Credit union programs specifically related to environmental sustainability are still rare, but the number of credit unions pursuing them is increasing, according to George Hofheimer, knowledge director of the Filene Research Institute, the nonprofit think tank for co-ops. credit in Madison, Wis.
The new faces are one of the reasons. Millennials and Generation Z are less patient with excuses to avoid the economic changes needed to reduce greenhouse gases and curb global warming.
“Young people who join credit unions are increasingly asking for answers or asking for answers,” said Hofheimer. “This is really what makes a difference. In my work with credit union boards and their planning efforts, I hear this topic emerge more as an important topic for strategic planning: “Where do we stand on environmental issues? “”
Some credit unions answer this question in ways that go beyond adding a solar panel to an office. Three American credit unions are among the 60 members of the Global Alliance for Banking on Values, a group formed 10 years ago to use “finance to ensure sustainable economic, social and environmental development, with an emphasis on l ‘helps people realize their potential and build stronger communities,’ according to its website.
The members of American credit unions are:
- Vermont State Employees Credit Union in Montpellier ($ 796.2 million in assets, 66,913 members);
- Missoula Federal Credit Union in Montana ($ 542.1 million in assets, 50,505 members); and
- Verity Credit Union in Seattle, Washington ($ 601.7 million in assets, 34,435 members).
“These early adopters see it as part of their mission,” said Hofheimer. “They see the credit union as a driver of sustainability, be it environmental, social or economic.
The Global Alliance for Banking on Values continues its mission by cultivating collaboration among the leaders of its members, said Paul Herendeen, director of impact market development at MFCU.
“It’s a growing organization as people try to figure out how to do this work, how to measure it and how you hold yourself accountable,” Herendeen said. “We are still in the learning stage.
The alliance does not tell members what types of loans it should or should not make. “It’s about transparency and letting institutions make the right decisions,” Herendeen said.
The alliance provides a way for the credit union to connect with a larger world of ideas and practices, enabling them to learn, find resources to experiment, and ultimately grow. its impact.
“It was in our wheelhouse in our way of seeing the world,” said Rob Miller, President / CEO of VSECU. “As a credit union, we need to understand how we finance change by changing the way we finance. In doing so, we are serving our own best interests, because if we can make the community stronger, that community will be healthier and need more of our services. “
And the services could be considerable.
A mid-size residential solar system has gone from a pre-incentive price of $ 40,000 in 2010 to around $ 18,000 in 2018, allowing installations to grow despite diminishing tariffs and incentives.
According to the Solar Energy Industries Association, the United States ended 2018 with 64.2 gigawatts of solar PV capacity installed, enough to power 12.3 million homes. Solar-electric installed is expected to more than double over the next five years.
In addition, the potential of solar is enormous. The US Energy Information Administration has found that photovoltaics generated 63 billion kWh of electricity last year, just 1.5% of the electricity consumed by the grid last year. He estimates that the small-scale systems generated an additional 30 billion kWh consumed near the grid.
Meanwhile, the internal costs of coal alone are forcing utilities to cut massive amounts of coal-fired capacity.
These are concerns in Montana, which is the country’s seventh largest mining state – as well as the seat of Glacier National Park, where glaciers disappear, and MTCU on the state’s mountainous western edge.
Herendeen, who heads the credit union’s environmental program, said his values-based approach to banking is the result of an intensive process of workshops and discussions on the credit union’s fundamentals-based strategy. since a long time.
“It was not a revolution, it was an evolution,” he said. “It was loyal to our members; it was true to our way of doing business. We also thought it would be a strong differentiator in an increasingly crowded market. “
The MTCU said it defines its four core values as cooperative ownership, empowerment, inclusion and impact, which includes impact on the environment.
Although surface mines operate in Montana and many of its residents are conservative, residents are also self-reliant and the credit union’s environmental work transcends political boundaries, according to Herendeen, a former gas researcher. 38-year-old greenhouse.
“Almost everyone in Montana is here because they care deeply about the natural environment,” he said. “We save all the money of our members who invest in alternative energy, that is, they keep money in their business, in their home and in their pocket.
On top of that, solar and energy efficient loans support the work done by small local businesses.
“So we don’t necessarily see this as a political issue,” he said. “We think there is something here for everyone.”
The MTCU Green Team completed the MTCU’s first environmental management plan last fall. It sets a target of reducing the cash register’s greenhouse gas emissions by 20% and paper consumption by 10% by the end of 2020. The plan is intended to be reviewed annually and updated regularly.
More ambitiously, MFCU is part of a group of alliance credit unions testing a method for assessing the greenhouse gas impact of its entire balance sheet. The method, called “Platform Carbon Accounting Financials”, was launched in 2015 by a group of Dutch financial institutions.
On the product side, MFCU offers solar loans of up to $ 25,000. And home energy loans of up to $ 7,500 for insulation, windows, doors and appliances that meet federal Energy Star standards.
The solar loan program has been streamlined to remove risk-based prices and fees and to provide unsecured loans of up to $ 25,000.
“We make it simple, so it’s the same price for everyone,” Herendeen said. “We think it will help marketing. “
VSECU has been ready for clean energy since around 2005, when its board of directors adopted an environmental mission statement. In 2012, it consolidated all of its sustainability programs under the VGreen brand, with incentives that include reduced rates and longer terms on energy efficiency loans. The portfolio has since grown by more than 20% per year.
VGreen’s loan portfolio stood at around $ 59 million in May, of which $ 44 million was for solar energy loans. The rest include weatherization, heating systems, green vehicles, bicycles and other energy efficiency purchases.
The program is an outgrowth of Vermonters’ passion for protecting the environment, “and our way of life here in Vermont,” said Miller, president / CEO. Part of this lifestyle is enduring long, cold winters and the resulting high heating bills.
“The goal of the VGreen program is to enable and empower our members to invest in energy efficiency. In doing so, they improve their own quality of life, ”Miller said.
Members could feel warmer in their home and do so more efficiently while putting less strain on the environment.
VSECU has loaned $ 10 million on 647 electric vehicles or other green vehicles out of a total auto loan portfolio that stood at $ 93 million as of March 31. Over the past four years, the credit union has extended VGreen to bicycles.
“We’ve seen a lot of electric bike loans over the past few years,” Miller said. “In a hilly area like Vermont, it has the ability to flatten your landscape a bit, giving you a bit of electrical assistance when you need it.”
The credit union also provides other ways for members to participate in VGreen. For example, money put into money market savings plans is used to fund energy efficiency loans; the credit union tells members they can “bank the switch.”
The overall VGreen default rate is around 0.30%, justifying that energy efficiency loans are unsecured, even for solar installations that typically cost $ 25,000 to $ 35,000, said Laurie Fielder, director of the VGreen program.
Miller said another reason for better loan performance could be the emotional engagement of borrowers.
He remembers making a comment to Fielder that suggested he thought borrowers were putting solar panels in the back of their house.
“Oh no, they want to put them on the front of the house because they want to show them off,” she told Miller.