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The 6 Principles of Values-Based Banking

Jack Lawson, CEO of Clearwater Credit Union, joins The Remarkable Credit Union podcast

Is the financial industry committed to the common good? If you equate the financial industry with megabanks, the answer would likely be a resounding no. Though millions of Americans are megabank customers, it’s doubtful many of us believe that these banks have our best interests at heart.

Here’s the good news: The financial industry presents us with many viable alternatives. There are several parallel and overlapping movements that point to a better way to bank—for instance, member-owned credit unions, Community Development Financial Institutions (CDFIs), and financial institutions that have explicitly committed to banking on values. Montana-based Clearwater Credit Union (a PixelSpoke client) is all three.

This month, President & CEO Jack Lawson joins us to talk about what banking on values looks like in action, how the six principles guide Clearwater’s strategy and every operational decision, and why marketing around impact is harder and better than the alternative.

He also addresses this month’s BIG question:

How can we reimagine the “scorecard” for a credit union to extend beyond standard financial metrics and NCUA regulations to a world where purpose and growth are aligned?

Key takeaways:

  1. We will always compete on price, product, and service delivery, but we will WIN on values.
  2. We’ve organized our entire strategy around the six principles of values-based banking:
    • Member Focus
    • Community Engagement
    • Long-term Resiliency
    • Positive Social & Environmental Impacts
    • Transparency & Good Governance
    • All about Culture
  3. Marketing is about storytelling around our strategy more than our products. It’s slower, harder to find the right partners, and probably takes more money up front – but it pays off in the long term.
  4. As a member of Inclusiv, we focus on socioeconomic uplift and ESG (Environmental, Social, and Governance).
  5. The anti-ESG movement asks, “Is this a placebo that won’t take us far enough?” It’s an important question.

 

Read the full transcript:

Cameron Madill:
Hello and welcome to another episode of the Remarkable Credit Union Podcast. We created our podcast to help credit union leaders think outside of the box about marketing, technology, and community impact. Each episode we bring on expert guests from inside and outside of the industry for conversations about innovation. Our goal is to challenge your preconceptions about business as usual, and provide you with actionable takeaways that you can use to grow your membership, improve the financial health of your cooperative, and magnify the positive impact that you have in your community. Today’s big question, how can we reimagine the scorecard for a credit union to extend beyond standard financial metrics and NCUA regulations to a world where purpose and growth are completely aligned? Today I’m really excited to welcome Jack Lawson, CEO of Clearwater Credit Union. Jack is a fascinating man who I’ve known for several years, including failed attempt to connect via telephone when I was on a train going through a tunnel.

But since then we’ve been really delighted and grateful to have them as a client for many years and Jack has a really impressive background. He’s been CEO of Clearwater since 2013, which is in Missoula, Montana. He was COO of Self-Help Credit Union from 2008 to 2013 and CEO of Brooklyn Cooperative FCU. Jack has a really impressive educational background, Master of Philosophy and Economics from the New School, Master of Arts and Development Studies from SOAS University of London and a BA in Biology from University of Vermont, so not the typical credit union CEO educational track. Jack was also the past board chair of Inclusiv and including leading the rebrand as they went from the Federation of, I believe, Community Development Credit Unions. Did I get the old name right? I hope so.

Jack Lawson:
National Federation of Community Development Credit Unions.

Cameron Madill:
Okay. Well, I got 80% right, let’s say. That was probably a B minus. And then Jack is a happy family of three that lives in Montana now for almost a decade, and as Jack filled me in, they spend as much time as possible outdoors as they can. Trail running, hiking, skiing, you name it, they’re doing it. Jack, thanks for joining us.

Jack Lawson:
I couldn’t be happier than to be here. Thanks for having me.

Cameron Madill:
All right, well let’s jump right in then, Jack. The first question I’ve got, it’s always a good question for a CEO, how would you describe your organizational strategy in one sentence?

Jack Lawson:
One sentence is always the challenge. It’s easy for us though. Our strategy is values-based banking.

Cameron Madill:
All right, I love it. Yeah, no like semicolons or hyphens or ellipses or anything.

Jack Lawson:
Happy to give you a mouthful more, but you asked for one sentence since that’s how we do it.

Cameron Madill:
I love it. Okay, so values-based banking. Now, tell me kind of what comes next when you’re talking to a new employee.

Jack Lawson:
Yeah, a lot comes next. We get into culture, we get into principles, we get into metrics, but if I was to be working with a new employee and just helping them to start to talk about values-based banking, our strategy, I’d encourage them to say or think through the clarity that we have about our organizational values, the commitment that we have to never compromising on those values and the work we put into aligning our business operations and our balance sheet with those values. We like to say we are always competitive on price, we’re always competitive on product and service delivery, we win on values.

Cameron Madill:
Let me hear that one more time. I like that so much. You said always competitive on price and service, but we win on values.

Jack Lawson:
We are always competitive on price, product, service delivery. We win on values and behind that is the idea that we don’t always win on price, product, service delivery. Sometimes we do, sometimes we don’t. We’re always at the table, we always strive to be competitive, but our members and the people who are near members might sometimes find a better price, a better mobile app, a more convenient branch, and we recognize that where we never want to lose them is on clarity and alignment around values. We win there.

Cameron Madill:
I love that. All right, well let’s dig a little deeper and dig into values and positive impact. I’d love to hear kind of in any order, what is the specific positive impact that you focus on? How do you measure that and how do you think that strategy helps make you all a more resilient and healthy organization?

Jack Lawson:
Yeah, that’s a lot. Let me try and take them one at a time and maybe just starting from the top high level cascading down. When we think about the impact that we make as a credit union, Clearwater and the communities that we serve start with mission or purpose. Our mission is to be a force for good in banking in the lives of our members and in the communities we serve. We hope that when you hear that mission, that statement of purpose, it encourages you to recognize that we know we need to go a little bit beyond pure financial product and service provision, right? Force for good in the lives of our members and the communities we serve says more than price, product delivery, financial services. We have to be good at those things, really good at them, but we have to go further and there are a lot of ways that we measure our success, we measure our social impact, we measure our environmental impact and I think we’re going to have time to go into all that.
But above all, at a very high level, we’re trying to be a real leader in this thing we call values-based banking. We lead in the ethical treatment of our coworkers and our members. For example, we practice very, very high levels of transparency, open management, good governance. We aim to lead in our social impact. For example, we are Montana’s largest certified CDFI. And that means we are driving and measuring our lending to low moderate income households and into census tracks that have been deemed to have some level of economic distress by the Treasury Department.

And we try to lead in our environmental impact. So for example, we do annual environmental impact statements and management plans that are very clear on our negative environmental impacts, solid waste production, water consumption, carbon outputs, and we set goals and metrics to reduce those negative impacts. We try to lead in all of these areas. That’s kind of a high level description. Leadership around values-based banking is how we begin to think about our impact. You know, you asked how do we more specifically measure positive social environmental impact? And I can get into that. That takes us into some greater detail. It’s a very big question. It’s not a catchy 1, 2, 3, 5 metrics that we use here. Let me kind of cascade-

Cameron Madill:
One of my favorite questions though, as you know, right?

Jack Lawson:
No, good. I mean, let me try to kind of cascade into it a little bit. Simplest terms, we measure the impact by way of our progress and values-based banking, but what does that mean? So it means we organize in a strategic plan all of our strategic priorities into what we call six principles of values-based banking. I’m going to share those with you. Each one of those principles has work plans, project work that we’ve got to do. Each one of those principles has key success metrics, hopefully pretty quantifiable that we can track every month or every quarter and ask ourselves, are we making a little bit of progress there? What are the principles? What are the key success metrics? I can hit all the principles and I think it’s important too because it’s a very important part of who we are and what we’re trying to do here. I’ll be able to give you a handful of examples about the success metrics because there are a lot and it would take us a long time to sort of drill through all of them. So far, so good.

Cameron Madill:
So far, so great.

Jack Lawson:
It’s coming across good.

Cameron Madill:
Yeah, let’s hear the six principles. I think they’re very illuminating.

Jack Lawson:
And I should say in upfront, some of these I think will be very familiar to most credit union operators, most people thinking about impact and then some push us a little further. I would argue then maybe your traditional credit union that’s thinking less about social environmental impact. Principle one is just pure member focus. That is we stay really focused on our members’ interests as much as bottom line coworker, et cetera. We’re really trying very hard to understand the opportunities our members are trying to take advantage of, the problems they’re trying to solve in their lives and build in product services delivery channels to help them with those two things. We measure these in some pretty traditional ways, to be honest with you: signs of growth, membership growth, where’s it coming from, growth rates of deposit balances, loan balances, signs of activity. What’s the depth of relationship we have with members and how long does it take to get to more than a single product? For example, retention rates, we are finding increasingly important.

If we’re really good at what we do, we know we’re going to lose people. But a sign of success in making a difference in people’s lives is that they stick around, they stay and of course we measure satisfaction levels. There we’re not just asking, would you refer us? How happy are you? But we’re also asking people, do you understand what makes us different? Do you care about what makes us different? So we’re trying to zero into the strategic differentiation. The second principle is about community engagement. We used to call this our real economy focus and then we called it our local economy focus. And over time we’ve realized what we’re talking about really is just the ways that we’re engaged in the communities we serve beyond pure deposit mobilization and lending.

And so here we measure philanthropy. We are committed to, as a policy, delivering back into the communities we serve 5% of our net income in the form of philanthropy. We bucket that up in three categories, protecting the environment, building inclusive economies and empowering people. We measure our levels of volunteerism in the communities we serve and we have people on staff that organize volunteer activities, encourage volunteer participation and we give our employees 24 hours or three days of paid volunteer work each year. And we measure community engagement by way of financial education activities: online, in-person branch managers doing lessons, they try to reach something like 1600, 2000 people a year and we have two full-time financial counselors onsite doing just one-on-one work. We’ve added to community engagement this year becoming a better partner to native people, native organizations, tribal governments. That’s 10% of Montana’s population. There are eight federally recognized tribes in Montana, seven reservations with sovereign tribal governments and we need to become a better partner to them.

We’ve never done a terrific job of it and that’s really becoming an increasingly important part of who we want to be. Third principle is an easy one, long-term resiliency. We really do believe that a part of being a very good impact organization is recognizing the need to be around for a long time, not chasing short-term maximization, superficial transactional relationships, but really pursuing long-term relationships and being around it. And that tends to be measured on the standard financial performance, a healthy return on assets, healthy credit loss levels, healthy protection in the form of allowances for loan losses, net worth, et cetera. Principle four is that we aim to deliver positive social and environmental impacts with the resources we have, with the balance sheet we have. A couple of examples there and there are a lot.

One is the CDFI metrics, very important part of our social impact. That means that we lend or annual lending activity is at least 60% in terms of units and dollars, both to low income households. That is area median 80% or less and or into CDFI designated investment areas or census tracts. Good example of the environmental impact measurement, I talked about an environmental impact assessment I should say, and a management plan. A part of that management plan has become measuring through PCAF or the Platform for Carbon Accounting Financials, the greenhouse emissions of our balance sheet. We don’t know yet what to do about that.

We’re not an organization that has yet set a target for reduction, but we have begun to develop better systems for measuring at least and understanding where are we at and I think an important part of our work in the future is going to become figuring out what our trajectory needs to be to lower those and ultimately get a balance sheet to net zero. And that means every building in our portfolio, every car in our portfolio. That’s a lot of work to do and we don’t know how in the world we’re going to get there, but by starting to measure and talk about it, we are building a culture that knows we’ve got to do something about it. We got to help our members get there.

Principle five, transparency and good governance. We publish a ton. You can go to our website and these are the metrics. You can pull up compensation metrics to understand how we pay men and women differently or similarly in the same kind of a job class to get a grip on the difference between the lowest paid and highest paid employee in the organization. You can pull up the environmental impact statement, the environmental management plan and you can pull up our diversity, equity, and inclusion plan. These are the sorts of things that we’ve put out there for our members and the communities we serve to digest, give us critical feedback on.

Then finally, principle six is all about culture. We got to build a culture of strategic alignment and one in which people feel like they have the tools to succeed, a voice in decision-making and the power to solve the problems that sit in front of them. So we measure this through a lot of survey work, coworker happiness, coworker engagement with the strategy. We measure it by way of turnover rates and retention rates and we measure it by way of progress in our diversity, equity, and inclusion work. So I hope that helps. I know that’s a mouthful, but that’s really when we’re organizing our strategic priorities, we dump them in these buckets of principles. We set key success metrics in each of them and we establish work plans in each of them and it seems to keep us anchored to progress and success.

Cameron Madill:
Yeah, that’s great Jack, I think. I mean I snuck three questions into one so it’s reasonable to respond with three answers in one. It sounds like a great book. Just a little thought for you to think about. I’d love to go back to from a marketing angle, you touched on something really interesting about… I’m trying to find the exact quote, but basically that if we’re going to be a force for good, we have to be good at these core product and service elements, but we’re going to win on values. So how does that change how you think about marketing? How do you market to bring in those people who really want to stick with Clearwater for a decade or two, not just because you got a great rate or a great product?

Jack Lawson:
Yeah, great question. Disclaimer it a little bit by saying I am a credit union generalist, I’m not a marketing specialist, and I’m thankful that we have really great marketing people in the team, but I should be able to be a little bit helpful here and hopefully give you a few kernels of wisdom or value along the way. I’d say this, the marketing, it has to be thoughtfully constructed around supporting the long-term strategy rather than short-term sales goals. That’s the kind of the start point. We really work hard to make our marketing decisions and make tactical or take tactical decisions through a mission purpose values lens more so than a sales lens. That can sometimes create some tension in the organization. If you’re running one of the lending teams, mortgage business consumer, then you hear me saying that, you’re pulling your hair out a little bit saying, “Oh, no. You’ve given me difficult goals to achieve, support it with a product specific sales promotion.”

We don’t do a lot of that. It’s not that we don’t do any, but we’re pretty careful to make sure that we’re storytelling around the impacts that we have around the difference in strategy that we bring to the market far more than we are doing product sales. I think it’s fair to say that this is a slower process. I’m not positive, but I think it’s probably true that storytelling versus feature and benefit messaging takes more time to develop. The development of campaigns to support long-term strategic direction is probably harder, more grueling than that would take in a near term sort of sales and product oriented campaign. And it’s also harder to find partners and vendors as you know, you’re right in that space. So we have to work harder to identify those folks, screen through and build those relationships, trust those relationships, I think then if we were in a more kind of a traditional approach.

I don’t know this for sure either, but I think it probably takes a little more money too in terms of sort of purchasing, whether it’s giveaways or vendor relationships or otherwise, just making sure that we are values aligned. And I think that sometimes if we’re doing mission aligned media investments and really finding the right places, the right moments, the right ways to communicate and place our messages, it’s probably a little more expensive than just pure price point media kind of buying. All that said, I also think that while this might take a little more time and money to get right up front, it pays dividends long term. Once it’s embedded, once it’s rolling, once we’ve figured this stuff out, we get the right people into the organization. Our members are joining us for the right reasons, they’re building deeper relationships with us, they’re sticking around. We’re getting the right people working here, they’re really aligned with the mission and the values and that those things ultimately pay off in spades.

Cameron Madill:
Yeah, well said. And I think as for anyone who hasn’t heard me, I talk about this probably almost every podcast, Jack, but much of my career has been in the community of certified B corporations, and I think you said it very well that I think it’s absolutely to be a really purpose and value-driven business is slower. It is harder to find the right partners and it probably does take more money, but it is also, and this is often what I’m trying to advocate for, done right it’s a very powerful differentiation strategy. And ultimately if you take the heart piece out of it, we are all looking to not just be one generic thing in a sea of commodities.
The beautiful thing though, of course, is that we can do this and be differentiated and have a whole lot of heart and soul and feel great about ourselves versus, I don’t know, if we differentiated on like something unethical I guess. So I love what you touched on there. I’d love to then actually circle back to Inclusiv because I think your work with… I know a lot of your career is community development credit unions, and I’d love to hear about why did you rebrand that organization and what did you learn from that?

Jack Lawson:
Yeah, all of the credit unions that I’ve worked in or been a board member at, and there have been a couple of the latter, have been Inclusiv members, have identified as community development credit unions, and in fact have been CDFIs. That’s just a part of the credit union movement that I grew up in. I say grew up in, I kind of started at about age 30, but that’s been it for me. I love Inclusiv and I loved the National Federation of Community Development Credit Unions, which was the name of the organization before we rebranded. The rebranding was I think about four years ago. While I’m not board chair today, I do still serve on the board of directors. I was board chair at the time.

I love the organization because among the trade associations and thought leader organizations out there in the world of credit unions, Inclusiv’s mission is somewhat unique in that it’s commitment is to strengthening low income people, low income households through their connection to the work of credit unions and connecting people, organization and communities to credit unions to help do socioeconomic uplift and to then in turn help those very same credit unions be better at doing that social and environmental impact in their own work.

So it’s a unique mission and a really impactful, solid organization populated with really, really good people. So we rebranded primarily just because National Federation of Community Development Credit Unions was becoming a mouthful. There was also relatively new leadership and a lot of growth happening and it felt like a good time to do a bit of a refresh. It was the case also very importantly that in the growth, we were attracting larger numbers of Spanish-speaking credit unions, with leadership teams that were Spanish-speaking, memberships that were almost who Spanish speaking, many from Puerto Rico, but not exclusively from Puerto Rico. And we wanted a name that translated a little more easily than the prior name. Finally, and this can be seen in the name that we landed on, we wanted a name that was very clear on and expressed the organization’s longstanding commitment to justice, diversity, equity, and inclusion.

The founder of the National Federation and now Inclusiv, a guy named Cliff Rosenthal who you may know well, and all of the initial credit unions and people who have made the organization great over many decades were people who were really committed to lifting minority populations, building strong minority governed credit unions and ensuring that the credit union was really, really strong in the black and brown and lower income communities of the United States. We wanted a name that really spoke to that and that’s a great part of the reason we landed on Inclusiv.

I think you asked what I learned as well, probably above all what I learned was while rebranding is daunting and a huge task, especially when you’ve got a good healthy organization with a lot of stakeholders very committed to and attached to a name, if it’s undertaken for the right reasons, if it’s done with care for the legacy, compassion for the stakeholders and sensitivity around what people feel and have built and you do really clear transparent communications, then it can really build strong momentum for future growth. And that’s exactly what we have experienced in the case of Inclusiv. It was not without some pain and challenges along the way, but there was no dip in membership, no dip in financial performance, no loss of key staff. It was a really strong momentum building brand change, and it’s only strengthened the organization. I would say to any of your listeners out there, if you’re not familiar, reach out to Inclusiv, learn the mission of the organization, consider joining. It’s a really great organization,

Cameron Madill:
Yeah, very much so. I would agree, I think it’s a great rebrand you all did. And having once rebranded PixelSpoke, I would agree also it was a huge amount of pain, but it’s a really key foundation that is going to get built on for years or decades.

Jack Lawson:
Don’t be afraid of it, but go into it for the right reasons and with some patience and care.

Cameron Madill:
Yeah, absolutely. And I think that sort of depth of purpose and clarity you had goes a lot further than just kind of a rebrand for the sake of a rebrand. So I’d love to just maybe hear if you’re open to it, one or two kind of key learnings or lessons when you think of your past credit unions, whether it’s Self-Help Credit Union or Brooklyn Cooperative FCU, because they’re both really interesting, innovative organizations and I imagine you got some good tidbits for us.

Jack Lawson:
Yeah, I mean, I’m a lucky man. I’ve really stumbled… I mean, first of all, stumbling into the credit union movement, finding work in it and purpose in it, it’s not something that everybody’s able to do and we all say this, it’s not something that any of us really set out to do. But when I was lucky enough to land there, good things happen and that’s totally been the case for me. Starting in 1998, my job was organizing. I was a key organizer and then sort of founder of Brooklyn Cooperative and then managed it for about a decade, 1998 to 2008. This was a hugely transformative experience for me. I was a white middle class, 30-year-old, I want to say kid, but I guess 30-year-olds aren’t really kids anymore. I think I felt like one at the time. But I was from upstate New York with that background doing organizing work in North Brooklyn, New York City, and I learned a lot about urban politics.

I learned a lot about the lives of immigrant families, both the opportunities that they’re sort of seeking and the challenges that they face along the way when they’re seeking peace, income, stability, better lives for the kids. I learned just about everything about credit union operations a guy could want to know from rolling up the gate in the morning, turning on the lights, booting up the systems to Tellering at the coffee break, lending through lunch, doing the marketing, doing the accounting, meeting with the regulators or foundations in the afternoon and evening, developing and working with a board of directors. We were a team of three at first, then a team of five, and slowly but surely a team of 10. And I think that above all, I learned how to be a really good roll up the shirt sleeves generalist leader of a credit union.

It’s a very old industry, but it’s a very cool industry and a very high impact one cooperative banking. And I just got silly lucky to become both a founder and initial manager or CEO of a startup CDFI credit Union in Brooklyn, New York. So then working at Self-Help was very different, but a huge privilege. I mean, for those of your listeners who don’t know, Self-Help is one of the countries leading community development financial institutions, not just credit union. And in fact, there are two credit unions at Self-Help, but also CDFI venture capital fund, also policy advocacy in the form of Center for Responsible Lending. It’s an amazing organization full of really talented people doing high impact work all over the country now.

My job in 2008 was to go to California and help stand up a new charter, a federal charter to partner with kind of sister organization, if you will, to the state charter. The name was Self-Help Federal Credit Union, and to work on what turned into a mergers campaign. This was 2008, I was there from 2008 to 2013. This was great recession years and up and down California, small mid-size credit unions were suffering with really high unemployment rates in some cities as high as 40% in Bakersfield and a real estate value environment that was almost as bad as anywhere in the country. And so there were a number of credit unions that couldn’t weather the storm, and we built a merger platform to stitch together some really great small mid-size community credit unions into one larger higher impact organization.

Across those five years, I helped with nine mergers and acquisitions, seven core system conversions and I think, if anything in that environment, I learned operating with a lot more resources than we had been in the Brooklyn context. But I think above all, I learned how to operate and the importance of speed and scale in a similarly mission aligned impact-focus, but just better resource, clearer, faster drive to scale kind of a context. That was enormously valuable to me. After that five years, I was the chief operations officer of the federal charter and very focused on internal operations, core system conversions, training programs, fee schedule combinations, et cetera. I really got hungry to get back to the strategic work of being a CEO and started to look around the world for my next gig and just got once again stupid lucky and landed here in Missoula, Montana, one of the coolest towns in the Rocky Mountains, a really, really special place. And as I said earlier, or you said earlier, I’ve been at it for 10 years here now.

Cameron Madill:
Well, they always say better to be lucky than good, but obviously you’ve made a lot of your life better. Well, yeah, thanks for sharing those. I agree those are both just really sort of laudable tremendous examples of what’s possible within the credit union model and just how flexible and diverse it is. I’d like to pivot to a different topic, and this is one that I’m fairly ignorant about, but I’m going to give you just a very brief backstory. We just had our annual conference for the Community of Certified B Corporations in North America, and I’ve done a lot of leadership in that space and they did a CEO forum. The whole topic of the CEO O forum was how is the anti-ESG movement going to impact businesses that are committed to measuring their impact?

And it was something that, to be honest, I’ve never… This won’t surprise you. I’ve never met a credit union that said, “Oh God, you try to measure your impact, we don’t want to talk to you. Go away, or that’s antithetical to how we operate.” Every credit union person I’ve met who I explain our model, they say, “Wow, that’s really cool. We’re doing some of that. We want to do more. We’re doing a lot of that.” It just seems like so much of the world has gotten stuck in this team red, team blue, everything’s polarized, you got to be for something or against it. And so it was interesting to hear stories of consumer companies that were having getting demand letters from the attorney general about some of their policies around measuring impact in different ways, whether it was greenhouse gases or DEI policies or whatever.

So yeah, I guess I admit I was kind of ignorant about this, but I just thought what a tragedy to have. There are definitely people who greenwash or impact wash or whatever you think, but to sort of have this get sucked into the national polarization. And so I was curious, just would love to hear what do you think about that because you’ve literally built this entire model around measuring and quantifying a lot more than just core financial metrics.

Jack Lawson:
Great question. Another very, very big question, Cameron, and I’ll try not to be too drawn out about it. I mean, I think you defined it, I can’t remember, but ESG for your listener… Your listener’s probably familiar, but ESG stands for environment social governance. And there are growing number of not-for-profit credit unions, but also profit maximizing businesses of all types that have begun to say profit taking a loan is enough. We also have to drive positive social environmental impacts and practice highly transparent, good governance in order to succeed. That is, it pushes beyond the pure maximization of monetary shareholder value, which is why you have some state governments, some attorneys generals beginning to question whether those practices are valid, give it a set of shareholder bylaws or otherwise. I hate to do this, but I think it’s important that I do. I want to say that I have heard credit union executives in the United States argue in advocacy sessions, in government affairs sessions, we got to put a stop to this ESG nonsense.

Sooner or later it’s going to come haunt us as an organization or industry and we’re going to have regulators telling us that we have to measure our environmental social impacts and change our governance practices. And we are credit unions, we’re member owned, member driven, would never do harm and we need this to go away. So the voice exists within our credit union industry as well. I think there’s a couple of different angles of anti ESG out there, and I think it’s worth distinguishing just a little bit. One of them I think is that good old fashioned free market economics argument, minimize regulation, get the government out of the way, let profit maximizing behavior by businesses, banks, credit unions. You know, let that drive for profit, allocate resources, and we’re going to get the best possible outcomes we can get.

I mean, there’s a lot of deep theory behind this and there’s a lot of self-interest, business interest kind of embedded in it. I don’t have a whole lot of patience for that form of anti-ESG, if you will. I think it’s shortsighted, given the scale, the scope of the environmental and social challenges. I’m talking poverty, I’m talking inequality, I’m talking climate change, I’m talking disappearance of biodiversity given the size of these problems and the real challenges they pose to peace, stability, longevity, all of that. The theories have been proven to be poor, where you can argue they’ve been tested in practice, they’ve not played out very well. We need to move beyond that. And that’s just going to take raw hard politics. I mean, that’s what it’s going to take, I think.

There’s another form of anti ESG though, that I think is worth talking about just a little bit. Maybe it’s not even so much anti as concern that ESG can become a placebo and not take us far enough. And I think this is sort of rising up mostly in the investment community. I mean, whether it’s, we call it ethical investment practices or responsible investing or ESG investing, this has become a pretty… One of the leading places where ESG metrics is playing out, people setting up funds that will only invest in ESG kind of positive areas and consumers, investors trying to push more money there. And I think there’s a growing chorus of concern that that’s just not going to be enough. Maybe it’s anti ESG, it’s partly constructive criticism, recognizing that these forms of E A S G are very well-intentioned, but they’re just not going to go far enough.

Not investing in a bad thing doesn’t necessarily make the bad thing go away, and that’s because markets don’t necessarily self-correct. And that the bottom line is that in addition to metrics, commitments by profit maximizing or non-profit organizations to do better, ESG measurement and disclosure are just not nearly enough. And ultimately you want to get climate change under control, you’re going to need some global regulation and you’re going to need national governments coordinating and forcing carbon taxes, making certain types of industries go away altogether. And that the ESG kind of movement can be a bit of a placebo, which suggests that as long as enough of us do this, we won’t have to have that.

We’ve seen the number of ESG assets in the economy rise pretty quickly while inequality has also risen, greenhouse emissions have also risen. The warning signs are out there. So I have quite a bit more sympathy for that line of criticism, and I think that’s the kind that may push organizations like yours, ours, and the B corps you are meeting with to make sure that we are all doing more than the measurement, the brand building around it, but also doing the hard advocacy, the political action that we’re going to need to get real change.

Cameron Madill:
So I’d love to switch now to some rapid fire questions, which you have not had the chance to prepare for, so we’ll just see where it goes, Jack. You’re good on your feet though. All right, what is your favorite ice cream?

Jack Lawson:
Salted caramel.

Cameron Madill:
All right. Pretty good.

Jack Lawson:
At times pistachio.

Cameron Madill:
Pistachio’s surprisingly good. I’m always a little bit… Yeah, I always expect to not like it, and then I do like it.

Jack Lawson:
It’s a good ice cream flavor.

Cameron Madill:
What’s a song you’re embarrassed to admit that you like and you’re out there biking in the wilderness or trail running?

Jack Lawson:
I’m stumped.

Cameron Madill:
I mean, journey, that’s usually a good source of-

Jack Lawson:
I’m just not embarrassed by any of it. I’m going to my fondness for Elton John, but who’s not fond of Elton John.

Cameron Madill:
Yeah, [inaudible 00:36:08].

Jack Lawson:
There’s still a lot of Led Zeppelin in my history that I’ll never let go of. I’m not embarrassed about any of it.

Cameron Madill:
I love that you talked about kind of being blessed with this career trajectory you’ve had, but if you had a different career, if we were in some other universe in the multiverse, where would Jack Lawson have ended up?

Jack Lawson:
Maybe journalism. That or agriculture.

Cameron Madill:
All right.

Jack Lawson:
Yeah, both of those things are really appealing livelihoods, trades to me. Difficult, but I’d love to be really good at either one of those and spending more time in either one of those.

Cameron Madill:
Yeah, I love it. All right, my last question. I would love to know what’s the best advice you’ve ever received?

Jack Lawson:
Never look away or stand around when you see someone else working.

Cameron Madill:
Never look away or stand around when you see someone else working. I like that.

Jack Lawson:
That’s my dad.

Cameron Madill:
I was about to say… that was going to be my next question, that was your Dad. Yeah, you hope that’s not from your board or one of your key executives or whatever. Awesome. Well, thanks Jack. I’ve really enjoyed having you on. I’d love to just do a final take. Is there anything you didn’t get to that you wanted to share with our audience or anything you’d really like to reiterate?

Jack Lawson:
No, I just thank you very much for putting the time in and for anybody who’s listening, thank you for putting the time in. I hope I’ve brought a little bit of value to the show. It’s been pleasure.

Cameron Madill:
All right, great. Thanks, Jack. Great to have you.

Jack Lawson:
Yep. Thanks, Cameron. Talk to you soon.

Cameron Madill:
All right. Well, I knew I was going to enjoy speaking with Jack. I hope that you all similarly enjoyed listening to him. I’d love to quick share my key takeaways. The first one was really just the phrase that we heard him use several times, that we will always compete on price, product and service delivery, but we will win on values. You can tell they’ve used that a lot, and I thought it was just such a powerful framing to really embed their mission inside of the organization and in particular the lens that they want to be put on top of all operational decisions. The next was hearing the six principles of values-based banking. It was interesting to hear how Jack has refined or revolved these over the years, but how having that framework has allowed them to orient the entire strategy around this, including, as you said, management plans and key performance indicators.

So the first principle was member focus, the second was community engagement, the third was long-term resiliency, the fourth was positive social and environmental impacts, the fifth was transparency in good governance, and the sixth was all about culture. And I just thought that was just a wonderful framework and all of his anecdotes and examples inside of them. The next piece I enjoyed hearing about was how they think about marketing, that it’s all about storytelling around kind of their strategy, impact and essence more than their product. And I would echo from both my personal experiences at PixelSpoke as well as many of just kind of our colleague B Corporations that I think Jack was right when he said that it’s slower, it’s harder to find the right partners and it probably takes more money up front, but that ultimately it can really powerfully pay off in the long term.

And I think we really are all looking for that differentiation so we don’t just end up lost in a C of commoditized offerings. I encourage anyone who has not heard about Inclusiv, by the way, it’s I-N-C-L-U-S-I-V, there’s no E on the end of it. If you’ve not heard about Inclusiv, they’re a really great organization. We’re proud to be members of them here at PixelSpoke, and that their mission is really unique. There’s so many credit union groups that work in different ways on these problems, but they are the organization that is in charge of focusing on socioeconomic uplift and helping their member credit unions to be better at environmental and social governance and to be better run and more financially healthy. And then lastly, it’s an enormous debate. Sorry, I didn’t spell out the ESG acronym of Environmental and Social Governance.

It’s quite the topic among many of the people I’m engaging with. I think it’s a big topic of what does this anti-ESG backlash mean, but I think it is really interesting to think about because it is a real problem to have people out there who are claiming that they are substantial positive impact organizations and they’re fabricating claims or they’re exaggerating claims. I mean, that’s literally influencing their customers or investors. And so I think it’s a really rich and important debate, and I hope it’s one that all of us in especially credit unions engage in because I think at the end of the day, as Jack said, there’s so much work to be done in the world. And I think if we can’t measure impact, then it’s hard to make sure it’s more than just hot air and so I think it’s a reason for continued focus and work to keep getting even better at this. All right, thank you so much for joining us today for another great episode. Until the next time, I wish you the best of luck in making your credit union remarkable.

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