Corporate responsibility: what are we going to do about our broken banking system?
My flat in Bow offers a good view of Barclays Bank’s Canary Wharf headquarters, rising up alongside the other skyscrapers that symbolise London’s financial centre. Where once the Barclays’ signage was plain to see at the top of Churchill Place’s 156 metre tall tower block, there is now a gaping hole. Is this coincidental, or a deliberate attempt by its bosses to hide the true identity of this now tarnished brand?
In his Sustainable Business blog, Jo Confino invited readers to indulge “a little dark humour” by taking a look at Barclays’ 2011 annual corporate responsibility report, published just a couple of months before the interest-rate rigging scandal. As he rightly points out, the massive gap between the company’s conduct and its claims around corporate responsibility calls into question the very value of this kind of reporting.
If ever there was a bank that should take the crown for ‘greenwashing’, surely it is Barclays?
So serious is the interest-rate rigging scandal that it will take more than Bob Diamond’s resignation this week to restore the bank’s reputation. On Wednesday the former chief executive of Barclays will be grilled by MPs about the bank’s manipulation of the Libor interest rate, a fraudulent activity that threatens to engulf many more banks. And just a few days ago it emerged the big banks have misold Interest Rate Swap Repayments, complex financial products, to small businesses.
The Government is calling for an immediate Parliamentary inquiry into the rate-rigging scandal and Labour is going even further, saying it will accept nothing less than a Judge-led independent investigation in the style of the Levenson inquiry.
So what is to be done about our broken banking system?
An inquiry is of course needed, and the bigger and more rigorous the scope the better – so I do hope the Government doesn’t stubbornly stick to its quick turnaround Parliamentary inquiry. The public and the tens of thousands of bank employees that have nothing to do with this scandal deserve more.
But we don’t need to wait for an investigation to find out that our banking system is broken; the financial crash proved that. Yet four years on, the investment banking operations that dreamed up the complex financial instruments that only served to line the pockets of an elite group of bankers, are still infecting the entire banking system. The FT‘s Philip Stephens rightly points out that the Government’s “half-baked scheme” to simply “ring-fence” these ‘casino’ operations fails to grasp the level of change required.
Just four months ago, Ethical Consumers’ banking report found widespread involvement in corporate malpractice, greenwash and investments in climate changing industries among the ‘Big Five’ banks and branded UK banking the “most unethical business sector” in the UK.
As individuals we can all take action, by moving our accounts from the big banks to more ethical alternatives. The ‘Move Your Money’ campaign, which is supported by a coalition of groups including Co-operatives UK, Ethical Consumer and the New Economics Foundation, aims to help us do just that.
Another answer is to rebalance our economy away from the financial services sector, which has been allowed to get far too big. The Next Manufacturing Revolution a new not-for-profit, proposes an interesting solution to position the UK at the forefront of a new green industrial revolution in a post-financial crisis era.
Is ‘democratic finance’ the answer?
In April, I wrote an article looking at a new financial movement called democratic finance and asked whether it held the key to a more ethical, even greener future for our financial sector.
I certainly hope it does, but in the meantime, politicians must do everything they can to force banks to radically shift the way they do business.