Credit Union Social Responsibility: a Road Map for the Development of a Sustainability Strategy Jointly with the Filene Research Institute

i ACKNOWLEDGMENTS The author acknowledges the support of participating credit unions in helping to inform this guide. Their observations were insightful and their commitments inspiring. Credit Union Central of Canada (Canadian Central) also deserves recognition for perceiving the significance of this trend to Canadian credit unions. Finally, the author would like to thank her colleagues at Vancity Credit Union and the credit unions she has worked with over the years on sustainability strategy, as this experience has helped create the pioneering Road Map to move the credit union system toward greater economic, social, and environmental sustainability. ii TABLE OF CONTENTS Executive Summary and Commentary iv About the Author vii About This Guide viii CHAPTER 1 Introduction and Context 1 CHAPTER 2 Sustainable Finance Trends and Drivers 14 CHAPTER 3 Sustainability Strategy 32 CHAPTER 4 The Future of Sustainable Finance 64 APPENDIX Case Studies 68 Resources 107 Endnotes 109 EXECUTIVE SUMMARY AND COMMENTARY By Brigitte Goulard om‘s not a runner. Don‘t get me wrong, he looked like one. In his bright Vice President, Policy new athletic shoes, brand-name sunglasses, and race day shirt and bib, he T fit in with the crowd. But somewhere between the nine kilometre mark and the start of a shooting pain originating from the third toe of his right foot and his almost complete loss of forward momentum, the conclusion was unavoidable. My friend had casually signed up for his first half marathon confident that he was more fit than most men his age. That was true. But as race day approached, he hadn‘t trained or changed much about his routine at all. The pain in his foot and his shortness of breath served as evidence of this. His mistake was that while Tom looked and felt like a runner, he had never started thinking like one. Tom‘s story isn‘t just for middle-aged golfers with an occasional weakness for steak sandwiches; there‘s also something in it for credit unions who are taking a critical eye to how they approach their community involvement and social responsibility. From the beginning, long before anyone would stitch the phrase ―corporate social responsibility‖ together to describe the deliberate inclusion of community concerns in business decision making, credit unions have been inspired to achieve what Alphonse Desjardins called ―the expression in the field of economics of a high social ideal.‖ Over the last century, individual credit unions have developed an impressive array of programs and community investments, resulting in increased financial literacy among school kids, more banking services for inner-city residents, micro- finance for small entrepreneurs, low-cost financing for affordable housing, and more environmentally sustainable branches. But while credit unions long ago embraced social responsibility as an essential part of what they do, fewer have made it a core part of their strategic vision and business plan. However, this is changing. In Canada and internationally, more and more credit unions are beginning to take steps towards more mission-driven social responsibility. They are communicating their intentions, making staff responsible for championing them, setting goals, and assessing and improving their performance. They are still doing the right thing, but they are being much more deliberate about it. Just like in Tom‘s case, the key is to take the steps necessary to transform a subconscious belief into intentional outcomes. iv WHAT’S THE BIG IDEA? Increasingly, credit union social responsibility is less about changing what we do, and more about changing how we think. Once we decide to think strategically about financial literacy, for example, we can begin to measure the reach and effectiveness of our financial literacy programs and strive to improve outcomes for our members, employees and broader community stakeholders. But implicit in this is agreeing that social responsibility will be a core mission of the credit union; which also means setting goals, assigning resources and measuring performance, just as we do with revenues or return on investment. That‘s the idea behind the approach that Coro Strandberg explains in this Road Map. Drawing extensively on interviews with credit union system experts in Canada, the United States and Australia, Strandberg has collected a multitude of practical examples and concluded with ten case studies of leading credit unions who are successfully managing their social responsibility strategies. WHAT’S IN THIS FOR CREDIT UNIONS? The corporate social responsibility (CSR) mega-trend continues to rapidly transform the way businesses operate, driven in large measure by the changing expectations of Canadians. A recent survey found that the share of those who strongly agree that doing the basics - being profitable, paying taxes and providing jobs - is enough to be considered ―socially responsible‖ has not grown in the past decade. Meanwhile the share that says corporations need to be more accountable, ethical and responsible has grown greatly in the past five years.1 Another found that nearly 80 per cent of those under 35 years of age said they would likely switch to the competitor of a company they had a negative impression of – a far greater share than Canadians overall.2 Credit unions are starting from an advantaged position. Returning profits to the communities we serve through social responsibility initiatives is considered a core-competency and point of differentiation for credit unions. Enhancing this advantage is crucial. This means keeping pace with the changing expectations of Canadians, along with our traditional stakeholders: members, employees, and our communities. The credit unions who are doing this have responded by further engraining CSR principles and practices into their operations. The best practices of this approach are outlined in the Road Map. v Part of Strandberg‘s methodology is a five-stage corporate social responsibility (CSR) continuum based on the approach and practices of credit unions, from ―Pre-CSR‖ to the final stage of ―Mission-driven CSR.‖ Credit union boards and managers can decide where they want to situate themselves on this continuum. The Road Map provides a 10-step approach credit unions can borrow from, either in whole or in part, that will take them from the early preparation stage to identifying opportunities that will improve CSR performance so that your every next step is towards the finish line. Canadian Central is especially pleased to publish the Credit Union Social Responsibility: A Road Map for the Development of a Sustainability Strategy jointly with the Filene Research Institute. The Filene Research Institute (Filene) is an independent United States-based think-tank dedicated to innovative research and scientific analysis about emerging issues vital to the future of credit unions and consumer finance. Much of the research being produced by Filene has direct applicability for Canadian credit unions. Originally produced by Filene in 2009, the Road Map is a perfect example of how credit unions on both sides of the border are confronting similar challenges. We would like to thank Mark Meyer and the staff at Filene for their help through this cross-border collaboration, as well as to Coro Strandberg for conducting additional research for this version. For more information about Filene, visit www.filene.org. Figure 1: Corporate Social Responsibility Curve Values-based Growth platform self-regulation Strategic Efficiency philanthropy Legal and compliance Incorporates the Access to new company’s value markets, new Alignment of system and/or code of Measurable cost partnerships, or charitable activities conduct to guide savings through product/service efficient or win-win Adherence to law in with social issues that business behavior innovations that scenarios the countries of support business generate revenue production, operation objectives and distribution Source: IBM Institute for Business Value (www-935.ibm.com/services/us/gbs/pdf/gbe03019-usen-02.pdf vi ABOUT THE AUTHOR CORO STRANDBERG Coro Strandberg is the principal of Strandberg Consulting, which provides strategic, facilitation, and coaching services to businesses seeking to integrate social and environmental factors into their governance, strategy, and operations. She is a past director and chair of Vancity Credit Union in British Columbia where she was instrumental in helping to position the credit union as a leader in corporate social responsibility. Coro has provided training on corporate social responsibility to credit union managers and directors and has helped more than a dozen credit unions develop corporate social responsibility and sustainability strategies. She is a global thought leader in the areas of sustainable governance; sustainable purchasing; sustainable human resource management; and sustainable finance, insurance, and asset management. Prior to her consultancy, Coro was the director of social policy for the Government of British Columbia, and prior to that she was the social planner for the city of Surrey, one of the fastest-growing municipalities in Canada. vii ABOUT THIS GUIDE his is a guide for credit union executives, staff, and board members who are interested in the opportunity of generating business and community T value through the development and implementation of a corporate social responsibility (CSR) or sustainability strategy. The guide provides a general overview of CSR and sustainability as they relate to the retail financial services sector, trends,

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