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Introduction to Credit Union Social Responsibility

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1 Introduction to Credit Union Social Responsibility
Venue & Date Introduction to Credit Union Social Responsibility Presenter

2 Introduction 1. What is CSR? 2. Why have a CSR strategy in place?
3. How to implement a CSR strategy? 4. Who is currently practicing CSR? 5. Where to go for more information? VERSION 1 (November 2010) Note to presenter: Please tailor these slides for your purposes. You may prefer a combination of handouts and slides for your presentation. Depending on the number of slides you use, your pace and number of questions or amount of discussion you entertain during the presentation, this presentation is expected to take about one hour, followed by a Q & A and discussion session. CSR refers to corporate social responsibility. Credit unions also refer to it as credit union social responsibility. This presentation provides a robust and comprehensive overview of CSR as it is increasingly practiced in the financial sector and companies around the world. As such, it is an A to Z framework to communicate the extent and breadth of CSR. Credit unions will find that many of their current activities fall under “CSR” and that building on this existing good practice can help generate business and community value for their members, the communities they serve and the credit union overall.

3 1. What is Corporate Social Responsibility?
This section will help you understand what Credit Union Social Responsibility (CSR) is, how it fits into the credit union system, and the core areas of CSR practice and CSR leadership.

4 History & Terminology Rooted in the evolution of commerce
Credit Union Social Responsibility notes the unique approach of credit unions Many terms in use, for example: Corporate social responsibility/Corporate responsibility Corporate citizenship Sustainability People, planet, profits Sustainable development Environmental, Social, Governance (ESG) (investor terminology) Triple bottom line The history of CSR is rooted in the emergence of commerce. Many companies adopted benevolent approaches to their communities and employees. The term Corporate Social Responsibility (CSR) has its origins the 1950s, and has come into increasing use since then. Originally CSR referred to philanthropy; today it is a management philosophy and business model. CSR is still an emergent business trend. As such, there are many terms used to describe this management approach / no consistent terminology. Many people use these terms interchangeably. The credit union system has adopted the term Credit Union Social Responsibility to recognize the inherent and evolving community involvement that is unique to the sector.

5 Definition CSR is: The balanced integration of social, environmental and economic factors in business decision making, including governance, strategy, and operations while taking stakeholder interests into account. In essence, Credit Union Social Responsibility is about managing a credit union’s social and environmental performance to reduce its negative and enhance its positive impacts. There is no one fixed definition of CSR Most definitions address the concept of integrating social and environmental factors in business Example of negative environmental impacts: installing an ATM drive-through which encourages members to idle their car engines while conducting business Example of negative social impacts: providing a loan to an adult entertainment business Example of positive environmental impact: creating incentives for members to conduct home eco-audits Example of positive social impacts: hiring people with employment barriers into work experience opportunities at your credit union

6 Sustainable Finance For financial institutions, CSR incorporates
social and environmental considerations into financial products and services (banking, insurance and asset management), and is often referred to as “sustainable finance.” This includes offering a lower interest rate for fuel efficient vehicles, or offering a product which channels some revenues to a local or international cause. A service could include providing lenders with the education to assist members in understanding sustainable building options such as solar panel installation.

7 CSR Practice Areas Governance, ethics and management systems
Environment Community involvement Employee relations Member (customer) relations Products and services Supplier and business partner relations There are 10 basic areas of CSR practice which most companies on a CSR path address over time. These are likely to evolve in the future as CSR is a dynamic process. For example, multiculturalism or stakeholder engagement might evolve to become stand-alone practice areas over time.

8 CSR Practices Continue
Human rights Aboriginal relations (where relevant) Communications

9 Stages of CSR Stage 1: Pre-CSR Stage 2: Basic Stage 3: Proactive
No consideration of environmental or social impacts or role Stage 2: Basic Takes an ad hoc approach to CSR; primarily focuses on philanthropy plus some basic environmental steps such as recycling. Stage 3: Proactive Invests in a few CSR initiatives where it can reduce costs, foster employee engagement and build brand. There are many variations of the “CSR Continuum” which reveal the different maturation stages and philosophies operating in the marketplace. All five stages reflect development, from pre-CSR to mission-driven CSR. Two factors distinguish basic and further stages of CSR: 1) the degree to which social and environmental goals and plans are developed and managed for optimal results; and 2) the degree to which social and environmental objectives influence the business model. The co-operative structure of credit unions positions them to achieve the “mission driven” stage because credit unions are not governed by quarterly performance considerations and their governance framework already incorporates a stakeholder ethic insofar as customers (members) make up the board of directors. This governance model allows for automatic consideration of financial (fiduciary), customer and community interests within the core business model. However, in spite of this inherent advantage, many credit unions operate at the basic level, primarily because they are not managing their social and environmental performance the way they do other areas of their business, with goals, plans and targets, and annual measuring, monitoring and reporting.

10 Stages of CSR Continue Stage 4: Integrated Stage 5: Mission-Driven
CSR is embedded across the organization through policies, procedures and practices; CSR goals are incorporated into business strategies. Stage 5: Mission-Driven The business purpose is to improve social and environmental conditions.

11 CSR Leadership 1. House in Order 2. Products and Services 3. Investments and Procurement 4. Stakeholder Engagement 5. Advocacy There are five organizational requirements for organizations seeking to be CSR leaders. These are based on current good practice found in most business sectors across Canada. Credit unions can choose to be leaders in one or more of these areas; however, overall CSR leadership necessitates strong performance in all these areas

12 CUCC Position Statement
Canadian Central’s Board of Directors adopted four principles to guide its work to help member Centrals and Canada’s credit unions to “build stronger, more sustainable communities”: Demonstrating co-operative and sustainable governance Promoting social inclusion and diversity Fostering economic development Encouraging environmental sustainability CC Position Statement The Board of Credit Union Central of Canada adopted a position statement on Credit Union Social Responsibility in September 2010. Among other things, the statement commits Credit Union Central of Canada to helping credit unions reach their CUSR goals by providing tools, templates and expert advice. Find more details at

13 International Co-operative Principles
Concern for Community “Co-operatives work for the sustainable development of their communities through policies approved by their members.” Credit unions are also guided by the seven international co-operative principles, which govern all co-operatives, including credit unions. The 7th principle, “Concern for Community”, specifically addresses sustainable development. Sustainable development is another CSR term which means “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

14 International Standards for CSR
International Organization For Standardization (ISO) adopted CSR guidelines in 2010 Referred to as ISO 26000: “Guidance on Social Responsibility” Seven ISO principles of social responsibility: 1. Accountability 2. Transparency 3. Ethical behaviour 4. Respect for stakeholder interests 5. Respect for the rule of law 6. Respect for international norms of behaviour 7. Respect for human rights

15 Summary No single term or standard definition for CSR
Credit Union Social Responsibility is about managing your social and environmental performance to reduce your negative and enhance your positive impacts Aligned with CUCC and international co-operative principles

16 Summary Continue A natural fit for Canadian credit unions
It is important to understand the scope of CSR to make an informed business decision regarding focus and strategic priorities

17 2. Why have a CSR Strategy? CSR is becoming mainstream amongst companies. Some financial institutions refer to their role in CSR as “sustainable finance”. This section provides an overview of the drivers, trends and business case for CSR and Sustainable Finance to answer the question: “Why should we manage our CSR performance?”

18 Drivers of CSR Trends Campaigning NGOs (non-governmental organizations) Rise in government and regulatory standards Investors seeking improved ESG performance Globalization of corporations Instant worldwide communications Supply chains and increasing CSR demands of purchasers Niche innovating sectors Rising customer and employee expectations Growing resource scarcity Rising poverty levels Corporate scandals Trade associations Growing awareness of the business case There are a number of drivers of CSR impacting its growth in Canada and around the world. Each of these drivers will have a bearing on how CSR evolves in the financial sector in the coming years. A few examples include: Campaigning NGOs: many environmental organizations are campaigning to have global banks adopt CSR programs to manage the impacts they have in the supply chain; this has resulted in the World Bank requiring banks providing project finance to satisfy a stringent set of social and environmental conditions; this has resulted in banks applying these standards (the Equator Principles) across other areas of their business. The federal government requires the banks to produce annual Public Accountability Statements; this has resulted in the banks developing increasingly comprehensive CSR and sustainability reports on their financial performance. Active shareholder investors such as Ethical Funds are engaging banks to improve their social and environmental performance. Trade associations, such as CUCC, are providing information and education and adopting standards and principles to help move their industry along the CSR path. Credit unions report that drivers for adopting CSR strategies include: External stakeholder expectations and demands Internal staff champions Altruism Return to roots and founding mission Need for focus and differentiation The business case

19 CSR Trends Companies are: Adopting CSR commitments and policies
Taking a catalytic role within their spheres of influence Implementing 3 – 5 year CSR strategies Disclosing their CSR performance in CSR reports Creating board CSR committees Assigning accountability to a senior staff person reporting to a CEO Supporting internal CSR or green teams and training staff on CSR Incorporating CSR into their performance management systems Offering CSR oriented products and services Perceiving CSR as a risk management and business strategy issue Key priorities are often climate change and poverty/social inclusion Redesigning community programs to be more “strategic” Consulting stakeholders in developing CSR strategies amongst financial institutions. These trends are supplemented by 2010 research commissioned by The Co-operators on best practice in corporate sustainability which looked at 17 companies, most of which are financial institutions, insurance companies and co-operatives.

20 International FI Network
Nearly 200 financial institutions (banks, insurers and fund managers) from around the world are signatories to the United Nations Statement by Financial Institutions on the Environment & Sustainable Development. Committing to make the economy and lifestyles sustainable and integrate environmental considerations in their operations. Network is a resource to financial institutions to help them improve their CSR performance. Includes the five major Canadian banks, Desjardins and The Co-operators. The foregoing trends and drivers are further advanced by international sector networks which have evolved over the past decade, such as this one. A global network under the auspices of the United Nations supports financial institutions to improve their CSR performance.

21 CSR Product Array Social Products Green Products
Financing for affordable housing Products tailored to Aboriginal and other underserved groups Micro-credit financing for community economic development Term deposits that finance community development Green Products Green mortgages and home improvement loans Green car loans Green credit cards Term deposits that finance environmental initiatives Green car and home insurance Emergent social and green products and services offered by financial institutions around the world.

22 CSR Product Array Continue
Green Products Continue Financing for environmental businesses and eco-advice services Business loans for eco-efficiency retrofits, fuel efficient fleets, etc. Socially responsible investments

23 CSR Business Case Top-line benefits: Generating Growth Opportunities
Attract and retain customers Improve employee morale and productivity Enhance and maintain competitive advantage Foster innovation and opportunity creation, including new business lines and new products and services Build and sustain positive brand and reputation Build and sustain social license to operate Improve access to capital There are a number of demonstrated top-line and bottom-line benefits of implementing an effective CSR strategy experienced by companies around the world. As they relate to credit unions, these benefits are introduced, described and quantified with examples in the Business Case for CSR tool found at: The business benefits described in the tool are credit union specific, identified through research and credit union interviews. Many credit unions adopt a CSR strategy because they believe this is good business and a core credit union value; therefore they do not measure and track the financial and business benefits; thus there is limited tangible evidence of the CSR business case amongst credit unions.

24 CSR Business Case Continue
Bottom-line benefits: enhancing operational efficiency Avoid and reduce operating costs Improve recruitment and retention of talented employees Manage risk Forestall further government regulation Improve management quality Enhance supply chain management See the Business Case for Credit Union Social Responsibility tool at for definitions and examples.

25 Competitor Scan CSR management systems:
Banks are designating lead staff and departments to be responsible for CSR strategy and implementation They are implementing comprehensive CSR strategies They are reporting on their CSR performance They are becoming more strategic in their community investments and developing environmental action plans to reduce their environmental footprints A review of the 2009 CSR reports of BMO, CIBC, RBC, Scotiabank and TD Bank Financial Group provides insight into their CSR priorities. This summary is not comprehensive because it only summarizes efforts included in their 2009 CSR reports – not necessarily the full suite of current CSR efforts. However, it reveals that banks are setting goals and targets in CSR areas and monitoring and reporting on their CSR performance. Banks may threaten a key competitive advantage of credit unions as they improve their management of CSR.

26 Competitor Scan Continue
Community and social priorities include: Financial literacy projects Multicultural and Aboriginal banking Accessibility of banking services to people with disabilities Environmental priorities include: Implementing environmental policies and strategies; designating key staff with environmental responsibilities Building or renovating green buildings / branches Reducing energy use and GHG emissions and sourcing renewable energy Reducing paper

27 Competitor Scan Continue
“Blended” priorities include: Providing environmental grants to community groups Implementing sustainable purchasing Offering Socially Responsible Investment (SRI) products These initiatives generate both social and environmental benefits

28 Summary CSR is becoming mainstream amongst most sectors, including financial institutions. CSR oriented companies are implementing CSR strategies and integrating CSR into operations. Canadian banks are implementing well thought CSR strategies.

29 Summary Continue A CSR strategy can generate business benefits, though this is not the only rationale for adopting CSR: some do it because it is a core credit union value. Reasons for managing CSR performance include: Core credit union value Maintain competitive advantage Generate business benefits

30 3. How To Implement a CSR strategy?
Credit unions already have good CSR practices underway; a managed CSR approach requires thinking strategically about goals and targets and the engagement of stakeholders in that exercise. This section will review a step-wise approach to the development and implementation of a CSR strategy and management system.

31 CSR Strategy Development
Phase One: Commitment and Gap Analysis Define CSR and agree on the business case and rationale. Adopt and communicate CSR vision and policy. Assess baseline (e.g. existing programs) and current practices. Research best practices and understand stakeholder priorities and key sustainability impacts and risks. Conduct gap and opportunity analysis. Many of these management steps are employed daily by credit unions as part of good management practice. For example, in step 3 conducting a baseline assessment, many credit unions will find that they are not starting from scratch – they have many good programs underway they can build upon. Credit Union Central of Canada has developed tools to help credit unions with steps 1 (business case) and 2 (vision statement and policy).

32 CSR Strategy Development Continue
Phase Two: Develop Strategy Develop long-term CSR vision (10 years). Develop medium-term CSR goals and targets (3 – 5 years) and one year business plan. 3. Develop key performance indicators to measure progress. A long term vision might be ‘to become a leading catalyst for sustainability in the communities we serve’. Goals could include understanding and reducing our environmental footprint, engaging employees to become CSR champions at work, or developing partnerships to help our business members and suppliers improve their CSR performance. A target could be to become carbon neutral across our operations.

33 CSR Strategy Development Continue
Phase Three: Implement, Measure and Report Assign responsibilities and resources. Establish steering committee to monitor implementation. Integrate into performance systems and training. Regularly review performance. Communicate progress on performance. Step 3, Performance Systems and Training: a critical success factor for CSR is to ensure staff are trained and compensated for achieving CSR goals, especially at the CEO and management level. It is often presumed that developing and implementing a CSR strategy will increase the credit union’s expenses. It may or may not. Costs can be incurred, or avoided at both stages: Development costs: Some credit unions hire an expert consultant to help develop their strategy. Others do not. Implementation costs: A CSR strategy focused on improving existing community investment initiatives may only result in reallocations. Initiatives like increasing energy efficiency may be cost neutral or cost positive in the long run. Costs will built into your one year business plan and considered on a cost/benefit basis like any other initiative.

34 Common Practice Areas Community (Aboriginal business, accessibility, financial literacy, community economic development) Employees (Diversity management, work life balance, healthy lifestyles) Environment (Energy, GHG emissions, green buildings, waste, water and paper) Suppliers (Sustainable purchasing) Products (see earlier slide) CSR management and reporting systems Financial institutions generally focus on these six “basic” CSR practice areas. In addition to this list of common practice areas, credit unions also often focus on member education and engagement.

35 Role of The Board of Directors
Approve CSR mission, vision, values Adopt CSR strategy and provide oversight over implementation Monitor CSR policy compliance and integration Integrate CSR into CEO performance plan and recruitment Consider CSR trends that impact the credit union and integrate into enterprise risk management Monitor stakeholder relations Foster board diversity (gender, age, ethnicity, etc.) Provide CSR orientation and education for directors Provide Input into CSR reporting Assess board CSR competency The board of directors “sets the tone at the top” and has a key role to play in CSR governance and overall CSR success.

36 Summary To develop a CSR strategy the credit union must answer four questions: Where are we now? Where do we want to be in the future? How do we get there? How do we measure progress? The Board of Directors has an important governance role to play to foster CSR success The development of a CSR strategy and management system is an iterative, flexible process of continuous improvement: The credit union’s ability to implement CSR evolves over time. There is no one-size fits all approach. The progress requires an iterative and ongoing process.

37 4. Who is currently implementing a CSR strategy?
A number of Canadian credit unions are developing and implementing CSR strategies to manage their social and environmental performance and achieve beneficial results for their business, members and the community. Four of them are profiled here. More detail is available from the Credit Union Central of Canada’s Credit Union Social Responsibility InfoHub.

38 Not Just Big Credit Unions
iNova Credit Union (Halifax, NS) Asset Size -$25 million (2009) Sydney Credit Union (Sydney, NS) Asset Size -$100 million (2009) Bergengren Credit Union (Antigonish, NS) Asset Size - $177 million (2009) The four case studies deal with credit unions between $830 million and $14.4 billion in asset size. But it’s not just the largest credit unions who are managing their CSR strategies. Some smaller and medium sized credit unions have also taken big steps by taking a strategic CSR / sustainability approach.

39 Alterna Savings and Credit Union
CSR definition: “An organization’s commitment to operate in an economically, socially, and environmentally sustainable manner, while recognizing the interests of its stakeholders, including members, employees, business partners, local communities, the environment and society at large”. Board of Directors and Member Relations Committee has overall responsibility for the CSR strategy and policy, oversees the CSR report (accountability report), and monitors stakeholder relations Board sets CEO’s CSR goals and ensures board is educated on CSR. CSR is responsibility of SVP of Marketing, Communications and CSR. Alterna Savings and Credit Union is based in Ottawa, Ontario $2 billion in assets (2009)

40 Alterna Savings and Credit Union Continue
Implementing a 5-year CSR strategy adopted in 2007, which set goals and targets for community economic development, financial literacy, environmental sustainability, accountability and philanthropy. Environmental sustainability committee of employees assesses environmental impacts, and develops and monitors implementation of environmental initiatives. A key CSR performance indicator is member satisfaction with the credit union’s CSR efforts. Provides an “ethical” screen to its investments, partners and suppliers, based on Ethical Funds’ screening program.

41 Assiniboine Credit Union
Credit Union Mission: “Our purpose as a socially responsible and profitable financial co-operative is to provide accessible financial services for the well-being of our members, employees and community; offer fair and meaningful employment in a safe and respectful workplace; and build partnerships that foster self-reliant, sustainable communities.” 5-year corporate strategic plan includes visioning goal of Making a Difference in Our Community: “When we reach our vision we are positive agents of change and CSR is integrated into everything we do.” Key Performance Indicators measure progress towards achieving vision CSR strategies to achieve visioning goal and long-term targets: expand services to the underserved; invest strategically in the community, model and facilitate a commitment to environmental sustainability, and integrate CSR and the Co-operative Principles throughout ACU Assiniboine Credit Union is based in Winnipeg, Manitoba $2.6 billion in assets (2009)

42 Assiniboine Credit Union Continue
Annual Balanced Scorecard approved by Board includes a CSR component to measure progress in moving forward on CSR strategy. Balances Scorecard results account for 50% weighting on individual performance plans for executive management team. Board governs CSR through mission, values, corporate strategic plan, annual Balanced Scorecard, and governing policies. Community & Member Relations Committee oversees stakeholder relations with members and community; including governing policies e.g. Community Investment Policy, Member Engagement Policy

43 Assiniboine Credit Union Continue
HR Policy & Compensation Committee oversees stakeholder relations with employees, including governing policies e.g. Employment Principles, Compensation Philosophy. CSR is responsibility of VP Corporate Social Responsibility who reports to CEO. A small team of CSR subject matter experts supports the roll-out, coordination and integration of CSR efforts. New Eco-Excellence Team will develop integrated action plans to continuously improve environmental performance.

44 Northern Savings Credit Union
Sustainability vision: ”Strong, resilient, Northwest BC communities and credit union, excellent financial services and enhanced quality of life for members, and recognized by our employees to be a great place to work.” One of five values is: Positively impacting the communities we serve. Six principles guide the credit union to build strong, resilient and sustainable communities. Seven long-term business goals include three focused on sustainability and community reinvestment: Strong, resilient communities Enhanced community reputation and increased profile as a community leader and champion Northern Savings Credit Union is based in Prince Rupert, BC $830 million in assets (2009)

45 Northern Savings Credit Union Continue
Stakeholder awareness and understanding of and support for Community Reinvestment Strategy Board of Directors has a Donations and Community Reinvestment Committee which provides oversight over implementation of sustainability strategy (referred to as the Community Reinvestment Initiative). Manager of Community Reinvestment reports to the HR VP Sustainability is incorporated into job descriptions. Team of ‘Sustainability Champions’ provides support to implementation and manages sustainability projects.

46 Vancity Credit Union Credit Union Vision: “Redefining Wealth in a way that both grows our business and supports our members and communities in a reciprocal fashion. This new definition of wealth goes beyond profit alone to one that includes social justice, environmental sustainability, and community well-being. It’s a definition that goes beyond the trade-offs assumed in a triple-bottom-line approach to one that creates true blended value.” Three year strategic business goals include one focused on: Build Our Social Finance Offer – provide access to credit, investment and financial advice for members and agencies engaged in businesses that create social or environmental benefit as well as economic benefit. “Community Investment” Division is focused on increasing their Social Finance business, an entrepreneurial and risk-based discipline of investment in enterprises – business, not-for-profit, and co-operative. Vancity Credit Union is based in Vancouver, British Columbia $14.4 billion in assets (2009)

47 Vancity Credit Union Continue
The Community Investment Division includes Vancity’s Sustainability Group (focused on reducing the credit union’s environmental footprint) as well as its business banking and commercial real estate groups to capitalize on synergies with existing business and new community investment / social finance initiatives Community Investment Committee of the Board provides strategic oversight over Social Finance strategy CSR is decentralized and embedded into other departments, including finance, facilities, marketing and branch operations Currently working on the development of a community impact metric to measure success

48 5. Where to go for more information on Credit Union Social Responsibility?
The Canadian credit union and co-operative sector provide CSR resources through the two trade associations: Credit Union Central of Canada and the Canadian Cooperative Association.

49 Canadian Central and CCA
Credit Union Central of Canada’s “Credit Union Social Responsibility InfoHub” at Canadian Co-operative Association’s Environmental Toolkit Credit Union Central of Canada’s Credit Union Social Responsibility InfoHub is a showcase, book shelf an even workspace for credit union social responsibility. The site at contains: The Roadmap for Credit Union Social Responsibility – a guide for credit unions preparing their CSR plans, developed by system experts. Ready-to-use tools and templates to help credit unions take next steps. A discussion forum for sharing ideas and questions with credit union staff and system experts; as well as Success stories of innovative products and projects Canadian credit unions have undertaken to meet their CSR goals. The Canadian Co-operative Association (CCA) provides co-operatives and credit unions information, resources, and tools specific to co-operatives and environmental sustainability CCA has also created an ad-hoc Environmental Sustainability Committee to advise CCA's board and staff on issues and policies related to the environment. Current resources include: Environmental Casebook Profiles, case studies of a number of co-operatives and credit unions in different sectors, serving different communities throughout Canada. Each profile provides a snapshot of the organization and its environmental policies and practices; accountability and reporting; lessons learned and plans going forward     Sustainability Toolkit, an on-line resource providing guidance and assistance to co-ops and credit unions on how they can embed environmental sustainability strategy development; measurement; monitoring, and reporting within their organization

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