Finding Sustainable Profits: Green Lending in Credit Unions
Credit unions that ask how they can join the green revolution often make a quick leap to green lending for cars, home improvements, energy savings, and more. Lending is, after all, credit unions’ core business. But, to date, there has been little data on green lending.
This report shows that a growing number of credit unions are offering loans to their members that are specifically focused on helping them make energy- saving improvements to homes, businesses, and transportation. In some cases these green loan programs have been motivated by a concern for the environment, and in others the focus has been on helping members or increasing loan applications and spurring new membership growth. The data are limited to a sample of credit unions, but they are directionally useful. The survey data on which this report relies represent responses from dozens of credit unions larger than $50 million (M) in assets, supported by follow-up interviews. In nearly every instance, the credit unions have reported that their green loan programs have been profitable.
Moving forward, credit unions should explore “going green” not just as a cost- cutting strategy but also as a business growth strategy. Many energy- saving loans are relatively small and can be offered on an unsecured basis. Historically, this is an important credit union market niche, and one that many banks have avoided.