Banks are cashing in on morality checks
Does anyone else think there might be a problem when bankers are telling us what it means to be good? Did we learn nothing in 2007?
When did British people start calling our public toilets “bathrooms” or “restrooms”? It’s interesting to see the extent to which this Americanism has infected corporate policies and activist speech, and it’s a clear indicator that the policies in which it appears are not homegrown.
With the focus on banks this week, I had a quick look at some of their so-called “Diversity and Inclusion” policies. They’re pretty bad, and it doesn’t look like any of them were developed in-house.
Leading from the front, The Bank of England’s “Trans Equality Policy” from 2021 looks like it was written by activists and demands that any employee claiming to be transgender, non-binary or gender-fluid do as they please without challenge in respect of dress, pronouns and bathrooms.
It’s such a giveaway. The Bank of England doesn’t even have the excuse of being part of an American corporation like the high street banks. This policy is due to be reviewed in September 2023. It deserves to be scrapped.
All of the high street banks (and many other major corporations) refer to their Environmental, Social and Governance (ESG) policies - another US import - as if they were the universally acknowledged gold standard for corporate management. We’re told that ESG is all about “responsible banking”, and who doesn’t want that?
Why does ESG matter?
Finance is global, of course, and we want our corporations to behave responsibly.
But while we are all thinking that “responsible banking” means not financing drug cartels or terrorist organisations and making sure loans are affordable, Santander disagrees. It’s all about “diversity, equity and inclusion”.
In an evermore connected, globalized society, barriers are falling. As a bank with local leadership and global scale, and a purpose to help people and businesses prosper, Santander does business in a responsible way. We have the right responsible banking framework to embed ESG standards in all our processes and operations. …
We believe diversity, equity and inclusion (DEI) are essential to our corporate strategy.
And there’s another one of those slippery American terms – equity – not meaning what we think it means.
All the banks now have an ESG focus, and while some of the outcomes are desirable, some are not. It’s not the place of banks to set social agendas or take ideological positions however well meaning.
What are banks for?
It’s the job of banks to be fiscally responsible so that we, their customers, can have confidence that our money is safe. This includes legal and regulatory compliance, making good economic decisions, and keeping our funds secure. Loss of confidence in the banking system has serious consequences for all of us – as we found out in 2007.
Everyone benefits from good governance in our banks, and it is entirely appropriate for banks to put some effort in here. A case could perhaps be made for banks considering environmental impacts, although I would argue that legislation is a more appropriate mechanism for controlling environmentally damaging businesses. But these are a Trojan Horse for what is called Socially Responsible Investing (SRI).
SRI investors seek companies that promote ethical and socially conscious themes including diversity, inclusion, community-focus, social justice, and corporate ethics, in addition to fighting against racial, gender, and sexual discrimination.
That our banks are making investment decisions based on this ideology driven tick list should worry us all. But it does help to explain why they are all marching in lock step. Because declaring yourself to be an “inclusive organisation” that “stands against hate” as Lloyds does is cheap and easy:
Standing against hate
We’re an inclusive organisation and do not tolerate hate.
We have and will take action against discrimination and inappropriate behaviour, whether racist, sexist, homophobic, transphobic, ageist or ableist, regardless of whether this happens in our branches, offices, over the phone or online on our social media channels. Such action may include account closure or contacting the police if necessary.
We always hope to do the right the thing but we know we won’t always get things right. We are committed to striving to do better, for our colleagues, customers and communities.
Introducing the Sustainable Finance Index
And of course, there is a Sustainable Finance Index to measure how “socially responsible” each bank is.
EY (we used to know them as Ernst & Young) found that British banks score well on Governance measures but poorly on “diversity and inclusion”.
Although it’s not clear how EY came to these conclusions, they gave a hint of what was being measured in 2020:
The rankings were based on factors such as the policies and targets (if any) in place on diversity and opportunity within the workplace, and tracking data on the gender balance of managerial roles. However, even the leaders on this agenda sit at a relatively low level, and there remains significant work to be done.
…
D&I within the workplace is something that all UK firms are working to move the dial on, and the banks are no exception. It is well acknowledged that diverse teams drive stronger performance, and that it is not only the right thing to do, but it makes commercial sense. The prominence of the Black Lives Matters campaign this year has acted as an important catalyst for change on the race agenda, but the speed of change remains slow.
It looks very much as though EY are running a Stonewall style “Index” (that has no basis in law or regulatory requirement) to rank public corporations for compliance to ESG measures that have been determined by EY and agreed privately with the companies they will rank.
This will not be something that EY are doing for free.
Why are our corporations doing this?
The service provided by EY is an income generator for them, but why are companies agreeing to set targets and be measured by a third party?
Taking a sustainability lens to executive compensation policies, 65% of UK firms were found to align executive pay with ESG performance, compared with 40% in France and 20% in Germany and Switzerland.
So a good score on EY’s ESG index – paid for by corporations and agreed by chief execs and EY working together – looks like it has been used to justify increasing pay for company C-suite members. This would be a clear conflict of interest that should be illegal.
This matters for all of us
It’s against this background that a vicar who objected to the LGBTQ+ narrative had his account closed and Lesley Sawers (the Equalities and Human Rights commissioner for Scotland) was told she would have to make banking arrangements outside of the NatWest Group with no reason given.
“Wings Over Scotland” blogger Stuart Campbell did get an explanation from the donations site Ko-Fi that was pretty clear.
The Wings blog lists other examples, and more are being reported all the time now that people have noticed.
But these are likely just the tip of the iceberg. More than 9,000 people have joined the Facebook page “NatWest CLOSED down my ACCOUNT” which was set up three years ago.
If it improves their EY ranking, it’s no longer a surprise that Barclays sponsored a float at Pride, or that Halifax was unconcerned by this PR disaster:
Or that HSBC tweeted their support:
In a world where it’s not possible to live without a bank account, who is brave enough to call it out?
Of course “equality and inclusion” means creating a group whose beliefs are unacceptable and denying them the means to function in society. And it only takes a few before the rest of us are too afraid to speak out.