Of all the moral quandaries Guy Cormier has faced since becoming president and CEO of Desjardins Group (seven million-plus members, $295 billion in assets) in 2016, the question of whether or not to fund energy pipeline projects was probably one of the most difficult. Cormier says it was a group of millennials that helped him make up his mind after encouraging a more pragmatic approach to fossil fuel divestment — which is probably not what most would expect from the so-called green generation.
Mind you, who would have thought that Canada’s largest federation of financial cooperatives would actually take the recommendations of its Youth Advisory Board seriously? “It’s not true that millennials are all totally against oil and gas,” Cormier says of the valuable insights he has gleaned from the youth committee, a group of 12 credit union members, elected caisse officers and Desjardins employees between the ages of 18 and 35. “These young ones really helped me have a better understanding that when it comes to pipelines, transition is the key word.”
Compromise was not what environmentalists and Indigenous groups were hoping for back in July 2017, when Desjardins made headline news by placing a moratorium on the financing of pipeline projects. At the time, Desjardins was among 24 financial institutions that had agreed to lend money to a subsidiary of Kinder Morgan Canada for the high-profile expansion of its Trans Mountain pipeline, which was subsequently purchased by the federal government. If Desjardins had turned the temporary freeze into a permanent boycott (as the Dutch-owned ING Group has already done), it would have set a precedent in the Canadian finance industry and could have triggered a call to action across the country.
Instead, Desjardins lifted the suspension five months later, agreeing to live up to its lending agreements while vowing to evaluate the environmental, social and governance (ESG) practices of clients in all future lending decisions. This was still a substantial change that expanded ESG criteria beyond major accounts to include insurance, wealth management and banking.
Desjardins also unveiled new measures to divest from fossil fuels: the purchase of carbon credits to offset its greenhouse gas emissions (it became carbon neutral in 2018); a focus on renewable energy for the direct investment of its own assets (which includes the Desjardins pension plan); and a commitment to reduce the carbon footprint of its own assets in publicly traded securities (to 25 percent below average) by 2020.
Last spring, Desjardins began installing 200 charging stations for electric vehicles in Quebec and Ontario. This past September, it doubled its number of socially responsible investment (SRI) products, including a new line of eight exchange-traded funds (ETFs).
Cormier is proud of Desjardins’ commitment to combating climate change. “Now people can look at Desjardins and say, ‘You know what? It wasn’t just words. You took real action.’ ”
He’s just as pleased with the Youth Advisory Board he created, which was actually one of the first decisions he made after becoming CEO. Cormier takes the members out for informal dinners every couple of months, just to talk about life and see what makes them tick. They are also asked to provide input at the meetings of the board of directors and management committee, where they again weighed in on Desjardins’ recently softened stance on the cannabis industry with surprising nuanced views.
“Now people can look at Desjardins and say, ‘You know what? It wasn’t just words. You took real action.’ ” – Guy Cormier
“Sometimes we hear, ‘Oh, millennials all want to smoke cannabis.’ It’s not true. This advisory committee told me, ‘we’re not pro cannabis and we’re not against it but if it’s there, Desjardins should be a leader in education and its impact on health, especially as a life and health insurer.’ ”
Cormier, who has four millennials in their 20s at home, was about their age when he first began working for Desjardins as a teller in 1992. Admittedly he wasn’t nearly as “woke” as today’s kids. “Was it really clear in my mind what the purpose of Desjardins was? Was it clear in my mind the role we could play to enrich the lives of our members and clients, to enrich society, to impact the economy? Not necessarily.
“But after a few years, I decided to go back and do my master’s degree. After this, I received so many offers from banks. Some colleagues said, ‘just go to Toronto and work in a big bank, you’ll have more money, more impact, blah, blah, blah.’ But it had been, at this time, six or seven years that I was with Desjardins. And by then I knew that we were more than just a financial institution. Our purpose is very different from the big banks.”
On this point, Cormier has no moral quandaries or ambiguity.
“As a cooperative, we want to always work in the best interests of our clients and our members. It’s not in conflict with the fact that we have to make money. Actually, this year we’ll make more than $2 billion in net earnings. We’re okay. But at the end of the day, this is not the only game we want to play.” ◊