Why ESG is so valuable to Community Banks and Credit Unions!

Climate change, whether we believe it is just a cycle or it is exasperated by humanity, is affecting businesses in many ways.  Regardless of the political argument, investors are looking at how a company manages this, and other ESG risks.

As a Credit Union or Community Bank we may already be actively engaged in community efforts addressing climate change and impacts of the environment to our communities.  We must also be concerned about good business and risk governance as well as the social impacts of business such as equal pay, competitive salaries and diversity in hiring and promoting employees.

On its surface this may look like a daunting task. And it is. But there is a real value for those organizations that want to take advantage of the ESG attention. That value can be defined in one word: sustainability.

Investors are encouraging companies to look more deeply at long-term survival. Business practices, strategic goals, and risk management activities should all be designed to assure a business’s longevity and positive contribution to society. The old school thinking of short-term profits may still permeate in some sectors but there is a definite shift to investing in sustainable companies. Not only investing. Today’s consumers are no longer interested in a brand for a brand name.  They are increasingly more selective in which companies they support. Being more socially and environmentally sensitive than previous generations, the buying power and influence of the young generation is manifesting itself through unique behaviors. If Community Banks and Credit Unions want to capture this generation then attention to ESG is vital.  Developing and creating a sustainable business is the key to long-term customer retention and investor satisfaction.