Last Tuesday (23rd) a few of our members headed over to the Birmingham and Midland Institute to attend an event entitled ‘Ethical Banking; Debt, Tax & The Environment’. The event was organised in collaboration between Birmingham Friends of The Earth, the Jubilee Debt Campaign and the Methodist Tax Justice Network.
There were a few technical difficulties to overcome and, with some the noises coming from the microphone, the audience could have been forgiven for thinking we were about to watch an episode of Doctor Who. Thankfully these were resolved and the audience of over 70 was treated to really interesting talk by the guest speaker Charles Middleton, Managing Director of Triodos Bank.
Charles began by talking about Triodos, its history, purpose and guiding values. The Bank was established in 1980 by a group of Dutch bankers and its name derives from its tri-purpose; people, planet and profit. The bank operates in the Netherlands, Belgium, Germany, Spain and the UK. It deals in savings and investments, focusing its activity on sustainable and ethical business.
What Triodos does or does not invest in is influenced by its team of researchers and excludes any business which is seen as having non-sustainable goods or services (weapons, tobacco, pornography, fur, environmentally hazardous substances and gambling) or non sustainable working practices (animal testing and inhumane farming methods, corruption and support for dictatorial regimes, breaches of fundamental labour rights).
Charles suggested that transparency was one of the most powerful features of the bank; he insisted that all information about services offered by the bank were made as clear as possible and all the companies that it invests in are also listed on their website.
He moved on to discussing some of the projects he was proud to be involved in through Triodos as well as giving a brief account of his own biography and formative influences, including having recently studied psychotherapy and having served in the armed forces in Northern Ireland. He finished with some critical remarks about banking in the lead up to the financial crisis, and the role of the sector played in that crisis by using complex financial engineering to obscure risks, not being transparent with it’s customers and pursuing short term profits at the expense of long term financial, environmental and social sustainability.
After a short break we were invited to submit questions; there were lots of questions asked but I have summarised a few which I think provoked the most interesting response. Questions began with one from each of the campaign groups. We asked for Charles’ view on the best way of encouraging action on the climate, was it through divestment campaigns or greater regulation?
He began by saying he didn’t think it was an either/or. He distinguished between regulation which encourages and that which prevents and talked about onshore wind subsidies having been an example of effective regulation. But concluded by saying that divestment was an effective strategy and he felt the bigger change would come from the financial impact on companies who failed to respond, rather than through regulation.
The Jubilee Debt Campaign wanted to know; when is it ethical for debt not to be repaid?
Charles used two examples to answer this question; he began by recalling politicians in India using debt write offs for farmers as a way of bribing them in the lead up to elections and the damage this did to nationalised banks in the country. He then spoke about Greek debt and suggested that it was probably in everybody’s interest that Greece had some of that debt written off as it was so unlikely at this point that the government could pay it all off. In general he seemed wary about supporting the non-payment of debt, reminding us that he does run a bank after all!
The Methodists for Tax Justice Network asked about tax and the financial sector; should financial institutions pay more tax? Should something be done about tax avoidance?
Charles spoke about his own experience at Triodos over the question of how much tax ‘planning’ should be done. On the one hand they have a responsibility to their account holders and investors not to pay more tax than they need to, so that they can provide a competitive service. On the other hand it would be inappropriate and inconsistent for an ethical bank to ‘plan aggressively’. He suggested that tax policy and enforcement should provide a fair and level playing field for financial institutions, but suggested that tax relief for certain types of activity such as riskier social investment had been positive and should be maintained or increased.
The audience asked a host of interesting questions but I only included a handful here to give you a flavour of the discussion;
How realistic is it to expect ethical banking without regulation?
Again Charles gave a mixed response to this one. He recognised the important role of regulation in the financial sector, he cited for example the ring-fencing of savings and investments to protect account holders from high risk activity and greater oversight to prevent criminal activity such as fixing the libor rate. However he stressed the importance of company culture and responsibility when it came to the behaviour of bankers, arguing that that regulation was not an effective tool in this regard.
Are politicians taking any notice of ethical banking?
Charles suggested that some politicians appeared interested and enthusiastic, but it was difficult at times to determine who’s interest was genuine and who was just interested in the potential for good publicity.
In the wake of the financial crisis do you think banks are more receptive to outside pressure groups?
Here he admitted he didn’t really know, and put the question back to the room, but warned against financial institutions greenwashing and appearing responsive through clever marketing while maintaining business as usual.This was a really insightful talk and with a really good turn out I was left feeling optimistic.
It was a reminder that investment in things worth supporting could be as important as divestment from those activities that need to be stopped.