Our approach to cooperative banking – putting things in context

A message from mecu’s Chairman of the Board GRI 1.1

mecu represents a community of over 100,000 people who together pool their savings and lend them to each other. We take a cooperative approach to banking.

This approach has seen mecu grow to become one of Australia’s largest credit unions, recognised nationally and internationally for its socially responsible approach to banking. This year mecu was recognised globally as being among the top 50 leading sustainability reporters.

This year’s Sustainability Report is our third. It aims to inform our members and stakeholders about the way we go about our business. The Report offers an insight into our current levels of performance and plans for the future, and it illustrates why we believe a sustainable approach to banking represents opportunities for all financial institutions.

We trust our approach to disclosure and transparency gives people confidence in our organisation and the approach we take to sustainability.

Over the past three years the business case for a sustainable approach to banking has become even clearer and our ability to articulate the value of doing business in this way has improved. The mecu business case for sustainability recognises the following principles:

  • Integrating sustainable development into policy reduces risk, improves staff morale and provides a strong and confident long-term relationship with members and stakeholders.
  • Internal transparency improves external dialogue and internal communication. It helps overcome cultural barriers and achieves workplace diversity.
  • Taking into account economic, social and environmental aspects of business operations reduces risk to members and stakeholders, therefore improving the bottom line and creating long-term value.
  • Responsible business conduct is a good means of building and maintaining brand reputation.
  • Growing demand for more responsible corporate behaviour creates new business opportunities.

What we’re most proud of: our achievements

This past year has seen mecu’s commitment to sustainability return clear benefits to its members and stakeholders. mecu is reporting record levels of financial performance, member satisfaction and staff engagement which represents world’s best practice. It proves the value of being a mutually owned financial institution and that our sustainable approach to banking could also represent the future for many other businesses.

This year:

  • group after tax profit was $16,591,038
  • group assets grew by 10.41% to $1,353,673,598
  • group loan portfolio (gross) now stands at $943,719,462 representing growth of 11.33%
  • group member deposits grew to $1,150,566,598 representing growth of 9.63%
  • member reserves are now $162,860,031
  • returned a member benefit dividend of $16,773,348.67
  • member net satisfaction levels increased to 93.8%
  • member shareholders grew 6.76% to 107,302
  • overall average member value increased from $17,389 to $18,91 5.

Again we have been honoured to receive recognition for our efforts to redefine cooperative banking. Global Reporters (the flagship SustainAbility research program) which surveys and ranks the quality of non-financial reporting, along with the United Nations Environment Programme (UNEP) and Standard & Poor’s, collaborated to produce an international benchmark survey of non-financial reporting. mecu was placed 30th out of the top 50 global reporters.

Association of Chartered Certified Accountants(ACCA) also acknowledged mecu’s efforts in producing yet another well regarded, transparent sustainability report with a (joint) award given for ‘continued high quality sustainability reporting’.

Looking to the future: key impacts’ risks and opportunities GRI 1.2

Results achieved in 2007 give us confidence that our strategy is the correct one.

However, we remain aware that the credit union industry continues to gradually lose market share to a host of other domestic and international approved deposit-taking institutions [ADIs] operating throughout Australia. We must continue to find ways to remain relevant to our members and broader communities of interest. To overcome the long-term adverse impacts of an ageing membership on the business we must also find ways to attract younger members to mecu. We shall further encourage mecu members to refer friends and relatives to the Credit Union.

To remain competitive, mecu is committed to maintaining its operational margin by improving non-interest, non-fee income and keeping operating expenses low. We are committed to remaining a successful credit union by maintaining high levels of corporate governance, managing costs and building competitive advantage in the areas of price competitiveness, product quality, personal service and values.

The prospect that some mutually owned ADIs may either voluntarily or unwillingly demutualise, represents both potential risks and opportunities for all credit unions and their members. mecu has developed strategic as well as defensive demutualisation strategies for consideration by members, should the need to pursue these paths ever eventuate. Changes made to mecu’s constitution in 2007 provide members with greater protection against a hostile takeover of the Credit Union as well as protection of shareholder value.

mecu members have overwhelmingly supported the Credit Union’s approach to ethical and socially responsible banking. We see opportunities for mecu to continue to innovate and define its approach to banking by:

  • Becoming carbon neutral
     
    In addition to our ongoing work to reduce mecu’s environmental footprint through the products we offer, mecu will work on developing a carbon management framework which will see our direct operations become carbon neutral by 2010. We will aim to achieve this goal through forming a better understanding of the entirety of our direct footprint and minimising it with a combination of energy savings across the business, continuing to source electricity from renewable energy projects, investing in new, more environmentally friendly technology in the buildings we own and where necessary purchasing carbon offsets. At the same time we will continue to improve our water consumption and waste management.
  • Building the mecu land bank EN14
     
    This year we will also begin the task of building a mecu land bank, which will see a percentage of the profits we make each year directed to building and preserving Australian native forest, enhancing biodiversity and carbon sequestration which will help mecu become carbon neutral. The land bank will become an asset all mecu members can be proud to own.
  • Tackling social issues of concern
     
    Our commitment to sustainability is balanced, addressing both social and environmental issues relevant to our business. House affordability and personal levels of indebtedness are serious challenges. mecu will focus on tackling both issues.
  • Showing leadership
     
    We also see further opportunities for mecu to encourage a shared approach to sustainable banking across the Australian credit union sector and mutual building societies. More than four and a half million Australians are members of credit unions and building societies so our collective impact on the planet and people’s lives, together with the opportunity to encourage people to live more sustainable lives, is significant.
  • Meeting member and stakeholder expectations
     
    As mecu develops its approach to sustainability we must find ways to better identify and respond to new issues that our members and stakeholders expect us to consider and address. The question of our role in lobbying for environmental and social change is something we shall give consideration to. How we shape our response to this and many other issues demands we have an accurate understanding of what members and other stakeholders expect of mecu.

To assist us further identify expectations of material importance to members and stakeholders, mecu is developing a new on-line presence, which will enable us to better connect with mecu members, creating a virtual mecu community of like-minded people.

Finally, thank you to everyone who has contributed to the success of mecu, which in 2007 celebrates 50 years of cooperative banking. We look forward to continuing to report our performance to all people who share an interest in the mecu story. We trust you will enjoy following our progress and share in our learnings as we move further along the path to becoming a truly sustainable business and leader in cooperative banking.

I welcome any feedback you may have on this report or mecu’s strategy.

Peter Crocker - signature

Peter Crocker
Chairman