MADISON, Wisc. (2/12/14)--A new study has concluded that credit unions still have room to improve when it comes to social responsibility and sustainable practices--and that they can potentially improve their bottom lines doing it.
The research, which was published Monday by the Filene Research Institute, compared nine credit unions to 15 "independently held, sustainably focused banks," and found that credit unions studied "have yet to make significant progress toward improving their measurable social and environmental performance."
Ryan Honeyman, a sustainability consultant and author of the report, scored both sets of financial institutions on governance, workers, community and environment. While credit unions had higher scores in the first two categories, their comparative weakness in the latter dragged down the overall score. The banks' total was 62.9, while credit unions' aggregate score was 62.
Honeyman said that the credit unions studied outperformed "sustainable banks" in certain "important categories," such as employees' salaries and recycling practices. "Nevertheless," he found, "there's room for improvement."
"Despite scores that outperform banks on numerous scales, sustainability-oriented credit unions can still improve on issues like writing environmental and social stewardship goals into policy, increasing support for child care and maternity/paternity leave, and incorporating sustainability goals into employee reviews," Honeyman wrote.
He concluded that improved sustainability practices can attract potential younger members and create loyalty. It could also create "innovative loan growth opportunities." So-called green loans, he said, "have been shown to be profitable; and can attract financially strong borrowers, spur membership growth, and lead to new growth in solidly performing loans on the balance sheet."
The nine credit unions that participated in the study had assets ranging from $80 million to $12 billion.
The report used the "B Impact Assessment" gauge, which measures social and environmental impacts of a business. The assessment takes into account governance, mission, structure, engagement, job flexibility, management communication, community engagement, and environment.