Credit Unions Fight Back On Corporate Social Responsibility

08 April 2006

Credit unions are fighting back against social responsibility claims by major corporate entities, by measuring for the first time their own social, environmental and economic performance.

A new toolkit which enables small to medium enterprises to measure and report on their ethical, social, environmental and economic impact for the first time has been developed by the Credit Union Foundation of Australia (CUFA).[1]

Peter Mason, CUFA Executive Officer, said credit unions have been delivering benefits to members and their communities for over 60 years, without measuring the impact of their programs and the benefits they bring.

“Credit unions offer a different kind of banking. They were established as co-operatives to benefit their members and communities,” Mr Mason said. “Credit unions are not driven solely by profit motives like most corporations, but are dedicated to returning benefits to members through fairer fees and contributions to their local communities.”

Mr Mason said the contribution made by credit unions touches communities across Australia every day, but that measuring CSR had been difficult and expensive for smaller institutions such as credit unions.

“From community grants, to the provision of no-interest loans and banking services in remote communities, credit unions have been good corporate citizens long before it was fashionable. Now it’s time to measure the impact of that approach,” he said.

In launching the kit, Mr Baird said credit unions play an important role in their local communities, and measuring CSR on a community level has significant benefits.

There are 151 credit unions across Australia. With combined assets of over $32 million, they are the 7th largest deposit-taking force in Australia serving over 3.6m members.

Examples of credit union commitment to CSR include:

• Community grants
  Many credit unions offer grants to their local communities to assist others to reach their potential, to help people with a particular need or facing an emergency or to support innovative or creative activities. They also often act as the point of donation for local appeals to assist ill children and their families. Examples include RegionalOne CU in Victoria, Credit Union Australia, WAW Credit Union in Albury-Wodonga, Berrima District CU, Savings and Loans CU in Adelaide, St Mary’s Swan Hill CU and New England CU.

• Culturally appropriate services
  Credit unions are at the forefront of providing financial services for and by Aboriginal communities in remote areas disadvantaged by a lack of banking services. Traditional Credit Union (TCU), established in 1994, creates employment for Indigenous people managing and working in its remote branches. First Nations Australia Credit Union (FNACU), established in 1999, is owned and operated by Indigenous People and, as well as providing financial services to over 3,000 members, produces support to improve financial literacy among its community.

• Providing services in non-bank locations
  Credit unions worked with the Commonwealth Government to maintain and develop banking infrastructure in 50 rural and remote areas when these services were withdrawn in the late 1990s. This program was the basis for the Regional Transaction Centre (RTC) program that offers basic financial services alongside Government services such as Medicare and Centrelink.

• Philanthropy
  In addition to funding community groups, credit unions and Cuscal fund a range of philanthropic activities through the Credit Union Foundation Australia (CUFA). These include both domestic and international projects such as financial literacy development in regional Australia, and programs to help disadvantaged communities in Bougainville, Indonesia, The Philippines and Cambodia to establish community owned and operated financial services for savings and loans.

• Environmental Consciousness
  Many credit unions use environmentally appropriate products and supplies, and others have gone further by introducing banking products that encourage environmental sustainability among their members. Examples include mecu’s award winning goGreen car loans, offering lower interest rates on vehicles with lower emissions, and offseting the emissions generated by the cars by planting the equivalent number of trees in the Murray-Darling Basin. Over 22,000 trees have now been planted as part of the scheme. Maleny CU’s Cool Home Loan offers discount loan rates for energy efficient homes.

• Microcredit
  Historically, many credit unions were formed as co-operatives to provide financial services to those who would otherwise fall prey to opportunistic lenders. Today, credit unions continue to offer financial services to low-income earners and vulnerable consumers who are unable to access these services in the mainstream credit market. No-interest or low-interest loans are offered to assist members in their local community. Examples of such schemes include the Fitzroy & Carlton Community Credit Co-operative (Victoria) and Encompass CU’s Boomerang Grant Scheme in western Sydney.

• Financial Literacy
  Credit unions work to assist their members to avoid over-commitment, high household debt and other financial hazards through a number of award-winning financial literacy programs. There are a series of financial literacy publications provided free of charge to members, seminars for primary and high school students, financial coaching services, family budgeting sessions ad pre-retirement seminars. Credit unions with particular financial literacy programs include Berrima District CU, Community First CU, Horizon CU, Police and Nurses CU (WA), Queenslanders CU; Queensland Teachers CU, Traditional CU and WAW CU.