Executive Summary
Professor Hart and his esteemed colleague, Monica Tousenard, set out to discover how the trend toward sustainability can be leveraged by credit unions. Rather than competing directly with banks, Hart and Touesnard conclude it may make more sense for credits unions to go “back to the future” by using their unique historical and organizational characteristics to offer a set of products and services that differentiate them.
What is the research about?
Hart and Touesnard identify the handful of credit unions and other financial services providers that have created innovative products such as green building mortgages; special loans for fuel- efficient or hybrid vehicles; financing and arranging energy conservation upgrades; low-income mortgage products; and microlending. Hart and Touesnard analyze these best practices in sustainability within existing financial institutions. Based on this analysis, they then recommend potential avenues for credit unions to integrate sustainability more effectively into their strategies.
What are the credit union implications?
Many of today’s sustainability initiatives involve profit spending—e.g., grants to community groups or expensive high-touch services and educational programs for underserved families. Such programs are often considered loss leaders for the institutions involved. While they fail to cover their costs, such programs are justified to the extent that they serve to bolster reputation and establish productive relationships with other nonprofit or public partners.
With their tax-exempt status, credit unions are clearly able to offer such programs, given their lower cost position relative to banks. Indeed, credit unions create value for their members by providing important services, increasing dividend payments on savings, and lowering rates on loans. However, providing these benefits cannot be achieved in the long run without at least covering the costs of the programs. Ultimately, truly integrating sustainability into credit union strategy requires shattering the presumed trade-off between social and financial performance; this can only be achieved by devising new strategies that simultaneously benefit members, their communities, and credit unions’ bottom lines.