At Vancity Community Investment Bank, our decisions are shaped and guided through the lens of purpose and our mission of driving immediate and lasting change for people and planet. Pre-COVID, this meant asking questions like: How can we use the tools of finance to accelerate the low carbon transition? Or, by lending to this organization, are we supporting marginalized communities in accessing affordable housing or decent work?
With our new COVID experience, the questions we’re asking have changed slightly, but the outcome is the same. Simply, how can we support communities, organizations and businesses impacted by the pandemic? From granting, loan relief and new impact investment products to our decision to accelerate the launch of small businesses banking and lending services, purpose is what guides our response.
As CEO, I bang on the “purpose” drum at every opportunity. But that’s because I truly believe it needs to become the reason “to be” for all organizations–and have seen the real-world impacts of purpose-driven banking in action.
Purpose gives us clarity on what types of organizations and projects we will finance and drives us to mobilize money in service of sustainability. It is at its most powerful when it is embedded in every aspect of decision-making, informing strategy, guiding hiring decisions, customer service, employee development and even customer selection.
What is the business case for becoming purpose-driven?
If anything, this pandemic has shown us the deep cracks in our society and why organizations should employ a purpose-centric approach to business.
To start with, there is an obvious business imperative: in the last financial crisis, certified B Corporations (like Vancity Community Investment Bank) were 63 percent more likely to survive than other comparable businesses. Not only are purpose-driven companies more resilient to economic downturns, they consistently outperform the stock market, and have an easier time recruiting and retaining top talent that drive that performance.
Purpose also facilitates nimble decision-making in times of crisis. Organizations with purpose mandates rallied quickly and effectively to the needs of their local communities during COVID-19. Our own parent company, Vancity Credit Union, has been recognized for its rapid and compassionate response as have other values-driven financial institutions. In partnership with VCIB, three of Ontario’s largest community foundations – the Toronto Foundation, Ottawa Community Foundation and Hamilton Community Foundation – mobilized to deliver immediate and unrestricted emergency relief funds to non-profits and charities providing essential services to vulnerable groups.
From a customer lens, there is also mounting evidence that people want to purchase from organizations that demonstrate good corporate leadership and positive impact. In VCIB’s experience, putting impact first has helped build our client base and increase loyalty, even during the pandemic.
Where is purpose-driven banking needed most?
There’s no doubt that the pandemic has highlighted our economy’s shortcomings, and we need to ask the question: why was our economy so fragile in the first place?
Small and medium-sized businesses are the lifeblood of our economy. Yet these organizations are also vulnerable to shifts in consumer spending and economic upheaval. While this is in part down to their size, it is also the result of a system in which these businesses are the least likely to secure lines of credit and loans even in the good times – steps that would help ensure their resilience when times are bad.
Similarly, non-profits, charities and social enterprises are critical players in community building, offering essential services and pathways to solve complex challenges. Yet this sector, which depends heavily on donors and government grants, is already seeing a significant shortfall in funding due to the pandemic, and the closure of such organizations will be felt by vulnerable communities that rely on the services they provide.
If this pandemic has taught us anything, it’s that inextricable ties exist between small businesses, non-profits, communities and the state of our national economy. For financial institutions, our priority post-COVID should be to build resilience into our economy by supporting the businesses, organizations and communities at its heart.
What can the financial industry do to rebuild our economy resiliently?
Again, this brings me back to purpose.
By applying a purpose-focused lens to lending, financial institutions can build long-lasting community and economic resiliency. Will this investment drive economic opportunity for marginalized communities? Contribute to more sustainable cities? Purpose-driven organizations are not only more resilient themselves, but the framework through which they make decisions also engenders economic resilience.
The measures we use to rebuild now will be put to the test sooner rather than later. Let’s use the pandemic as an opportunity to rebuild sustainably, purposefully and resiliently. Let’s use it as an opportunity for collective industry action as we work to create sustainable growth for both the financial sector, and the wider economy. Let’s use it as an opportunity to discover our purpose.
To learn more about VCIB or if you have questions about this blog, please contact:
Lauryn Drainie, Marketing and Impact Strategist, VCIB