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Ethical Companies can't survive – can they?

In the light of the troubles afflicting the Co-operative Bank, the doomsayers are out in force noting that companies that have an ethical basis can't make it in the cut and thrust of harsh market capitalism.

I like to think that BHB is an ethical firm with clearly stated values which we try to live up to, and the Firm banks with the Co-operative Bank .so I am an interested outsider.

5 things strike me about the Co-operative Bank debacle:

  • It's neither ethical, nor good business practice to fail to undertake due diligence, which seems to have happened with the Co-op takeover of the Britannia Building Society.
  • It does not seem ethical to pay a retiring Chief Executive, who on the face of it had failed, several £millions in a pay-out.
  • It isn't ethical to sell unnecessary Payment Protection Insurance.
  • It isn't ethical to have a main Board which doesn't seem to understand the world of Banking.
  • The Co-op in the UK has expanded its range of interests in recent years, for example it has recently branched into Legal services. Alongside funeral parlours, Farming, Supermarkets and Insurance, one wonders if they have the expertise across the Board to sustain all of these interests.

As a result of straying from their ethical values, the Co-operative Bank has failed, and has fallen in to the hands of two American Hedge funds. Having said that, it has a far cleaner history than most UK Banks (another scandal hits Barclays this week) and it hasn't relied on the taxpayer to bail it out.

This begs the question, if the Bank had genuinely stayed true to its stated ethics, would it have failed at all? So rather than stating that ethical companies can't make it, I would argue that it is ethical companies that will in fact survive.

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