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Filene study Green lending is appealing and profitable
MADISON, Wis. (9/26/11)--More and more credit unions are discovering that lending for green purposes is good business. The loans are profitable and attract financially strong borrowers. They spur membership growth and lead to new growth in solidly performing loans on the balance sheet, according to the latest research from the Filene Research Institute. “Finding Sustainable Profits: Green Lending in Credit Unions” finds that a growing number of credit unions are offering loans to their members that are focused on helping them make energy-saving improvements to the homes, businesses and transportation. The report, by researcher W. Robert Hall of Hall Associates Consulting, LLC, is based on an extensive online survey and a series of in-depth interviews. “These findings make it clear that there is a solid business case for credit unions to expand their focus on helping their members cope with the ever-rising costs of energy to heat their homes and to get the most out of each gallon of gasoline,” Hall said. “We continue to be interested in the implications the sustainability movement holds for credit unions,” says Mark Meyer, Filene CEO. “This report is the first systematic look at green lending among credit unions, and we’re impressed with how many credit unions are reporting profitable portfolios.” During the past several years, governments and nonprofit organizations have identified the need to increase access to credit for homeowners and businesses to make energy-saving improvements. A key component of most strategies has been trying to get financial institutions to offer reasonably-priced green loans that will enhance U.S. energy independence, address environmental concerns, and stimulate the creation of new green jobs. “This report contains key insights for anyone who cares about economic growth, consumer services, energy security, and environmental health,” said Frances Dubrowski, adjunct professor at the University of Maryland School of Public Policy, who wrote the report’s foreword. “Now that we’ve found that green lending is profitable for credit unions of all sizes, it is time to bring these findings to financial institutions of all types,” Hall said. “These loans can be particularly important to smaller credit unions in expanding their loan portfolio and attracting new members.” The research also found that many credit unions are partnering with local utilities, vendors and nonprofit organizations to offer their members green loan products. These partners assist the credit unions in marketing the loans, and, in some cases, they help subsidize the interest rates or provide other forms of financial assistance that lower costs to members. “Moving forward, credit unions should explore ‘going green’ not just as a cost-cutting strategy, but also as a business growth strategy,” the report concluded. “In the future, with energy costs expected to rise from the fuel pump to the electrical outlet in people’s homes, well-structured and marketed green loan programs have the potential to become as important as car loans have been in the past to credit unions,” Hall noted. For more information, use the link.
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