Thursday, June 25, 2009

Bank secrets... not any more

An interesting thing popped into my email box from Banktrack newsservice - Banktrack is the site that tracks banks (funny, eh?) .. which means that it scrutinizes the activities of banks and their effects on people and planet, something us cr reporters would call.. indirect impacts. See, the true impact of the banking sector is not the checking accounts or the home loans or even the savings accounts that make up their current business, but the large, significant chunks of money they use to finance major energy or infrastructure projects, the arms industry, the nuclear sector and a whole host of things that negatively (or positively) impact us, the planet and future generations. The owners of these initiatives rely on banks to finance them. The banks that do so should be held accountable for these indirect impacts of their financing policies. And this is where Banktrack comes in. Anyway, back to my inbox (ugh!), a press release is what popped into it.

It goes something like this, well, exactly like this:

"Campagna per la Riforma della Banca Mundiale (Italy), Friends of the Earth (France), Netwerk Vlaanderen (Belgium), Platform (UK), SETEM (Spain) and Urgewald (Germany) expose investments in harmful practices and companies of thirteen large European banks in this new website. Despite of the banking crisis, financial institutions continue to do harmful investments in a sphere of secrecy. .......The thirteen banks have financed 11,4 billion euros in loans to the14 blacklisted companies as well as arranged and underwritten bond and share issues for a total value of 10,5 billion euros. In addition, the thirteen banks own or manage 17,7 billion euros of shares in the researched companies. "

The new website refferred to is BANK SECRETS. it's an amazing site. Amazing design. And the content is pretty impressive too . There are profiles of these 13 banks and the dubious investments they have made ...a click on Barclays shows 11 locations of negative financing, Deutsche Bank also 11, RBS 9, and BNP Paribas tops the chart with 12 locations. Another page focuses on controversial investments by sector such as coal or oils and gas, and another page invites you to send an ecard to your bank proposing that they adopt ethical financing principles, and offers you a checklist of points to help you verify just what your bank is doing with your money. Finally, the site offers a selection of ethical banks in 7 European countries which you could choose to bank with if you want your money to be used for good and not the opposite.

The Equator Principles were designed to provide voluntary regulation in this area. Over 60 major banks worldwide have joined this intiative, which was launched in 2003.The principles were revised in 2006, making them more stringent, and apply to project financing with capital costs above USD 10 million . Whilst the principles have made a major impact on project financing, there are still many inadequate applications , even amongst the signatories.

I decided to take a quick look at Citibank's CSR report for 2008. I was hoping that it would reveal some secrets. Such as the ones revealed by BankSecrets, for example, financing of EADS, the second largest european arms producer, involved in nuclear weapons production, or financing Dongfeng which supplies military equipment to Burma, strengthening the repressive Burmese junta. One of Citibank's citizenship goals is to continue to provide Equator principles leadership . I looked for a mention of Burma, Dongfeng, EADS or nuclear weapons but .. alas.... zilch. Of course, they would not tarnish their positive cr report with vivid description of the indirect impact of financing nucler weapons or supporting repressive regimes. And they didnt. to be fair, Citi does boast a good record of reponsible home-loaning and community involvement, but nothing about the hotspots of their financial lending activities. In 2008, Citi funded 10 transactions worth over 183 billion $, out of a possible 39 requested, after environmental and social risk management review. However, it is not clear whether financing was rejected due to ESR issues, or due to the fact that Citi judged they would not make enough money on the the projects. There is definitely room for more transparency in reporting by the financial sector.

To round off my foray into (un)ethical banking, i took a quick look at one of the recommended banks - GLS Bank. This bank describes itself as: "the first social and ecological bank in Germany. GLS stands for "Gemeinschaftsbank für Leihen und Schenken", which translates as "community bank for loans and gifts". The bank was founded in 1974 and it currently finances around 6.500 projects and businesses. The Bank focuses on cultural, social and ecological projects which try to tackle challenges in our society by developing creative solutions". Not only are your savings invested ethically, you can also choose which positive causes to route your money to support. Sounds neat, right ?

Now, as the threshold for project financing is $10 million, i figure that this could fund around 1.7 million Chunky Monkeys. A further calculation is that this supply, if financing is secured, could last me around 3.17 weeks.

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm based in Israel. Visit our website at:

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