3 Cheers For Co-Operative Insurance Society


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Sarbanes Oxley : Governance : Back Office

3 Cheers For Co-Operative Insurance Society

David Anderson
Chief Executive
Co-operative Financial Services

Following extensive consultation with its five million policyholders, Co-operative Insurance Society (CIS) has became the first insurance company in the world to launch an Ethical Engagement Policy that will act as its touchstone for all future shareholder activism and campaigning.

Customers have given CIS an overwhelming mandate to engage with companies on a broad and challenging ethical agenda that they would expect businesses to address. CIS, which has funds under management of more than GBP20 billion, will lobby business at every opportunity to improve their ethical and environmental performance, whilst those companies that pro-actively adopt commendable initiatives will be publicly applauded.

Launching the CIS Ethical Engagement Policy, David Anderson, the newly appointed Chief Executive of Co-operative Financial Services (CFS), said: "This is a case of ethics in action. Like The Co-operative Bank, CIS now has an ethical mandate from its customers. "For the first time and in the best traditions of a co-operative, individual policyholders have had their say, so there is now a direct link between an individual customer and the engagement policy of a major institutional investor.

"From now on we will make our customers' views known at annual general meetings and other engagement opportunities and we will use our position as a major shareholder to put pressure on companies in order to bring about change where necessary. "I am confident that this will contribute to new standards being set in socially responsible investment which other institutional investors will increasingly wish to follow."

The new policy, which had the backing of 98 per cent of customers who responded to a detailed questionnaire, will guide CIS on such issues as human rights, the arms trade, environmental impact, labour standards, animal welfare and corporate governance.

CIS is already firmly established as one of the pioneers of responsible shareholding in the UK. Last month it opposed the re-election of Exxon Mobil's Chief Executive Lee Raymond on ethical grounds.

CIS, which holds $25m worth of Exxon Mobil shares, did not support Raymond's re-election because of the company's attempts to talk down the links between man-made carbon dioxide emissions and climate change, and the pressing need for drastic action.

CIS also pointed out that under Raymond, Exxon Mobil has argued vociferously against the Kyoto Protocol and has lobbied against the US Government not to sign the international treaty. The CIS Ethical Engagement Policy This is the Ethical Engagement Policy of Co-operative Insurance Society (CIS). It is based on extensive customer consultation and directs how CIS will seek to influence the social, ethical and environmental impacts of its investments.

It reflects customers' wish for CIS to encourage the adoption of the highest standards of Corporate Governance in the companies in which it invests. It also informs CIS' choice of partners and suppliers.

Human Rights & Armaments CIS supports the principles of the Universal Declaration of Human Rights and will challenge organisations that:
? undermine basic, universal human rights, e.g. tolerate unfair discrimination;

? support, or benefit from, governments that oppress human rights;

? manufacture or transfer armaments to oppressive regimes;

? manufacture torture equipment or other equipment that is used in the violation of human rights.Trade & Labour Rights CIS will seek to:

? protect workers from exploitation, e.g. oppose child labour;

? support poverty reduction, e.g. encourage the adoption of Fairtrade or ethical trading principles;

? advocate an end to trade which fuels conflict or undermines human rights, e.g. displaces people from their lands;

? encourage the promotion of co-operative enterprises.Consumer Protection CIS will promote:

? responsible marketing practices, e.g. with regard to marketing to children, the marketing of tobacco products and of breast-milk substitutes;

? the health and safety and labelling of products, e.g. genetically modified foods.

Social Inclusion CIS will promote greater access to:
? health services and basic medicines;

? basic financial needs;

? education;

? basic necessities, e.g. water.

Genetic Modification CIS will challenge businesses involved in the application of genetically modified organisms (GMOs) which:
? damage the environment, e.g. through the uncontrolled release of GMOs;

? compromise human health, e.g. through a failure to account for significant risks.

Environmental Sustainability CIS will encourage businesses to reduce pollution and their environmental impact, and in particular:
? reduce reliance on fossil fuels - which contribute to climate change

? and increase their use of renewable energies and energy efficiency;

? end the production of chemicals that nature cannot easily breakdown and which build up and contaminate plants and animals;

? end the exploitation of nature - which results in the loss of plants and animals and their surroundings

? and consider more sustainable natural products and services.

Animal Welfare CIS will encourage:
? a move away from intensive animal farming systems, e.g. battery cages;

? an end to the reliance on animal testing for cosmetic or household products;

? support for the development of alternatives to animal testing;

? an end to the trade in fur;

? an end to blood sports, which involve the use of animals or birds to catch, fight or kill each other.

Corporate Governance CIS will challenge companies to:
? adopt and implement all appropriate codes of best practice, e.g. the Combined Code of Corporate Governance;

? avoid excessive pay to directors and rewards for failure;

? have strong safeguards against fraud, bribery and corruption.Customer Consultation

? CIS will regularly reappraise customers' views on these and other issues and develop its Ethical Engagement Policy accordingly.

? From time to time, CIS will seek to represent customers' views on the issues contained within this Policy, through, for example, its campaigning activities.

? On occasion, CIS may take a stance on issues not included within this Policy.

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