Unless you've been living in some sort of quasi- dream state for the past few years, you've inevitably heard of people, companies, cities, and even countries "going green."
Today, politicians are trumpeting their plans for creating "green-collar jobs;" San Francisco and China are banning the use of plastic shopping bags; universities are minting "green MBAs"; and companies as disparate as ExxonMobil and Nike trumpet their "green initiatives."
This greening trend is large, important, and emerging as a significant shift in thinking about our business, civic, and personal lives.
But according to a Filene Research Institute study authored by Cornell professor Stuart Hart, going green is a small part of the opportunity.
Moving Beyond Greening
By moving beyond greening, credit unions can not only address mounting social and environmental concerns, but also build the foundation for innovation and growth in the coming decades. In so doing, CUs could outperform and differentiate themselves from their competitors in today's business, and outrun them in tomorrow's technologies and markets.
Don't think for a minute it is only the academic world that thinks these trends are game-changers. The highly regarded consultancy McKinsey & Co., states, "...companies have significant opportunities to differentiate themselves and to increase shareholder value by acting responsibly to improve their reputations and by providing products and services that address consumers' concerns."
Additionally, Lehman Brothers, in a recent study titled "The Business of Climate Change", insists, "The firms that will prosper in a climate-changed world will tend to be those that are early to recognize its importance and its inexorability; foresee at least some of the implications for their industry; and take appropriate steps well in advance."
Hart's research concludes very few credit unions, or banks for that matter, have taken the appropriate steps to ride this trend. So, what does it mean to go beyond greening and what does it look like? Going beyond greening explicitly recognizes that not only environmental, but also social, enonomic and ethical factors directly affect business strategy.
For a glimpse of what this sustainable business strategy looks like I invite you to read Hart's study (see info at the end of this article for a link to download the study, free) which highlights the activities and experiences of the pioneers in 'sustainable finance.'
An organization that provides the clearest picture of what a sustainable financial institution looks like is the Co-operative Bank in Manchester, England. A close cousin to U.S. credit unions this bank faced many of the challenges credit unions face: slow growth, smaller scale than competition, no clear differentiating factor and low public awareness.
To counter-act these disadvantages the Co-operative Bank in the late 1980s and early 1990s embarked on a strategy to become the "Ethical Bank."
To accomplish this goal it followed the framework established in Hart's research. (see info at the end of this article for link to download a detailed case study of the Cooperative Bank, free) and also employs several unconventional tactics, such as refusing business with firms that conflict with their customer-driven ethical policy.
Doing business with firms that needlessly pollute the environment, engage in animal testing or armaments production are strictly off-limits. Perhaps most dramatic is the manner in which the Cooperative Bank communicates its strategy through dramatic imagery and shocking connections most consumers don't make when thinking about banking. They started a conversation all across the UK (and now the world) about what happens to your money on deposit in a financial institution.
One (of many) particularly stark TV advertisement employs a storyboard of black and white images with the following:
These are the trees [picture of beautiful trees]
The Wilkinson's planted [video of middle class family]
With interest accrued on their savings [video of money]
Which their bank had lent [video of large national bank]
To a chemical giant [video of huge industrial factory]
That ceaselessly spews [video of pipeline spewing black sludge]
Toxic Waste [video of animals in rotten water]
The Cooperative Bank's ethical policy prohibits investing their customer's hard earned savings in such unethical business; something the bank's larger competitors cannot claim. Additionally, the Cooperative Bank employs an independent audit firm and a publicly available "Sustainability Report" to confirm they do what they say they are going to do.
This ethical policy, which is constantly updated (see www.goodwithmoney.com), is the crux of its organizational strategy.
And boy, has it paid off! In addition to being able to claim that they've turned away £700 Million (or about $1.4 Billion) in business that conflicts with their ethical policy; the organization has managed to quadruple in size since the early 1990s while remaining profitable, increasing consumer awareness and satisfaction.
U.S. credit unions can take a similar tack and integrate sustainability into their strategy by taking a stand, and offering services, related to environmental, social, economic and ethical issues.
NCUF's REAL Solutions
For a glimpse of what one of these tactics looks like today, simply review the work of the National Credit Union Foundation's REAL Solutions project and its effort to include underserved communities into the credit union community.
What is largely missing from the conversation is a discussion of how credit unions can own the financial institution mantel on ethical, environmental and social issues.
Given the relative scale of most credit unions, it is questionable whether the system or individual credit unions can compete on the traditional elements of convenience or price. Most credit unions hang their hat on service or, they could, in the immortal words of Monty Python, try something completely different.
Based on the research and case studies quoted in this article, I vote for sustainability as the strategy of the future. Where do you stand?
For more info, you can download a free copy of Filene Research Institute's report Back to the Future: Integrating Sustainability into Credit Union Strategy at www.filene.org.
To download a free copy of the Cooperative Bank case study, go to www.co-operativebankcasestudy.org.uk/download.asp
George A. Hofheimer is chief research officer at the Filene Research Institute. For info: www.filene.org.
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