Green Lending: The Bridge Between Idealism and Practicality
October 10, 2011
October 11, 2011
By David Bennett
Being “idealistic” is a personality trait I share with what is likely the vast majority of the entire credit union movement. The quality is a prerequisite for getting in, some would argue.
If idealism is the prerequisite inhabitant of one-half of the perfect credit unionist’s mind, then surely Unit 2 of this cranial duplex is occupied by practicality. Do a synonym search for “idealism” on Microsoft Word and you’ll get several matches; one of them is impracticality—the polar opposite of practicality.
Two personality polar extremes living together—mostly harmoniously—in the same gray matter answers a lot of the questions I have about my favorite credit union people. But it doesn’t say anything about how this “odd couple” mentality manifests itself every single day in the credit union world. At least, it didn’t for me until last week when a new Filene Research Institute report on green lending at credit unions was released.
The idealist in me loved that the report, entitled “Finding Sustainable Profits: Green Lending in Credit Unions,” lauds many benefits of having a “green lending” program, citing real world successes in addition to the positive effects of going green as a business model. I read the synopsis. I watched the video, stopping occasionally to take notes, and what Filene had uncovered about those most interested in green loans was eye-opening.
Green lending is essentially a program that makes loan money available specifically for environmentally-friendly products or home improvements, such as solar panels, hybrid cars and bicycles—usually at a slightly discounted rate.
Part of the appeal of green lending for credit unions is that it attracts desirable members in the 20-to-40-year-old demographic with above-average incomes and above-average credit scores. And in follow-up interviews with the 100 credit unions it surveyed for the report, Filene didn’t find any delinquencies in green loans to members.
Another interesting fact: one-third of credit unions surveyed that are offering green loans are partners with a community or other non-profit entity. For some reason, this statement struck me as one of the most important of the entire report. Green lending is an opportunity to engage communities that are already formed around sustainable living associations, community gardening, and even energy and food cooperatives.
This is all fine and dandy, but if I was going to turn my pie-in-the-sky idealism into an Anthem story on the topic, I needed a Northwest opinion, and I turned to TwinStar Credit Union in Lacy, Wash.
If credit union idealism in this retelling of Neil Simon’s “The Odd Couple” manifests itself as Felix Unger in the form of Filene’s study and my enthusiasm for everything green, then Oscar Madison is represented by credit union practicality and is personified by TwinStar and its loan administration manager, Phyllis Kaczmarski.
TwinStar is a champion of green. The credit union was a 2008 top honoree for large businesses in the Thurston County Green Business Awards for its sustainability efforts and has partnered with Thurston Energy in encouraging Thurston County residents to conduct an energy evaluation on their home. TwinStar’s green lending program includes special rates and discounts on environmentally-friendly products like electric and hybrid vehicles, bicycles, and motorcycles, which include scooters.
Kaczmarski agreed with much of what the report said about green borrowers: green borrowers are younger, with above-average incomes and credit scores, making green loans dependable. “The problem, David, is that the state of ‘things’ is keeping loan volume down. Other products, like our HELOC (home equity line of credit), are much more popular.”
Like the yearly bonus for a Bank of America executive paid in gold bullion, the weight of her statement on the state of “things” crashed down upon me. As much as Filene contributes to the credit union industry, this report—the synopsis, at least—is roaming in greener pastures than many credit unions, no pun intended.
According to Kaczmarski, green products are still too expensive for consumers to begin purchasing on a large scale. In addition, Kaczmarski cited a flailing economy, high unemployment and uncertainty about the future as factors in what she sees as a fading interest in green loans.
“The ‘Cash for Clunkers’ program helped,” Kaczmarski said, referring to a government-sponsored program aimed at getting high-emission vehicles off the roads. “But as soon as it was over, it was over. Credit unions need sustainable programs. And so far, green isn’t it.”
Kaczmarski added that many home improvements made to members’ homes with TwinStar’s HELOC are, technically speaking, green loans, because they are generally being used to upgrades to more efficient windows, doors and appliances.
Okay, so my blue-sky bubble wasn’t completely burst, but if the rubber of green lending has indeed hit the road in the Northwest, the tire was flat and the pavement full of potholes.
I believe in going green. My family reuses or recycles practically everything. I’m a regular at thrift stores and have a bicycle with more miles on it than any two of our company pool cars.
And realizing that is when the practical half of my brain (Oscar, if you will) spoke to me in its raspy voice.
“You reuse and recycle. You buy used and ride bikes. And this is not to mention that your mini-van, the one and only fume-emitting product you own, is creeping its way to 180,000 miles. You are the green demographic of which you speak, yet you can’t figure out why green loans aren’t making headway?”
Going green is more than just a product or service. As the Filene report points out, green is a lifestyle. It’s hard work and often not very much fun. But more importantly, green is more than just green. It’s a commitment to living more simply, to being more practical in an age when things are tough all over.
I think we all know this, but most don’t know where or how to begin making a commitment to doing what’s right.
If credit unions can make that commitment and can help members live more simply by living more sustainably during the tough times, then all of the “greens” who are currently squeezing the last bit of use from their old cars, roofs and appliances will eventually take notice of the lower rates and better service that credit unions offer. And when they do, they’ll come as more than just rate shoppers and for more reasons than just being angry at the banks.
They’ll come looking for help meeting the challenges that come from trying to live sustainably during tough economic times. They’ll come as members ready to team with their local credit union to find solutions that are both economically and environmentally viable. And they’ll come looking to bridge the gap between their green environmental idealism and their green financial practicality.
And here is where the value of green lending truly reveals itself. More than a gimmick to attract desirable members, green lending gives credit unions a chance to put their money where their mouth (idealism?) is and offer better rates on loans being used to buy Earth-friendly products. They can openly, tangibly support people who are trying to do the right thing.
And that’s an idea that every part of me can get behind.
David Bennett is the director of public relations for the Northwest Credit Union Association. He can be reached with questions or comments at firstname.lastname@example.org.