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The demise of the mutual sector? We don’t think so



Anna Laycock, ethics manager at Ecology Building Society, reflects on recent media criticism of financial mutuals.

Reading the headlines this weekend, you’d have been forgiven for thinking that the ethos and effectiveness of the mutual sector had been comprehensively debunked. Rotten mutuals, boardroom shambles and “lax standards” were just some of the accusations thrown at building societies in the wake of events at the Co-operative Bank.

We don’t deny that what’s happened at the Co-op is more than disappointing: it’s a blow to us all. Somewhere along the line, the pursuit of long-term value became the pursuit of growth for growth’s sake, and a focus on sustainable governance, driven by its moral commitments, was lost.

Given the Co-op’s roots and well-publicised ethical policy, it’s no surprise that it has attracted stinging rebuffs – accusations that have now been extended to the mutual model as a whole.

But this criticism is wrong in both facts and analysis. For a start, the Co-operative Bank is a plc wholly owned by a mutual, so the structure of its governance is very different to that of a building society. Mutuals are owned by their members and run for their members.

Unlike plcs, members of a mutual have a voting voice in how their society is run. At Ecology, we have an ambition to take that even further: we want to be a truly democratic organisation, with our members having a direct voice in our decisions.

Let’s accept that the Co-op is a figurehead for the mutual financial movement. Does the fact that it has failed its members badly mean that the mutual model is inherently flawed? Such hasty generalisation ignores the huge diversity of the mutual sector in the scale, structure and focus of its members. And it confuses function with form: mutual structures are a facilitator of democratic, values-based governance, but not a guarantor.

Whether an institution behaves ethically or makes the ‘right’ decisions depends as much on its mission, culture and core values, something our regulator the Financial Conduct Authority (FCA) is belatedly acknowledging.

Mutual structures provide a framework for resilient, progressive businesses and economies. To be truly democratic this must be backed by concrete, transparent mechanisms that enable meaningful participatory decision-making and promote member engagement.

And to be truly progressive, mutuals must be run in a way that takes seriously our shared responsibility to serve the real economy, society and environment. By embedding these concerns into the heart of mutually governed financial organisations, we can create organisational cultures that genuinely support the interests of all and stand up under scrutiny.

Within and beyond the financial sector, many mutuals are living up to this promise. Across the UK, there are over 6,000 co-operatives owned by 15.4 million people. For five successive years, the co-operative sector has outperformed the growth of the UK economy, growing by 20% since 2008.

These organisations are a vehicle for empowerment and unity, offering people the chance to reclaim control over the things that influence their lives, such as energy and housing. Events at the Co-op offer a sharp reminder of the misfortunes likely to strike an organisation – co-operative or otherwise – when leaders lose sight of the wider values that should form the basis all decision making.

And what about those leaders themselves? Is mutual governance as weak and ill-informed as the media might have you believe? Again, we’re seeing a severe case of faulty generalisation. All building societies have voluntarily signed up to the UK Corporate Governance Code and have a majority of non-executive directors. Those directors are recruited through a stringent process and a substantial majority have a financial, accounting, legal or management background.

But diversity is also vital to avoid groupthink. On Ecology’s board we have individuals from the green building, legal, financial, co-operative, and environmental policy sectors. We need every one of their perspectives to ensure we’re making decisions that reflect our mission and ensure our long-term health.

The media debate on the conduct of Paul Flowers, former chair of the Co-operative Bank, is edging towards a consensus that the chair of a financial institution must be a banker. We’d argue that the chair of a financial institution must have the balance of skills, experience, independence and knowledge of the organisation to do their job well, regardless of their background. It’s not just us that thinks this: the Corporate Governance Code does, too. And if the financial crash has made one thing clear, it’s that being a banker is no guarantee of competence to run a bank.

This focus on the role of one person, however reprehensible their conduct, serves to distract from the real scandal in our financial system: the disregard of banks for the effect of their activities on individuals, communities and the world we live in. This needs to change, and we continue to believe that mutual governance is one of the tools we can use to make that change.

We believe that mutual structures are the most effective, democratic way to run a financial organisation, but the need for reform runs much deeper than that. We must address both the structure and purpose of financial institutions if we are to reclaim money as a force for positive social and environmental change. Only then will we fulfil the potential of the co-operative approach to build a better financial system.

Anna Laycock is communications, research and ethics manager at Ecology Building Society. This article originally appeared on Ecology’s blog

Further reading:

Gross lending by mutuals up 32% in 12 months

Nationwide to raise £500m without ‘compromising mutual status’

Co-op Bank says ethics are in its constitution – but should we believe it?

Ethics, mutuals and the Co-operative Bank’s unclear future

The Guide to Sustainable Banking 2013


Report: Green, Ethical and Socially Responsible Finance



“The level of influence that ethical considerations have over consumer selection of financial services products and services is minimal, however, this is beginning to change. Younger consumers are more willing to pay extra for products provided by socially responsible companies.” Jessica Morley, Mintel’s Financial Services Analyst.

Consumer awareness of the impact consumerism has on society and the planet is increasing. In addition, the link between doing good and feeling good has never been clearer. Just 19% of people claim to not participate in any socially responsible activities.

As a result, the level of attention that people pay to the green and ethical claims made by products and providers is also increasing, meaning that such considerations play a greater role in the purchasing decision making process.

However, this is less true in the context of financial services, where people are much more concerned about the performance of a product rather than green and ethical factors. This is not to say, however, that they are not interested in the behaviour of financial service providers or in gaining more information about how firms behave responsibly.

This report focuses on why these consumer attitudes towards financial services providers exist and how they are changing. This includes examination of the wider economy and the current structure of the financial services sector.

Mintel’s exclusive consumer research looks at consumer participation in socially responsible activities, trust in the behaviour of financial services companies and attitudes towards green, ethical and socially responsible financial services products and providers. The report also considers consumer attitudes towards the social responsibilities of financial services firms and the green, ethical and socially responsible nature of new entrants.

There are some elements missing from this report, such as conducting socially responsible finance with OTC trading. We will cover these other topics in more detail in the future. You can research about Ameritrade if you want to know more ..

By this report today: call: 0203 416 4502 | email: iainooson[at]

Report contents:

What you need to know
Report definition
The market
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
The consumer
For financial products, performance is more important than principle
Competition from technology companies
Financial services firms perceived to be some of the least socially responsible
Repaying the social debt
Consumer trust is built on evidence
What we think
Creating a more inclusive economy
The facts
The implications
Payments innovation helps fundraising go digital
The facts
The implications
The social debt of the financial crisis
The facts
The implications
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
An ethical economy
An ethical financial sector
Ethical financial services providers
The role of investing
The change potential of pensions
The role of trust
Greater transparency informs decisions
Learning from past mistakes
The role of innovation
Payments innovation: Improving financial inclusion
Competition from new entrants
The power of new money
The role of the consumer
Consumers empowered to make a change
Aligning products with self
For financial products, performance is more important than ethics
Financial services firms perceived to be some of the least socially responsible
Competition from technology companies
Repaying the social debt
Consumer trust is built on evidence
Overall trust levels are high
Payments innovation can boost charitable donations
Consumer engagement in socially responsible activities is high
Healthier finances make it easier to go green
37% unable to identify socially responsible companies
Building societies seen to be more responsible than banks….
….whilst short-term loan companies are at the bottom of the pile
Overall trust levels are high
Tax avoidance remains a major concern
The divestment movement
Nationwide significantly more trusted
Trust levels remain high
For financial products, performance is more important than principle
Socially conscious consumers are more concerned
Strategy reports provide little insight for consumers
Lack of clarity regarding corporate culture causes concern
Consumers want more information
The social debt of the financial crisis
For consumers, financial services firms play larger economic role
Promoting financial responsibility
Consumer trust is built on evidence
The alternative opportunity
The target customer

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A Good Look At How Homes Will Become More Energy Efficient Soon




energy efficient homes

Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.

There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.

1. The Rise Of Smart Windows

When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.

If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.

2. A Better Way To Cool Roofs

If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.

Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.

3. Low-E Windows Taking Over

It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.

They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.

4. Magnets Will Cool Fridges

Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.

The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.

5. Improving Our Current LEDs

Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.

That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.

Maybe Homes Will Look Different Too

Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.

ShutterStock – Stock photo ID: 613912244

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