Ethical Banking

eskbanker

gsmh said:

eskbanker said:

On the contrary, I'm the one saying it isn't binary, i.e. whether an organisation is or isn't ethical, and that it's all a matter of personal opinion, so it now seems that we agree on this, but my intervention initially stemmed from your suggestion that there was some sort of consensus as to what constitutes an ethical stance, prior to your acceptance that there are varying subjective views (such as the polarising Israel/Palestine issue that you brought up):

I think we broadly agree, but you seemed to be suggesting that since there is no authoritative list it's not worth thinking about ethical banking. Every time I've posted about it you have turned up to disagree. Keep thinking about that package I mentioned. As an ethical consumer, if you find 80-90% of what a bank says ethical, and as long as there are no red lines then that's fine.

I don't know where you've got that bolded bit from, but for the avoidance of doubt I'm not saying that at all and don't believe I've ever suggested it.  I think it's important to put this discussion into context, i.e. OP asserting that MSE should somehow be incorporating ethical positioning in its listings, so my point was and is that there's no realistic way of achieving this when there isn't a clear consensus about what makes one bank more ethical than another, so ultimately this is all a subjective personal matter rather than something that can be quantified and ranked.  You'll have your reasons for selecting your bank(s) and others will have theirs, and neither is objectively 'right' or 'wrong' as such, each to their own....

fenwick458

Lexingtononetwofive said:

I greatly admire the work of MSE but am also hugely disappointed that ethics are not considered in your recommendations. Today’s MSE’s Money Tips recommends signing up for a Chase bank account, with no mention of their appalling ethical record on the environment, human rights and paying tax. According to a Guardian Money report from December 2022 “the Chase current account, JPMorgan’s consumer brand in the UK, was the fourth-worst ranked current account with a red – or poor – rating and a recommendation that this was a ‘brand to avoid’” based on a study by Ethical Consumer Magazine. I have found similar conclusions from other organisations in the US where Chase are headquartered.

Given MSE’s position in the market place, I find it irresponsible that ethics are not given consideration in your recommendations. I appreciate your approach of always finding the lowest cost options, supporting the least affluent in society, but the ethics of banks like JP Morgan Chase have catastrophic global impacts which ultimately, most harm the least affluent in society.

who's naïve enough to imagine there's an ethical bank? and really this is a money saving forum, the majority of posters are concerned with money saving, not ethics...

blue.peter

Section62 said:

... what is wrong with being owned by shareholders?

There's nothing inherently wrong with it.

However, a business owned by shareholders tends to be amoral (as distinct from immoral). It will, generally, do pretty much anything within its area of trade that's not actually prohibited in pursuit of profit and hence dividends for shareholders. The only moderating influences are normally legislation and regulation - and even those don't always work. (Bribery, for example, is supposed to be banned. But it's still sometimes seen simply as a cost of doing business.)

Poor regulation will often result in poor outcomes. Look at the water companies, fort example: their shareholders have been milking cash from them for decades, and we're paying the price now. We're seeing massive losses of clean water and frequent widespread dumping of untreated sewage into rivers and coastal waters. Good regulation was, and is, needed to prevent this.

Banks aren't prohibited from investing in things that are seen by many as unethical. They're profitable, so that investment happens.

Some people would prefer to take shareholders out of the equation, and favour mutuals and co-operatives for this reason. However, I'm not entirely convinced that this always works - customers and/or staff looking for the best outcomes for themselves can be just as prone as shareholders to ignoring wider issues.

In rare cases, shareholders will say to management "hey, we don't like that, so don't do it". But that's very much the exception. Some businesses are set up on that basis by their founders, but are then sold on and become owned by, for example, hedge funds. Co-operative Bank is the obvious example of this.

Section62

blue.peter said:

Poor regulation will often result in poor outcomes. Look at the water companies, fort example: their shareholders have been milking cash from them for decades, and we're paying the price now. We're seeing massive losses of clean water and frequent widespread dumping of untreated sewage into rivers and coastal waters. Good regulation was, and is, needed to prevent this.

Slightly off topic, but a good example of the difficulties involved in measuring ethics - the amount of clean water lost, and the amount of untreated sewage discharged has not necessarily increased.  In relation to CSO's what has changed is the way information is collected and reported, and a sucessful media campaign to bring this to the attention of the public.

The CSO's were originally installed when the sewers were in public ownership.  In one local authority area I worked I'd estimate we removed about half the remaining CSO's during the first 10 years following privatisation. There were specific targets for mapping them and developing a removal programme, in part driven by the separation (through privatisation) of the regulatory role (into the NRA) from the service provision role.

Prior to that, the public-sector body was both poacher and gamekeeper, and they simply didn't care about CSOs.  We didn't know where they were, nor how frequently they operated, nor how much effluent was discharged, nor the quality of the efluent.  The only sign an overflow had happened was when paper and sanitary items were left on riverbanks, which most people just ignored.

Now, with the availability of cheap electronics and communications, it is possible to monitor every CSO and record both times of operation, and volume of flow.  The requirements to report information have changed, and the public now have access to information which was previously unreported.  Hence it is dead easy for a journalist to pull out some figures which show "discharges doubled this year compared to last year" and demonstrate to the public that the water companies are truly amoral.

I have technical knowledge in this area which means I can look at that headline and understand some of the truth behind it. If I was asked to make an assessment of a water company's ethics I would take into account the difficulty in dealing with legacy CSO's (the money milked by shareholders doesn't scratch the surface of eliminating them).  My assessment would be diferent to someone who doesn't have that technical knowlege - which doesn't mean I'm right and they are wrong, it just means that 'ethical' behaviour isn't as easy to place in black/white categories as is necessary to produce easy to absorb journalism on which bank accounts are best.

blue.peter

Section62 said:

Slightly off topic, but a good example of the difficulties involved in measuring ethics - the amount of clean water lost, and the amount of untreated sewage discharged has not necessarily increased.

I'm happy to accept that you know more about this particular subject than I do, and that what you say is correct. However, two points arise from your comment quoted above:

1. I never said that the problem had increased. I simply pointed out that it exists and is large. It would be a lot lower than it is if we had good regulation.
2. Increased since when? The water industry was privatised 30+ years ago, if memory serves. That's a long period, and I think that there has been a bit of fluctuation since then. AIUI, problems were reduced while we were a member of the EU, but have increased again since then - not least following the Commons vote in October 2021. My perception might, of course, be wrong.
   

Section62 said:

Now, with the availability of cheap electronics and communications, it is possible to monitor every CSO and record both times of operation, and volume of flow.  The requirements to report information have changed, and the public now have access to information which was previously unreported.

I don't see this as a bad thing. Public awareness is desirable and pressure on a regulator can help.

Even if I chose a poor example (and I don't currently think that I did, even if I wasn't wholly correct about the cause being profit-taking), my point stands: most businesses need to be properly regulated if poor overall outcomes are to be avoided. Personally, I find the environmental impact of sewage dumping to be unacceptable. I'd like to see a regulator capping management salaries and banning management bonuses and shareholder dividends until it's brought down to a tolerable level. But it needs the necessary powers before that can happen. And regulation is particularly important in the case of water companies. They have geographic monopolies. I can't choose to buy my water from a different company if I don't like the one I have. There's no competition.

(CSO = Combined Sewer Outflow? Not being familiar with your abbreviation, I had to look it up.)