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Interfaith Investors to Score Banks

November 6th, 2012

The Interfaith Center on Corporate Responsibility, an influential investor coalition, will issue scorecards for the seven largest US banks next year, based on factors such as risk management and executive compensation.

The coalition has been influential in the field of corporate governance, pushing on issues such as “say on pay”, an advisory shareholder vote on executive compensation, which was included in the Dodd-Frank financial reform act.

ICCR has sent questionnaires to the seven largest US banks: Bank of America Merrill Lynch, Bank of New York Mellon, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo. Sustainalytics, a provider of environmental social governance research, is partnering on the research.

Reverend Séamus Finn of the Missionary Oblates of Mary Immaculate said in the organisation’s annual report: “What is frustrating for many of us is the knowledge that the vast majority of these problems can be avoided by adopting the appropriate risk management safeguards and the requisite checks and balances. With each new scandal we think ‘maybe this time they will get it’, and then we open the morning paper to see that we still have work to do.”

Next year, the interfaith group will issue a scorecard and an analysis of the banks’ performance in risk management, investment and lending practices, executive compensation and lobbying/political contributions.

A spokeswoman said responses from six banks have been received with the seventh due this week. The data will be reviewed by Sustainalytics and ICCR, with the full report due in late January or early February next year.

Sister Patricia Daly, executive director of the Tri-State Coalition for Responsible Investment, an ICCR member, said there is a need to understand where the banks stand, both independently and relative to one another.

Sister Barbara Aires of the Sisters of Charity of Saint Elizabeth NJ, another ICCR member, said: “For good reason, we continue to be very concerned with the way some financial products, like derivatives, are collateralised. But there are additional practices such as high frequency trading and anonymous trading in dark pools that we are only now hearing about.”

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