Understanding Shorebank: A community development bank passes

ONE OF THE MOST IMPORTANT stories for the nonprofit sector last week crept by with nary a mention in the press about its connection to nonprofits. ShoreBank, the nation’s preeminent community development bank, finally succumbed to a long spiral of financial troubles. ShoreBank will now be acquired and managed by a new entity, the Urban Partnership Bank, pulled together with investment support from major financial institutions such as Goldman Sachs, Citigroup, and JPMorgan Chase among others.

This iconic institution, with a current asset value of $2.2 billion, is almost four decades old. ShoreBank’s establishment in 1973 preceded the Home Mortgage Disclosure Act, passed in 1975, and the Community Reinvestment Act, signed by President Jimmy Carter in 1977. The message of the Community Reinvestment Act was that banks had to cease their destructive, neighborhood-destabilizing, discriminatory lending practice known as “redlining.” ShoreBank was out to prove—successfully for most of its existence—that community reinvestment was also good business. For most of ShoreBank’s history, business was good, and after its first few years, it was making profits and expanding.

But community development banks are no less immune to the economic downturn than their commercial peers, especially if they are located in Illinois and invest primarily in the state. One of out seven bank failures in this recession has occurred in Illinois, with ShoreBank’s extensive holdings in Chicago’s South and West Side neighborhoods, making it a strong candidate for failure during the economic downturn. The FDIC’s seizure of ShoreBank and seven others last week brought the list of official bank failures so far in 2010 to 118, compared to 140 in all of 2009 and only 25 in 2008 (these figures don’t count banks that avoided FDIC actions due to last minute acquisitions or mergers).

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How Do You Measure Sustainability?

How do you measure sustainability ? I have been fortunate to gain a little preview of the input supporting the soon-to-be-released report offering answers to this very question. The report has been compiled by  Ethical Corporation and is called “Social and economic impact: measurement, evaluation and reporting: A must-have guide for companies operating in emerging markets and vulnerable communities”. This  report promises to offer answers to many of the questions that most CSR practitioners and observers have been seeking. If only there were a way to capture all of a Company’s sustainability impacts in a clear and consistent measurement methodology, we would all be much wiser, and probably, much more sustainable. The Ethical Corp report promises to include ”a break-down and analysis of impact measurement methods, tools and processes currently available” based on insights from a survey of 116 CSR professionals worldwide, 30 in-depth interviews, a review of 60 Sustainability Reports and will include case studies from Henieken, Vodafone. SAB Miller, Tata, Unilever, Nike and more. There have been some spectacular impact assessments produced, such as Unilever’s economic impacts in Indonesia, published in 2005 and further studies in South Africa and Vietnam.  In fact, Unilever measure quite a lot, including their water footprint and more.

This focus on metrics and measurement is certainly welcome, as, beyond carbon footprinting and community giving, most companies haven’t a clue as to how to calculate their sustainability impacts.

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Business Sustainability: Optimizing the Flow

Have you ever observed a once thriving business, product line, or an innovative idea suddenly begin to falter and eventually disappear?  Often viewed as a failure in management or neglected operations, we instead ask the question: was sustainability an engrained part of this company’s strategies and operations?

Business sustainability has traditionally been put into the box of environmental or social action.  While these are certainly two very important areas of focus, business sustainability is really about taking action to maintain the on-going health and profitability of the company. 

Also viewed in terms of risk, sustainable business actions are really activities which have a positive impact on the flow of money and resources through an organization. 

Think of it as a forward flow of product and a backward flow of money.  Business sustainability action increases the volume, efficiency, and stability of product flow out, bringing more money in.  At the same time, applied sustainability concepts effectively improve internal and external business practices to slow the flow of money out.

•    Increase responsiveness to customer expectations.
•    Expand into new markets with innovative products and services.
•    Increase internal and external process efficiencies.
•    Increase employee productivity.
•    Reduce procurement and supply chain expenses.
•    Reduce business and operational waste.
•    Reduce environmental and social impacts.

In far too many cases, business models and strategies become misaligned with some basic business sustainability concepts.  Cash flow eventually slows and may even come to a stop.
By regularly reevaluating the company’s business model and its applied sustainability concepts, sustainable organizations are able to respond to the critical questions affecting the flows through the business.

The strong voice of the CSR community in response to WSJ’s “case”

It is now exactly 7 days ago that a storm in the Corporate Social Responsibility (CSR) world broke out over an article by Aneel Karnani published in the Wall Street Journal titled: ”The case against Corporate Social Responsibility”.

In the article he argued that the idea of companies having a duty to address social ills is not just flawed but that it also makes it more likely that we’ll ignore the real solutions to these problems.

All week last week the reactions to this article from around the CSR community flooded in. People tweeted on Twitter, shared on Facebook and emailed from one practitioner to the the other arguing for and against this point of view. Some reactions where in support of Mr Karnani but the majority where criticizing the simplicity of his argument and absolutely disagreed with his assessment that CSR in itself as a business principle was flawed.

This is a list of some of the reactions by authors and websites:

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The Endangered Species of Wood

In order to help green building professionals avoid inadvertently using endangered species in green building projects, the Pharos team has just added a section to the Pharos Chemical and Material Library (CML) that deals specifically with trees and other biobased materials. The CML now includes over 800 entries for tree species or groups of species with reference to any applicable warnings of threats to their survival or their habitats. Species warnings indicate the Pharos system’s prioritization of concern based upon the degree of the threat to the species.  One of the most widely accepted criteria sets for rating the threat to endangered species is the Red List Categories and Criteria prepared by the Species Survival Commission of the IUCN (International Union for Conservation of Nature and Natural Resources).  Pharos structures its prioritization of the relative significance of threats based upon the IUCN categories.

Warnings are categorized using a colored-flag system, similar to the one used in the CML for chemical warnings:

• Black – Extinct (EX) or Critically Endangered (CE) – species is extinct or facing an extremely high risk of extinction.  Species that have been listed as extirpated in a US state (locally extinct) are also included in this category.

• Red – Endangered (EN) – species is facing a facing a very high risk of extinction. Pharos also places most endangered species warnings from organizations that do not use the IUCN classification system into this category.

• Orange – Vulnerable (VU) – species is facing a high risk of extinction. Frequently referred to as Threatened.

• Yellow – Near Threatened (NT) – species is not yet considered vulnerable or endangered, but is close to qualifying for or is likely to qualify for a threatened category in the near future. Species not yet evaluated (NE) are included here.  Data deficient species (DD) are also included in this category where more information is required and the possibility that future research will show that threatened classification is appropriate.

• Green – Least Concern (LC) – species is still widespread and abundant

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What do Employees Need to Know about Sustainability at Your Company?

In addition to executive management playing a critical role in the success of a company, business sustainability requires leadership across the entire organization.  While management may ultimately carry the responsibility of sustainable business results, employees have a part to play in the definition and implementation of the company’s business sustainability programs.

It seems there is a disconnect between a corporate sustainability plan and how that vision filters down and is exercised in the day to day processes of an individual worker’s life.  Granted, there are leading organizations that have successfully tied process to sustainability initiatives; currently, they are the exception, not the norm.

 So what are your employees saying about your organization?  Are they equipped with information and engaged in your company’s business sustainability programs to passionately communicate the message you would like the world to hear?  Leading ‘green’ talent organizations are responding and creating sustainability advocates by:

 •    Cascading business sustainability strategies down through organizational and individual performance goals.

 •    Informing, motivating, and actively engaging employees in the company’s business sustainability programs.

 •    Integrating Key Performance Indicators (KPIs) into the business processes, corporate performance, and employee recognition.

 •    Actively engaged with key stakeholders on sustainability issues, including employees to understand how sustainability issues are affecting the business.

 •    Performing transparent reporting on sustainability concepts and sensitive issues, with both positive and negative results.

 Tying corporate sustainability initiatives to day to day processes makes CSR more personable to an employee and helps employees to identify their role in corporate responsibility.