Improving Social and Environmental Sustainability: A Credit Union Assessment and Comparison
by Monica Touesnard, Associate Director (5/20/14)
Monica Touesnard, associate director of the Center for Sustainable Global Enterprise, writes the foreword to a Filene report that helps credit unions identify where efforts should be directed to improve social and environmental performance.
Impact Measurement – two words that are increasing in popularity among private and public enterprises.
Measuring social impact is an ambiguous task. Before you can measure it, you have to clearly define it, but definitions can be very nuanced. What exactly does social impact mean? How does your organization define social impact?
Measuring impact has become a hot topic in the past several years with conferences, research and media focused on the issue. This has become of great interest to non-profits, and foundations, as well as mission-driven and grant-making entities being asked to prove whether or not they are meeting their espoused goals.
Efforts have been made to standardize social and environmental metrics leading to the development of tools such as Impact Reporting and Investment Standards (IRIS), Global Impact Investing Ratings System (GIIRS), and Global Reporting Initiative (GRI). Alternatively individual organizations are creating their own set of metrics using Balanced Score Card methodologies or other analytics specific to the needs of an organization such as Acumen’s assessment tool, Pulse. With the increase in information readily available on the internet, crowd sourcing information such as Crocodyl, have come into vogue, as have issue-specific tools such as Fair Trade USA and ClimateCounts.org to name a few. But what is the right tool for credit unions?
This report focuses on how credit unions can benefit from using the B Impact Assessment tool which was created by the B Lab as the first step for organizations interested in obtaining a B Corporation certificate. The tool identifies five areas for organizations to focus their efforts: governance, workers, community, environment, and impact business models. As a self-assessment tool it provides a logical framework from which to begin to identify and evaluate tangible items such as transparency, workers compensation, community engagement activities, recycling, and lending practices. Moreover it provides a weighted scoring system that assesses the degree to which an element has been implemented and a difficulty meter to indicate the amount of effort associated with the implementation of that component. These can be beneficial in helping prioritize where an organization can focus efforts to make improvements.
It is difficult for impact measurement tools to take into consideration the idiosyncrasies of individual organizations, but the B Impact Assessment tool allows enough flexibility for diverse users. This tool is able to assess impact not only on the internal activities of an organization such as charitable giving, community service, suppliers, customer feedback, diversity, and purchasing policies, all activities that one would expect to measure. But also, more importantly, it can evaluate its impact on credit unions’ most critical stakeholder – its members – which is the essence of the credit union model. As mission-driven organizations, credit unions are in a unique position to influence member behavior. Credit unions’ biggest impact may in fact be the influence they have on their members’ ability to make not only smart financial choices but also choices that impact the environment and society.
How do you measure this broader impact of encouraging members to buy energy efficient vehicles, appliances or homes? How do you attract new members through services that reach low-income families? How do you help low-income members develop a savings habit, or empower them to save for education or their first home? Credit unions that utilize tools and metrics to measure the outcomes of these types of complex dynamics will be in a better position to articulate broader social impacts. Moreover, it can help differentiate credit union services from other financial institutions.
Measuring impact can be a daunting task. However, only through an initial measurement of impact can organizations realize opportunities for improvement. The B Impact Assessment tool can be a constructive way for credit unions to get started and work toward more nuanced understanding of the effects they have on – and the value they generate for – their members and our communities.
The report can be found on the Filene website.