D6 BREAKING NEWS: VANCOUVERSUN.COM | ThURSdAy, JUNE 5, 2014|| joint venture

By Michael BernarDSpecial to the Sun

“W hat’s the difference between a tragedy and a catastrophe?

A tragedy is a ship full of bankers going down in a storm; a catastro-phe is when they can all swim.”

– From 25 Jokes About Bankers and Banking

T he world abounds in such jokes about bankers, par-ticularly after the financial

meltdown of 2008 and the U.S. government’s bailout of that country’s financial institutions.

But what many people don’t know is that since that time there has been a quiet revolution led by a group of financial institu-tions, including Vancity credit union, that pledge to put the well-being of people, their com-munities and the environment on par with — or even ahead of — profits.

The Global Alliance for Bank-ing on Values, an independent network of financial institutions from Asia, Africa, Europe, Latin America and North America, share a commitment to finding globally sustainable solutions to international problems, solu-tions that break from the current financial system.

While some might be inclined to cynically dismiss it as just “win-dow dressing,” leading business academics and others in the sec-tor say it is a wave of the future in the wake of unprecedented public distrust of financial insti-tutions.

“There was a pretty vile taste

left in international mouths after the 2008 financial meltdowns,” says Lindsay Meredith, profes-sor of marketing at SFU’s Beedie School of Business. He says finan-cial institutions would be one of the groups that could benefit from adopting ethical business objectives and by investing in “social equity.”

“It’s very a good long-term strategy if you want to preserve and you want to grow your brand. It makes bloody good sense. It’s that long-term loyalty, that long-term relationship, that really has the long-term payoff for the company, and the com-munity as well.”

Using the “triple bottom line” or “3P” approach to business — the terms refer to people, prosperity and planet — Vancity sees val-ues-based banking both as an ef-ficient way of doing business and a means of reaching loftier goals for its members, their communi-ties and the globe in general.

Vancity’s board has developed three guiding principles to focus its efforts to reach those goals: Embrace co-operative principles and practices; encourage and practice environmental sustain-ability, and work toward social justice and financial inclusion.

Co-ops, Vancity argues, can fulfil community and individual needs that aren’t always met by the marketplace and govern-ments. Thom Armstrong — ex-ecutive director of the Coopera-tive Housing Federation of British Columbia (which represents 240 housing co-ops with almost 13,000 units provincewide) — agrees.

Armstrong says Vancity’s sup-port of affordable co-op housing comes as the federal govern-ment and its housing agency, Canada Housing and Mortgage Corp. have withdrawn from the field. That has left Armstrong’s member co-ops scrambling to

renew mortgages and obtain much-needed new funding to repair and replace older housing stock built in the 1970s.

“What Vancity has done, which is so special, is not just talk about the relationship between move-ments that are mission-aligned,” says Armstrong. “They have in-vested resources in the relation-ship and created capacity.

“It would be easy to make a lot of sentimental pronouncements about values-based banking, but the true measure is resources on the ground; not just financial, but human resources as well. When you have the chance to sit down with your partners at Van-city, and roll up your sleeves, and get to work on a real project — a new development or re-develop-ment — that’s when value-based banking becomes real.”

Supporting affordable housing is a significant part of Vancity’s commitment to the co-opera-tives, but its financial support through mortgage loans and lines of credit flows to every imaginable enterprise in B.C. In the last few years, Vancity as a lending institution has back-stopped everything from organic food firms, aboriginal emerging businesses and services, to car-sharing co-ops and waste recy-cling companies. In the past year, it has helped 1,400 organizations green their business, spending more than half of its $468 million in business loans supporting en-vironmental sustainability.

In publicly releasing Vancity’s 2014-16 Three Year Plan, the credit union says it is embrac-ing “transformational change” in how it conducts business and is “creating a road map, not follow-ing one” in moving away from competing with conventional banks on their terms. Noting that “what we are doing cannot be easily replicated,” it adds “we are achieving growth in a sustain-

able way and are allowing our members to grow with us.”

Vancity, with its 500,000 mem-bers, 2,500 employees and $17.5 billion in assets, applies tough standards to its own perfor-mance in these areas. It is devel-oping ways to measure the im-pact of its business model on its members and the communities they live in and on its employees. For instance, Vancity introduced in 2012 an interviewing system to measure enhanced member well-being. A year later, it found that 50 per cent of its members strongly agreed their relation-ship with Vancity “improved their well-being.”

It also became the largest or-ganization in Canada to earn the title Living Wage Employer by adopting a new standard for its own employees and those of its suppliers. A “living wage” is the hourly rate required for a Metro Vancouver family with two children and two parents working full time to meet their basic needs. This was calculated in April at $20.10, almost double the provincial minimum wage of $10.25.

Abiding by the living wage has positive consequences for local

economies, and the credit union believes that by putting more money in the hands of working families is one of the best eco-nomic strategies we can employ and an important way to solve family and child poverty.

Vancity also began to measure how much its capital is being allocated to build healthy com-munities. It found that just over half of its non-retail lending was supporting aboriginal communi-ties, building affordable housing, fostering a local green economy, promoting a viable and sustain-able local food system, and de-veloping social enterprises and social ventures from early plan-ning and start-up right through to sustainability and expansion.

Is it succeeding?This week it added to its numer-

ous awards when it was ranked highest of any financial institu-tion and second overall on the list of Canada’s Top 50 Corporate Citizens identified by Corporate Knights, a Toronto-based media and research company that pro-motes “clean capitalism.” At the same time, it has delivered 30 per cent of net profits to its members and the community.

That track record appealed to David Ao, a 32-year-old provin-cial employee. He initially was motivated to take his business away from a major bank because it increased the fees it charged him. But he said he was con-vinced when he started to look at how much Vancity was active in the community.

“Their initiatives like having a living- wage policy, social hous-ing, being green and ethical, things like that kind of weighed in my mind,” he said.

“When I was younger and banked at Vancity, I didn’t really understand and fully appreciate it. Now that I am older, I see that stuff as pretty important.”

vancity banks on value-based future

n Vancity provides $750,000 in financial support to Reconciliation Canada, an initiative of the Indian Residential School Survivors Society and Tides Canada, culminating in 70,000 people walking in September 2013 to support new relationships between Aboriginal people and Canadians.

n Vancity has been carbon neutral since 2007. It accomplishes this by measuring and reducing greenhouse gas emissions and then offsetting emissions by purchasing registered carbon offsets from emission-reducing activities undertaken by others. In 2013, Vancity helped 1,400 organizations achieve their green goals through grants, advice and workshops. More than half of the $468 million in Vancity business loans supported environmental initiatives.

n By the end of 2013, 79% of the 42 firms providing goods and services to Vancity had become Living Wage Employers, reaching a wage level of $19.62 an hour including benefits. That wage marks the hourly rate required for a family with two children in which both parents work full time to meet their basic needs. The achievement led to Vancity being named one of BC’s Top Employers.

n In 2013, two-fifths of Vancity’s employees belong to a visible minority group and two-thirds were women. In the same year, the percentage of employees who identifying themselves as having a disability hit 3.1%, exceeding its annual target of 2.4% and growing from 2.1% in 2009. Vancity won two key awards — from Simon Fraser University and the City of Vancouver — for its efforts at promoting diversity, and access and inclusion.

n Vancity granted $1 million and provided a $200,000 pre-development loan to fulfil the Immigrant Society of BC’s initiative to establish a new Welcome House Centre for refugees and immigrants in one place and under one roof.

The centre, to be built over the next two years, is the first of its kind in the world and will feature 200 beds, a child care and youth centre, a medical clinic and education services among others, for new arrivals.

n Vancity approved $7.1 million in community grants in 2013 to 375 organizations primarily in the form of mission-based and community project grants, including local natural and organic food (24%); impact businesses such as not-for-profit co-operatives, social enterprise and mission-based ‘for profits’ (22%); social-purpose real estate, affordable housing (21%); micro-credit, financial literacy, poverty reduction (11%), energy and environment (11%) and Aboriginal communities and others (11%).

n Member and Vancity Investment Management client investments in socially responsible investment options totalled $916.1 million at the end of 2013, up from $786 million the year before.

Vancity’s successes at a Glance

Portfolio runs from bread to soap (and more)impact of loans on people, planet counts

By Michael BernarDSpecial to the Sun

It began as a dream over a beer with a friend, but is now a major Metro Vancouver enterprise built on that most commonplace of waste materials — Styrofoam.

Foam Only co-founder Mark Obedzinski first hatched an idea with a friend to divert asphalt shingles from landfill sites. But one landfill operator told him he would be better to forget shin-gles and focus on polystyrene. The operator noted that Styro-foam, with its high air content, takes up a lot of landfill space but brings in little revenue in an industry that pays by weight.

With the help of a $50,000 Vancity initial line of credit, Mark went on to purchase spe-cial machinery to compress the polystyrene to a fraction of its regular volume in a Coquitlam warehouse. He also connected up with major waste collection companies to collect and bring foam to him by the truckload. Meanwhile, he lined up polysty-rene manufacturers to buy the compressed product from him.

“Our relationship with Vancity has opened up doors and oppor-tunities for us.

“I feel they (Vancity) care more and that has come out in spades. If I had gone to any of the nation-al banks, I would be a docket. I guarantee I wouldn’t be having this conversation.”

What allows Vancity to lend money where others won’t is having the broader vision af-forded by a values-based bank-ing philosophy, which allows employees to think beyond dollars-and-cents profit and con-sider the impact of its loans on people, their prosperity and the planet. As a member of the Glob-al Alliance for Banking on Values, Vancity is committed to taking a holistic view of the loan and its ultimate value and cost.

Semiahmoo House Society has a goal of creating affordable housing for disabled people in South Surrey. What worried exec-utive director Doug Tennant was a possible interest-rate hike once the 71-unit project was nearing completion.

“That kept me and my board up at night, because the day the project is completed a construc-tion loan turns into a takeout mortgage,” said Tennant. “That could mean a million dollars in extra costs.”

Tennant said the society was able to reach an agreement with Vancity to peg the mortgage at essentially the same rate as the construction loan, allowing him a sigh of relief.

Sometimes, other financial in-stitutions would be prepared to consider a loan but it comes down to their comfort level. That was the case for A Bread Affair, a family-owned Langley-based business that has been specializ-ing in baking handmade artisan breads since 2005. President Pat McCarthy went looking for a suit-able location on Granville Island.

“I believe we had a solid busi-ness case for this investment and most of the big banks would have worked with us on it,” he said. “But Vancity brings so much more to the table than other fi-nancial institutions.”

Linh Truong was committed to developing an environmentally sound soap dispensing business in Vancouver that would fill reus-able containers with soap made from non-toxic, natural ingredi-ents. The fit was a good one for Vancity on two counts.

The concern for the environ-ment is one of Vancity’s pillars of its business philosophy. Truong’s plan also fit into Vancity’s interest in female entrepreneurs — four out of five businesses are start-ed by women, and Vancity has pledged to support their efforts.

On its first anniversary, Truong announced The Soap Dispensary had diverted 3,600 bottles and containers from landfills and en-ergy-dependent recycling.

VANCITY

Vancouver credit union factors the well being of its customers, employees and the globe into everything it does as a financial institution.

CLAUDETTE CARRACEDO PHOTO

Linh Truong, founder of The Soap Dispensary.

finance trendS a joint venture with vancity

>> At A time of soAring mistrust in finAnciAl institutions, credit union bucks trend

alliance shares commitment to finding glob-ally sustainable solutions to international problems.