Two Ways to Help Members by Taking the Lead on Climate Change
Climate change continues to be a major issue that many Americans want addressed. We often hear about what other business sectors are doing, or in some cases not doing, to lessen their impact on the environment, but what about the finance industry? Credit unions do have a role to play when it comes to the climate, and that role is multifaceted. There are, of course, the economic aspects in regards to the institution itself, but the membership of a credit union needs to also be taken into account.
Nearly all of America has in some way experienced the effects of climate change in some way. In recent years, we’ve had massive wildfires on the west coast, flooding on the east coast, and an increase in tropical storms and hurricanes, and the damage that these natural disasters have caused has also increased in severity. As the chairman of the NCUA Todd M. Harper explained in his written testimony to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, the increase in severe weather events means that credit unions will have to adapt in terms of how they do business.
“…The agency must consider not only the macroeconomic impact of climate change, but also the microeconomic context. Most credit unions focus on mortgage, auto, and small business lending. Over time, climate change will affect the value of collateral like homes and commercial properties, especially in areas affected by extreme weather. Additionally, a credit union’s field of membership may be tied to communities or activities that may be dramatically affected by climate change, like farming or fossil fuels. Credit unions serving such populations should consider adjusting their fields of membership or altering their lending portfolios to remain resilient over the long term.”
Consumers Want Help Addressing Climate Change. Here are two ways your CU can take the lead in helping your members address it.
1. Help your members track carbon footprints
One way credit unions can go about changing their lending programs is by helping their memberships with their carbon footprint. A good amount of your members may be climate-conscious already, and there’s a great advantage to be had in serving those people. However, it’s equally important that those who may not be doing as much to lessen their impact on the environment right now are not left behind.
The author of a recent study from Cornerstone Advisors and their Managing Director of Fintech Research Ron Shelvin pointed out when he wrote to Forbes that the issue of climate change is not lost on the banking industry. Banks have capability to assess and monitor their respective carbon footprints, according to an Accenture study. As for consumers, Cornerstone’s survey found that nearly one in four Americans consider the issue of climate change the most important social challenge that the country faces today, but among that number, only 9% track their carbon footprint, and only half of them said that they have taken action to reduce it.
The main reason for this lack of action isn’t due to a lack of trying. The truth of the matter is rather simple and, in a sense, tragic: a lot of people simply don’t know how to track their carbon footprint, and in turn, don’t know how to most effectively reduce carbon output. However, this presents an opportunity for credit unions to help their members make more climate-friendly choices. Your credit union can offer products that use renewable materials and offer services that encourage pro-environment behaviors. You can also provide educational resources to your membership on how to track a carbon footprint and everyday ways to protect and clean up the environment around them.
2. Invest in Renewable Energy and Green Programs
Credit unions can also find lending opportunities in programs that help create and improve renewable energy projects and services. For example, back in April of this year, OnPoint Community Credit Union launched their Green Horizons initiative, which offered discounts on solar panels and electric cars. At the same time, credit unions need to make investments in going green themselves. The big challenge is figuring out the best way to transition your lending portfolio, and that involves gathering the necessary data to best assess the risks involved and what effect the transition will have on the membership.
The task of taking on climate change is one of the greatest challenges of our time, and it will take a lot of effort from all of us in order to protect our planet and prevent worse environmental disasters from happening.
Credit unions have a large role to play, and while the best way to move forward isn’t always clear, providing educational resources, offering climate-conscious products and services to members, and revising the portfolio are key first steps to take on the long journey toward creating a cleaner, greener, and happier community and planet Earth.
