How a High Street U.K. Bank Reflected Its Values and Ethics Through ESG Ratings and Reporting

The Opportunity

Translating Co-operative Values and Ethics Into Conventional ESG Assessment Frameworks

The Co-operative Bank was born out of the co-operative movement over 150 years ago,¹ and these values still guide the way the bank does business today. As the prevalence of ESG ratings and performance assessments of financial institutions increased, the bank grew concerned that the values and ethics shaping its business approach did not correspond with broadly adopted ESG assessment frameworks. This discrepancy resulted in The Co-operative Bank receiving ESG ratings it felt were not reflective of its market leading approach to ethics and sustainability.

To address this, The Co-operative Bank sought out the opportunity to engage with ESG ratings providers as part of the evaluation process. The intention was to provide additional information about its ESG-related policies and programs, creating a more accurate review of The Co-operative Bank’s ESG risk management. Its search for a comprehensive assessment of its ESG credentials led The Co-operative Bank to secure a Corporate ESG Risk Ratings License from Sustainalytics.

The Results

An ESG Assessment Reflective of Corporate Values and ESG Risk Management

Disclosing relevant information to Sustainalytics through the ESG assessment process helped The Co-operative Bank convey all aspects of its approach to ESG, demonstrating the bank’s values, ethics and actions. The subsequent ESG Risk Rating of 9.2² allowed The Co-operative Bank to share its ESG score more broadly to external stakeholders and the public.

The ESG Risk Ratings License³ allowed The Co-operative Bank to devise a fully integrated internal and external communications campaign to showcase its ESG leadership. The campaign incorporated public relations, national press advertising, social media posts, website updates, and communications to all key stakeholders (e.g., colleagues, customers, suppliers, and corporate partners). In addition to its overall ESG score, the license allowed the bank to share details on its performance on material ESG issues, as well as its summary ESG Risk Ratings report.

Building on the insights gained through its ESG assessment from Sustainalytics, The Co-operative Bank continues with its ESG practices and disclosing its progress with the aim of maintaining a low ESG risk profile.

References

^{1. “The co-operative movement is a social and economic movement which emerged in Europe as a reaction to early 19th-century industrialization. Co-operative organizations, enterprises owned by and operated for the benefit of their members, follow a set of principles best defined in 1844 by co-operators in Rochdale, England. The most important of these principles were that members in a co-operative each had one vote regardless of the investments made; anyone could join; surpluses or profits were distributed to members according to their levels of participation; and co-operatives would undertake educational activities for their members.” Macpherson, I. (2015). “Co-operative Movement,” The Canadian Encyclopedia, accessed 0.10.2021 at https://www.thecanadianencyclopedia.ca/en/article/co-operative-movement.}

^{2. Sustainalytics’ ESG Risk Ratings measure a company’s exposure to industry-specific material ESG risks and how well it is managing those risks. The ESG Risk Rating is a company’s total unmanaged ESG risk score, thus the lower the score, the lower the company’s total unmanaged ESG risk. Learn more at https://www.sustainalytics.com/corporate-solutions/esg-risk-ratings.}

^{3. Companies can obtain an ESG Risk Ratings License for three main use cases: Marketing and Investor Relations, Sustainability-Linked Loans, and Remuneration Programs.}