Lending

Why Do CUs Offer Green Loans?

The desire to help members and the environment drives many CUs to introduce green initiatives.

July 10, 2012
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The decision to finance green initiatives such as hybrid vehicles and eco-friendly home improvements involves the convergence of several factors, according to “Finding Sustainable Profits: Green Lending in Credit Unions,” a report by the Filene Research Institute.

The report identifies several common reasons credit unions decide to enter the green arena:

Board interest

In some cases, board members will raise the issue.

The Filene report cites a credit union board member who was familiar with a local utility company that was seeking partners to finance residential energy improvements.

The board member raised the issue with the credit union’s manager, and senior staff were directed to evaluate whether the credit union should offer energy efficiency loans.

Some credit union staff had already contemplated the creation of a green lending program independent of the board. Therefore, the board member’s inquiry helped to legitimize the exploration of green loans.

In another instance, the board played a key role by adopting an environmental mission statement for the credit union. This action was implemented at about the same time the staff was developing ideas for a suite of green loan products.

Outside parties

Sometimes the initial impetus came from outside parties who contact the credit union’s CEO. At one credit union, the CEO was approached by the county executive to participate in a program to finance energy improvements in older houses.

In other cases, credit unions are contacted by select employee groups (SEGs), including one where city officials sought a lender to finance residential solar energy improvements at discounted interest rates. In this case, the credit union later expanded it solar loan program to the employees of all of its SEGs.

Commitment to the environment

One credit union’s decision to offer green loans was driven by a desire to measure and reduce its environmental impact as part of its participation in the Global Reporting Initiative’s (GRI) G3 Sustainability Reporting Framework.

To start, the credit union calculated an annual inventory of its carbon emissions, develop reduction goals, and take steps to reduce its impact. Through a series of steps, the credit union reduced its overall carbon emissions by 13% over a three-year period.

The credit union also calculated the greenhouse gas emissions generated from its auto loans and mortgages and created loans to help members make more sustainable choices—for example, by offering interest-rate reductions for members who purchase hybrid vehicles.

Growth opportunities

One credit union introduced a suite of green products to create a point of differentiation in a competitive marketplace. Its service area has a high degree of environmental consciousness that appealed to residents and elevated the credit union’s name recognition.

According to the CEO, the effort resulted in a significant source of loans for the small credit union.

Good for members

Green loans can reduce what members spend on gasoline and lower monthly utility bills, especially during times of rising energy prices.

Visit Filene’s website for more information.

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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