Economy

"Our human destiny is inextricably linked to the actions of all other living things. Respecting this principle is the fundamental challenge in changing the nature of business."
- Paul Hawken, The Ecology of Commerce

 

A SUSTAINABLE ECONOMY
- = Sustainable Economy Initiatives = -

VANCITY SAVINGS CREDIT UNION

VanCity Savings is Canada’s largest credit union,
committed to a triple bottom line that includes social and environmental responsibility.

Origins
Vancouver City Savings Credit Union, in British Columbia, Canada, known locally as “VanCity”, was founded in 1946. It is now Canada’s largest credit union, with over 300,000 members, 1916 employees, and $9 billion in assets, and a leader in corporate social and environmental responsibility.

Aims and Objectives
VanCity is a financial cooperative, owned and managed by its members. As such, it is committed to the co-operative principles of the International Co-operative Alliance, which include democratic member control, member economic participation, and concern for community. VanCity’s mission is to be a democratic, ethical, and innovative provider of financial services to its members, and through strong financial performance, to serve as a catalyst for the self-reliance and economic well-being of its membership and community. Its purpose is “working with people and communities to help them thrive and prosper.”

Activities
VanCity’s core business is providing regular financial and banking services to its 300,000 members. In 1992, following a new direction from its democratically elected board, VanCity embarked on a very diversified path of community service. This is best described under five headings: community investing; microlending; social and environmental responsibility; ethical investment; and community granting. In addition, in 1997, VanCity founded the Citizens Bank, a full-service, electronic banking service that operates with a full ethical policy on social and environmental issues.

1. COMMUNITY INVESTING
VanCity has established five major instruments to provide business and project financing outside the normal market requirements.

  1. The Community Investment Deposit is a $2 million investment pool, offering a slightly lower rate of interest, which is used to finance community-based economic development initiatives, environmental protection, and affordable housing, such as a mortgage to the Mental Patients Association that enabled them to buy Hampton Hotel, a 46-unit single room building in Canada’s poorest neighbourhood that provides safe, affordable housing for people with mental illness.
  2. The International Community Investment Deposit is a $2 million investment pool that channels members’ investments into microcredit programs for very poor people (mainly women) in developing nations, similar to the Grameen Bank in Bangladesh. Members earn 0% to 2% interest.
  3. The Conservation Loan Fund, launched in 2001 with EcoTrust Canada, aims to strengthen B.C.’s conservation economy. Loans are available for businesses that have strong business plans but are unable to access conventional credit. Recipients include the EcoLumber Cooperative (marketing FSC certified lumber), the Small Scale Food Producers Association, and the Certified Organic Associations of B.C..
  4. VanCity Capital Corporation is a $25 million subsidiary that provides $100,000 to $1,500,000 growth capital financing to green economy businesses, cooperatives and non-profit enterprises which have a minimum one year's results which indicate positive cashflow. Since it started, the fund has supported 85 borrowers, including Vancouver’s Cooperative Auto Network (a car-sharing cooperative), whose 1500 members share 75 vehicles; the China Creek microhydro project, owned by the Hupacsath First Nation on Vancouver Island; Vancouver-based Coastal contacts, now one of the world’s largest Internet retailers of contact lenses; and Bardel Entertainment, an animation studio that specializes in children’s viewing. The capital does not have to be supported by collateral assets, and is the equivalent of venture capital, but much cheaper (15% instead of a typical 30%), and does not entail any loss of control.
  5. VanCity Enterprises Ltd. is a real estate development subsidiary that works in partnership with local societies to support the development of safe, affordable housing projects for senior citizens, single parent families, and people living with a physical or mental disability. Recent projects include the Dr. Peter AIDS Center, a hospital and housing center for AIDS patients; St. Elizabeth Home, a 28-unit home and shelter for women; Conference Housing, a 64 unit non-profit rental for families; and The Grove, a 36-unit market condominium development.

2. MICROLENDING
VanCity has established three microlending programs:

  1. The Microcredit Peer Lending Program is based on the Grameen Bank model, in which a group of 4 to 7 borrowers who lack assets, traditional collateral or a credit history form a peer lending group and act as their own loan officers, and where loans to members depend on successful repayment by other members. VanCity provides advice, networking events and learning opportunities to support the peer circles. The loan range from $1,000 to $5,000 and terms range from 3 months to 24 months. Since 1997, VanCity has lent $1 million in 624 different loans to 257 borrowers.
  2. Self-reliance loans of up to 35,000 are available for mostly young people who have graduated from a self-employment or entrepreneurial training program. Collateral is not needed; loans are based on character, credit history, and the business viability of the projects. Since 1997, 800 entrepreneurs have borrowed over $11 million, including Nana’s Kitchen and Hot Sauces, making hot ethic sauces, which now has 18 employees.
  3. Advice and Business Loans for Entrepreneurs with Disabilities (ABLED) offers business loans up to $70,000 to individuals with disabilities who have difficulty accessing traditional business services, and securing financial capital.

3. SOCIAL AND ENVIRONMENTAL RESPONSIBILITY
VanCity takes its commitment to corporate social responsibility very seriously. All new members and strategic suppliers are asked to sign a “baseline ethical policy”, and VanCity conducts a detailed bi-annual social audit of its own performance, using the internationally accepted AA 1000 Assurance Standard for social and ethical reporting.

VanCity also offers a financial literacy program to alleviate poverty; a Youth Credit Union program in five schools, with 1200 students members; a high profile lesbian and gay outreach program, an Indo-Canadian Member Appreciation Event (800 attendees in 2003); and a Resettlement Assistance Program for new immigrants.

On the environmental front, over 50% of VanCity’s employees travel to work without taking their cars. VanCity used 100% post-consumer recycled paper for its 2003, annual report, saving 58 trees; achieved a 27% reduction in annual energy use since 1992, saving $1.16 million, and is committed to a further 10% reduction by 2007; builds all new branches to the highest green building standards; offers members a Prime + 0% Clean Air Car Loan for the purchase of hybrid vehicles; and sponsored an innovative U-Pass Program at local universities, through which all students pre-pay for an annual bus pass with their student fees.

4. ETHICAL INVESTMENT
In addition to selling a screened mutual fund (the Ethical Growth Fund), VanCity has established Real Assets, the first full-service investment manager in Canada to focus entirely on social impact investing. The Real Assets Social Leaders Fund invests in a global equity portfolio of 25 to 100 companies which have established their reputation as being the very best corporate citizens.

The Real Assets Social Impact Balanced Fund is a more conservative ethically screened portfolio of Canadian and U.S. stocks, where owning the shares enables the fund manager to pursue high impact shareholder action resolutions designed to push companies to address important social, environmental and ethical liabilities, accompanied by dialogue and follow-through. In the normal run of events, a “hostile” shareholder resolution (not approved by the board) wins no more than 2% of the vote.

Real Assets’ shareholder resolutions have included:

  • Asking Canadian resource companies operating in sub-Saharan Africa to implement treatment and prevention programs to decelerate the debilitating spread of HIV/AIDS in the workforce.
  • Asking petroleum companies to tell shareholders how they are addressing climate change, and how they plan to transform themselves into global energy companies with a commitment to renewable energy. (Bank of Montreal’s shareholders voted 90.9% in favour; Toronto-Dominion Bank shareholders voted 27% in favour.)
  • Asking Coca Cola, PepsiCo and other companies to report to shareholders on how they plan to adjust to a water-scarce world, and address the business risks associated with water.
  • Asking Procter & Gamble to purchase a portion of its coffee beans from Fair Trade sources. (They subsequently launched a Fair Trade coffee brand.)
  • Asking Canada’s major banks to explain to their shareholders how social, environmental and ethical issues impact their business, and how they are managing those risks.
  • Asking major Canadian companies to open opportunities for women. (Open Text Corp shareholders voted 45% in favour; Sears Canada minority shareholders voted 46% in favour.)

5. COMMUNITY GRANTING
Through its Shared Success program, VanCity invites its members to re-invest their dividends in the community, and it also does so on their behalf. In 2003, VanCity returned $13.5 million (30% of its net profits) to its members and the community, including $5.4 million in community grants.

  1. EnviroFund Grants up to $25,000 for local community environmental initiatives
  2. Grants up to $10,000 to community initiatives that focus on social justice, economic self-reliance or ecological responsibility.
  3. Capacity Building Grants up to $10,000 for non-profit member organizations.
  4. The Annual VanCity Award, worth $1 million, which is given to a single organization following a member-wide vote. This has reently been awarded to a project to create a wellness drop-in centre for women in the sex trade; to restore and revitalize a Cultural Centre in Vancouver’s poorest neighbourhood; and to a major greenway project that will connect local communities.
  5. The VanCity Community Foundation, with an endowment of $11 million, partners with local organizations to support capacity development for affordable housing, employment development and non-profit enterprise initiatives.
  6. VanCity staff chose a different fundraising project each year. In 2003, they raised $87,000 for Family Services of Greater Vancouver. They have raised over a million dollars over the years for a variety of causes.

Performance
In 2003, VanCity was listed among the Top 100 Employers in Canada by a major magazine. It experienced a 15.2% growth, attracted 14,000 new members, and returned 30% of its net earnings to its members and the community. According to VanCity’s 2003 social audit, 84% of its members were “totally satisfied” with its service, and 75% of its employees agreed that VanCity was a great place to work.

For further information contact :
Sara Holland
VanCity Public Affairs,
183 Terminal Ave,
Vancouver,
British Columbia V6A 4G2
Canada
Tel: 604-877-7000

www.vancity.com

Written by Guy Dauncey, Victoria, B.C., Canada.
Author of Stormy Weather: 101 Solutions to Global Climate Change (New Society Publishers, 2001).
www.earthfuture.com