8 December 2009

Rathbone Greenbank Investments was pleased to attend the ECCR’s annual debate which focused on the ethics and sustainability of the banking sector. The debate was chaired by Lord Harries of Pentregarth (former Bishop of Oxford).

Edward Mason from the Church of England Ethical Investment Advisory Group (EIAG) was first to address the audience. Edward discussed that while institutional investors from the church have long excluded certain sectors from their portfolios, the banking sector has never been avoided. However, the church’s concerns over usury have led to companies who undertake doorstep lending being excluded. Edward argued that there is nothing intrinsically unethical about banks and the services they provide. The blame for the recent crisis should be attributed to the banks but also the government, investors, regulators and consumers. In terms of changes required in the banking sector, Edward highlighted the need for strong non-executive directors and remuneration policies that reflect the long-term interests of society. Shareholders also need to engage with companies to ensure best practice across the banking sector is upheld.

Kevin Smith from Platform and BankTrack then addressed the issue of UK banks lending to companies involved in the highly carbon-intensive process of tar sands extraction. UK taxpayers’ money is now involved in tar sands extraction through the nationalisation of Royal Bank of Scotland (RBS), which has provided finance to companies engaged in a range of controversial projects. Platform and several other NGOs have decided to take legal action against the Treasury for allowing taxpayers’ money to be invested in projects that both violate human rights and contribute towards climate change. A Judicial review has been refused, however the coalition of campaigners are currently appealing this decision. In order to facilitate the transition to a low-carbon economy, Kevin stressed that sustainability should be at the centre of the financial system.

Chris Hewett from Green Alliance highlighted the barriers which are restricting flows of investment into renewable energy and other projects to create a low-carbon economy in the UK. In particular the large investment in capital infrastructure at the outset of renewable energy projects, the risks associated with new environmental technologies, government policy and the lack of incentive in terms of carbon pricing were all mentioned as contributing factors. In order to overcome these barriers, Chris argued the need for a publicly owned Green Investment Bank in the UK which would undertake the required investment in infrastructure and help develop the relevant expertise within the government.

Finally, James Vaccaro from Triodos Bank examined accountability within the financial system. He asked why we continue to be shocked that huge bonuses are paid by banks when the driving force behind the system has merely “rebooted” on the same programme. Since the emergence of the financial crisis, the issue of taxpayers taking responsibility to influence the way in which governments run the nationalised banks has been widely discussed. James highlighted that as shareholders, we were always the owners of the banks and should all be engaging with the sector in order to achieve systemic change.

Rathbone Greenbank Investments is pleased to continue its association with the ECCR as a corporate member, with Greenbank researcher Matt Crossman recently being appointed company secretary.