Catalyzing Retail Impact Investing

In this concluding section, we identify four priority areas to catalyze retail impact investment among the credit union sector in Canada. Within each area, we identify potential strategies and activities that could be undertaken by credit unions individually or collectively, or by broader sector networks and intermediaries within the credit union and social finance sectors. While these priorities are most directly relevant to the credit union sectors, it will be important for credit unions to engage the broader social finance community across Canada.[1]

For those priority areas that require system coordination, it is recommended that the Canadian Credit Union Association (CCUA) – through its Credit Union Social Responsibility Committee – engage in a process to assess which of these recommendations could be advanced.

 

Generate Awareness and Engagement Within the Credit Union Sector

  1. Share information and best practices among the credit union sector: The sector should commit to regularly updating the website [impactinvesting.ca] that was created for this guidebook to showcase the range of impact investing opportunities and best practices in product development. Through the website and other system-wide communications channels (e.g. newsletters, social media), invite the credit union sector to participate and contribute their experiences, examples and questions. This should also include integrating impact investing at system-wide conferences or regional events.
  1. Review product development approaches, and share tools and templates: Credit unions can use existing networks and platforms (e.g. CCUA, Centrals and other system partners) to describe the specific approaches that they are taking to product development within their respective institutions. Ideally, they would also be able to share tools and templates that other credit unions can review and adapt. Over time, this could also include collaborating around shared standards for financial and impact performance reporting.

 

Validate Member Demand, and Strengthen the Ability for Credit Unions to Respond

  1. Validate existing or latent member demand through research and campaigns: Credit unions – individually or collectively – can commission targeted research on the demand and preferences of existing members related to impact investing, as well as assess interest from potential members. These assessments can draw on surveys conducted in the US and UK, adapted for the Canadian credit union context.[2] The results can then inform product development or marketing activities (e.g. an “invest for impact” campaign).
  1. Strengthen staff capacity and education through professional development: Credit unions can embed impact investing as a component of professional development objectives, either through in-house materials, or suggesting the topic to training providers (for example, CUSource, the professional development and education arm for Canadian credit unions and/or networks such as the Responsible Investment Association). Additionally, specific content can be developed for targeted staff members (e.g. financial advisors).

 

Develop Shared Platforms to Catalyze Product Development

  1. Explore the feasibility of collectively negotiating a partnership with an established product issuer: To help reduce transaction and monitoring costs, credit unions could collectively negotiate a product partnership with an established product issuer (e.g. Oikocredit or Calvert). Such a partnership can significantly reduce the time and effort required for each institution around partnership development, increase accessibility to smaller credit unions, leverage collective assets, and reduce investment risks.
  1. Explore the feasibility of a national thematic product accessible to retail investors: Credit unions could engage with Centrals and system affiliates to assess whether they can create a product in an established impact sector – such as affordable housing or renewable energy – to access investment opportunities and place capital at scale. As credit unions have a bias to invest locally, the national product could be structured to have specific regional allocations. This product could also attract capital from institutional impact investors such as foundations and governments.

 

Strengthen the Enabling Environment for Social Finance

  1. Collaborate with social finance intermediaries to build a pipeline of qualified impact opportunities: The broader social finance sector has lamented the dearth of impact products and opportunities that are ready to receive investment. Credit unions can partner with local and regional intermediaries (such as community loan funds, community foundations, and business incubators and accelerators) to actively identify and vet potential opportunities, which could quickly help deepen the pool of existing opportunities. Credit unions also bring financial expertise that could be applied to strengthen the investment readiness of potential investees, and reduce the search and transaction costs of making impact investments.
  1. Build on regional or national policy, regulatory and advocacy initiatives that promote social finance: Social finance has been identified as a priority for the federal government, and several provincial governments – including Ontario, BC, Saskatchewan, and Nova Scotia, among others – have specific initiatives focused on social finance, social enterprise or social innovation. Some networks[3] are actively advocating for improved legal, regulatory and policy conditions, building on the recommendations on the Canadian Taskforce for Social Finance and the Canadian National Advisory Board.[4] For credit unions, this should include engagement with appropriate provincial and federal regulators.

[1] See State of the Nation: Impact Investing in Canada (2014) for more context; this should specifically include product issuers, institutional investors such as foundations, government agencies that can offer finance and technical supports, and the non-profit sector intermediaries that can bring specialized expertise around social finance lending and investment approaches, investment readiness services for business models, or impact measurement.

[2] See the Money for Good (US) survey conducted in 2010, as well as research commissioned by NESTA (2011) research on retail product demand and preferences.

[3] For example: Philanthropic Foundations of Canada and Community Foundations of Canada, Ontario Non-profit Network.

[4] See the reports of the Canadian Taskforce for Social Finance (2010) and National Advisory Board to the G8 Social Impact Investment Taskforce (2014)