' should form the basis for a new priority objective.

Financial - UK statutory guidelines for company reporting - existing Current guidelines for the statutory directors' report stipulate that the following issues should be covered: political and charitable contributions, employment of the disabled, employee involvement and the period for payment of suppliers. In addition, new guidance was recently issued on corporate governance and internal control (the Turnbull guidance). The bank's activity and compliance is confirmed in its Financial Statements by KPMG Audit Plc.

Triple bottom line - UK statutory guidelines for company reporting - pending In 1998, the UK Government announced that there would be a radical review of company law. The existing framework was established in Victorian times and is now considered to be ill-suited to a modern, socially responsible economy. In March 2000, to the disappointment of the bank, the Company Law Review10 proposed only limited changes to the duties established for company directors. On the positive side, the Review recognised that directors should, henceforth, be aware of wider social responsibilities and report accordingly in a new statutory Operating and Financial Review. However, these 'community' reporting requirements are to be discretionary. The bank believes that the current recommendations would not lead to a significant increase in the level of ethical and environmental disclosure undertaken by businesses. If anything, the reverse could be the case, as the statutory directors' report currently covers such issues as political and charitable contributions, employment of the disabled, employee involvement and the period for payment of suppliers. As a member of the Review's Consultative Committee, the bank has urged consideration of the following options:
  1. disclosure of 'community' issues to be made mandatory; failing this
  2. as suggested, maintain the discretionary nature of 'community' disclosure, but strengthen the penalties for willful omission and widen the scope of audit review (drawing on appropriate external expertise) to include the question of 'materiality'.
Triple bottom line - Other The bank's reporting of community involvement continues to work towards the London Benchmarking Group's guidelines11, and is considered to meet the requirements of the PerCent Club12. With regard to staff, Opportunity Now13, Race for Opportunity14, the Employers' Forum on Disability15, the Employers' Forum on Age16 and Investors in People17 are each utilised to inform respectively on gender, ethnicity, disability, age and employee development. During 2001, the bank reviewed its policies, procedures and practices against the International Labour Orgnanisation's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy18, the Organisation for Economic Co-operation and Development's Guidelines for Multinational Enterprises19 and the Global Compact's Nine Principles20 and considers that it complies with all policies, guidelines and principles.

Specific to Financial Services

Social - SPI Finance With regard to the development of sector-specific economic and social indicators, the bank is part of a project 'SPI Finance'21 which has agreed a memorandum of understanding with the GRI, the first of its kind. The project consists of 10 financial institutions from Australia, Germany, the Netherlands, South Africa, Switzerland and the UK, who are working together to develop social performance indicators for the financial industry. The key performance indicators developed in this project will be incorporated as a sector-specific supplement to the next issue of the GRI guidelines, planned to be published in mid 2002. The project incorporates a stakeholder involvement procedure in which stakeholders are invited to provide feedback regarding the social performance indicators being developed. It is the bank's intention to report against the proposed indicators within the 2002 Partnership Report.

Triple bottom line - Financial Organisations' Review and Guidance on the Environment (FORGE) Late in 2000, FORGE was launched with the support of the Association of British Insurers and the British Bankers' Association (BBA). The organising consortium declined to respond to The Co-operative Bank's urgings for the FORGE22 guidelines to advocate a broad environmental policy in relation to commercial lending (a policy that took account of matters other than the credit-worthiness of loans, i.e. a policy that indicates which areas will and will not receive finance). In addition, external verification of data and commentary is noted as an optional extra by FORGE, and not a basic requirement for best practice. The bank currently sees little value in pursuing the FORGE guidance, preferring to work with GRI and the SPI Finance Project to develop an appropriate set of triple bottom line indicators for the financial services sector.

Triple bottom line - UK Financial Services Initiative for the World Summit on Sustainable Development (WSSD) 2002 In March 2001, the Prime Minister challenged CEOs from five sectors, together with leaders of NGOs, to develop innovative strategies to promote sustainability in the run up to the WSSD 2002. The five sectors are financial services (FS), water, energy, tourism and forestry. The Corporation of London agreed to champion the financial services sector, and Forum for the Future were appointed to develop a set of recommendations on sustainable finance, based on best practice at UK financial institutions. The Co-operative Bank has acted as a key interviewee and opinions were incorporated in a briefing paper which informed discussions at a practitioners workshop on 13th December 2001. Key points made included:
  • for Government to provide more certain regulatory environment for sustainable environmental technologies;
  • for Government to encourage small-scale financial intermediaries, such as credit unions, when seeking to tackle social exclusion and community investment priorities;
  • distinction be made between environmental risk assessment guidelines (which are primarily designed to reduce risk) and environmental screening guidelines (which aim to lessen environmental impact, regardless of profit opportunity);
  • attention be brought to the contribution asset finance can make to the uptake of sustainable technologies given its relatively longer payback period;
  • Financial Services should be encouraged to disclose across a full range of environmental issues and produce Sustainability Reports.
A related contribution was recently posted on the website of the Sustainable Development Commission.

Specific to Co-operatives

Triple bottom line - Co-operative Union Following a call by leaders of the Co-operative movement, in February 2000 The Co-operative Commission was launched with the backing of the Prime Minister, the Rt Hon Tony Blair MP. The remit of the 12-strong Commission, which included the bank's Chief Executive, Mervyn Pedelty, was to investigate and propose ways to modernise the £9 billion UK Co-operative movement. At the end of the 11-month investigation, a 60-point action plan for the movement was produced24. This included a suggestion that there should be an increasing prevalence of, and convergence in, social accounting and reporting systems within the Co-operative movement. More specifically, that:
  • The Co-operative Union should establish challenging Key Social Performance Indicators (KSPIs) for measuring performance in relation to Co-operative and social goals.
  • The Co-operative Union should develop a standard for social reporting, so that there is consistency across the movement.
In the first half of 2001, the Commission's Report was presented to co-operators at an extensive series of meetings across the UK before being put to the Co-operative Congress at its annual meeting at the end of May 2001. A working Group on Social and Co-operative performance was convened in June 2001, which included the bank, CIS and the Co-operative Group. Priority was given to the task of identifying KSPIs. This has proved extremely difficult, as co-operatives come in many shapes and sizes. It is intended that a draft set of KSPIs will be presented for adoption to the 2003 Co-operative Congress. This time-scale does not allow for stakeholder consultation prior to issuance.

Co-operative - Euro Coop Social Working Party Created in 1957, Euro Coop25 represents over 3,200 local and regional consumer co-operatives, with over 21 million individual members in 13 European Union member states and in 5 central and eastern European countries. In 1999, the Euro Coop social working party produced a report entitled 'Measuring the co-operative difference'. The report explores social reporting and the rationale for co-operative involvement in this activity. The report proposes a set of Co-operative Indicators based on seven principles:
  1. Voluntary and Open Membership,
  2. Democratic Member Control,
  3. Member Economic Participation,
  4. Autonomy and Independence,
  5. Education, Training and Information,
  6. Co-operation among Co-operatives,
  7. Concern for Community.
The bank considers that indicators based on principles 1-4 are not directly applicable to the bank as it is not currently a membership-based organisation. Principles 5 and 7 are extensively covered within the Partnership Report. The bank introduced a new indicator covering the principle of 'Co-operation among co-operatives' into its Partnership Report in 2000.		 *
  1. www.co-operativebank.co.uk/partnership2000/audit_commentary_value.html
  2. www.AccountAbility.org.uk
  3. www.naturalstep.org.uk/
  4. www.defra.gov.uk/environment/envrp/index.htm
  5. www.macc2.org.uk/
  6. www.globalreporting.org/
  7. www.co-operativebank.co.uk/partnership2001/GRI
  8. www.projectsigma.com
  9. www.sustainable-development.gov.uk/indicators/index.htm
  10. www.dti.gov.uk/cld/modcolaw.htm
  11. www.corporate-citizenship.co.uk
  12. www.percent.org.uk
  13. www.opportunitynow.org.uk
  14. www.raceforopportunity.org.uk
  15. www.employers-forum.co.uk
  16. www.efa.org.uk
  17. www.iipuk.co.uk/
  18. www.ilo.org/public/english/employment/multi/tridecl/decl.htm
  19. www.oecd.org/daf/investment/guidelines/
  20. www.unglobalcompact.org/Portal/
  21. www.spifinance.com
  22. www.bba.org.uk
  23. www.sd-commission.gov.uk
  24. www.co-opcommission.org.uk
  25. www.eurocoop.org
    To follow any of the links mentioned within the Partnership Report 2002, please visit the links page.
Continue to: Global Reporting Initiative Back To Top