This is the time of year when I am invited by the building societies in which I have savings to participate in their democratic life. It’s, frankly, not much of an invitation. Building societies may be technically member-owned, but the ballot paper which comes round invariably allows me to vote (or decline to vote) for exactly the number of directors for which there are vacancies. It has been many years since I have been aware of contested elections for the boards of any of the major building societies and even more years before an ‘unofficial’ candidate not supported by the existing Board was elected (this was at the Nationwide some twenty years ago).
The usual device used by building societies is to bring in a new director by co-option, who then serves until the next annual election – at which point of course their name is added to the ballot paper in an uncontested election. It is, I’m sorry to say, a poor recipe not only for democracy but also for building society diversity and renewal.
So my heart sinks when the annual report and ballot arrives from the Ecology Building Society, and I find that the Ecology has followed industry norm: no contested election for the board and a new director brought in mid-year as a co-optee who we now have to endorse. The Ecology this week announced strong performance results, and I am pleased at their success. They also hold attractive green-themed AGMs which usually have good attendances. But I would be even more pleased if the board proactively worked to attract more candidates than places in future board elections.
Incidentally, the small and dedicated (if sadly all too powerless) Building Societies Members Association is still going after more than thirty years of campaigning for some real member engagement in societies. They have recently been trying to help get independent candidates on to ballot papers, not an easy task. They deserve to be commended for their perseverance.
I was contacted last week by the PR person at the Ecology Building Society who told me that the Ecology now had accreditation under the Fair Tax Mark. I emailed back to ask if the Ecology, a small building society with all the financial regulatory regime it is required to abide by, could actually avoid paying its taxes even should it want to, Fair Tax Mark or not. I can’t somehow see the Ecology with its single office in the West Yorkshire town of Silsden opening up, say, a Channel Islands offshoot as once upon a time an ex-building society named Northern Rock chose to do.
My email response was a little unkind. The Ecology, set up by a group of activists at the time when it was just about possible (with a lot of hard work) to start a new building society from scratch, has gone on to do good things. And the Fair Tax Mark (very much a creation from within the cooperative movement) is a useful propaganda vehicle when so many companies appear to feel that UK Corporation Tax is a voluntary commitment that they may or may not decide to meet.
‘Positive investment’ is what Jamie Hartzell calls the sort of ethical investment he’s concerned with. As he points out, ‘ethical investment’ in its traditional sense (as for example in the ethical unit trusts on the market) often includes holdings in firms such as Vodafone, Nestle and BNP Paribas – not necessarily everyone’s idea of ethical business.
By contrast, he suggests that ‘positive investment’ means initiatives such as the Ecology Building Society, Charity Bank, the Ethical Property Company, Traidcraft and Triodos Renewables – in fact, the sort of investments which his new organisation Ethex (= Ethical Exchange) is designed to promote.
I have interviewed Jamie by phone several times over the years (he was the leading light behind the Ethical Property Co, and I wrote a piece on the share issue which his firm launched back in 2002), but hadn’t met him until yesterday. Ethex is, in a sense, the necessary next step, given the growth in alternative investing which Ethical Property (and before that fair trade firms such as Traidcraft) have helped develop. The difficulty with positive investing has always been what happens later on when the original investors want to (or have to) sell their shares. The lack of a straightforward secondary market in these investments has always been a significant problem.
Ethex (launched earlier this year) provides a rough-and-ready solution to this, by providing a mechanism to put sellers and buyers in touch with each other. But because the number of relevant share and bond investments is still small and the number of trades also low, Ethex has sensibly chosen a broader remit for itself. It is hoping to develop a comprehensive website where would-be investors can find advice and details of other appropriate savings and investment products, including such things as the Ecology Building Society and Bristol credit union savings accounts.
When I met Jamie he was carrying a copy of a new report from Ethex, Positive Investing in the United Kingdom, which among other things identifies ten ‘hotspots’ where positive investors can particularly be found. (Yes, it does include some of the places you’d expect to find in such a list, including, I’m pleased to see, my own home town). The report is being published next week, which apparently has been designated Ethical Investment Week (news to me). It’s worth a look.