Credit Unions: Taking on Climate Change Worldwide

Heeding dire warnings of what the future holds, credit unions across the globe are working to meet the daunting challenges presented by climate change. But as World Council of Credit Unions and others have learned, that future is truly now – and meeting the challenges it presents cannot wait.

When Hurricane Maria made landfall on Dominica as a Category 5 hurricane in September 2017, it left a path of destruction that decimated the Caribbean island-nation.

Maria then traveled north, slamming into Puerto Rico as a Category 4 storm – just weeks after Hurricane Irma had already hit the U.S. territory.

Dozens of credit union branches were destroyed across both islands. By 2018, much of that devastation remained, as did structural challenges for the credit union systems of Dominica and Puerto Rico.

Disaster Response

Recognizing the problem wasn’t going away, World Council and our Worldwide Foundation for Credit Unions began a disaster relief response effort that raised $200,000.

The money was used to rebuild the headquarters of Dominica Cooperative Societies League Limited (DCSLL) – the nation’s credit union trade association – and to physically repair 10 credit union branches on the island. In Puerto Rico, the Worldwide Foundation and the Cooperative Credit Union Association hosted an August 2018 workshop on the island for local credit unions to work through methodologies, requirements, opportunities and simulations for engaging in loan participations.

Why? Many local businesses still had not reopened. Thousands of residents had left to seek work elsewhere. Tourism had not recovered yet. But with increased levels of liquidity and limited lending opportunities, cooperation with mainland CCUA credit unions in purchasing loan participations offered an in-system opportunity for generating income and diversifying risk for Puerto Rico’s credit unions.

Challenges also remained in Dominica – and still do today. Infrastructure and economic damages impacted credit union balance sheets and income. Dominica lost 96% of its GDP in 2018 as banana plantations were destroyed, large amounts of farmland were washed away and the local university moved to Barbados. Credit union loan performance was significantly impacted as a result.

The credit unions asked for technical support in working through the impact of the disaster on their financials and putting in place improved risk management systems. They also asked for advice in supporting members who had lost their livelihoods and had to shift to new types of economic activity – such as agriculture.

In April 2019, the head of the DCSLL and executives from two Dominican credit unions traveled to the U.S. to meet with WOCCU officials, as well as member organizations of the Indiana Credit Union League and Wisconsin Credit Union League for training and information exchanges related to the island’s recovery.

Project Storm Break

Because World Council has seen first-hand the impact natural disasters have had on credit union systems – and because climate change is only making those types of disasters more prevalent – our Worldwide Foundation will launch Project Storm Break at the 2019 World Credit Union Conference in The Bahamas, which runs from July 28 to 31.

Project Storm Break will establish a forward-prepared fund to respond immediately when a natural disaster happens. The response will include financial support, supplies and technical expertise to help credit unions in the impacted areas get back on their feet and help the communities they serve.

And in August 2019, our Worldwide Foundation and Global Women’s Leadership Network will lead a credit union study trip back to Puerto Rico. Our colleagues from Texas, Florida, North Carolina and California will share their own experiences related to disaster recovery and learn how the island’s credit union system provided post-disaster solutions in response to Hurricane Maria.

U.S. Credit Unions Step Up

While World Council is doing its part to mitigate the impacts of climate change, we are hardly alone in confronting the problem. Several credit unions across the United States are also going above and beyond for their members, and the planet.

UW Credit Union, based in Madison, Wis., was recognized by the U.S. Environmental Protection Agency for leading the charge – becoming the first credit union in the nation to receive the EPA’s Green Power Leadership Award. UW Credit Union purchases all the electricity for its headquarters and branch offices from renewable resources and does not directly make loans or participate in multi-institutional lending transactions providing credit for the extraction or holding of fossil fuel assets. Its investment portfolio also does not include the securities of companies involved in those business lines.

Other American credit unions – such as Suncoast Credit Union and Vermont State Employees Credit Union – are developing innovative solutions to combat climate change.

Suncoast, based in Tampa, Fla., has three administration buildings and 16 branch locations powered by solar energy. Five of those branches are net zero, producing enough energy to fully offset their use. Their “eco-friendly” branches feature LED lighting throughout, high-efficiency windows and insulation, geothermal air conditioning and heating, and 40-kilowatt solar power panels to offset electricity. They average 80% more energy efficiency than a standard branch.

VSECU offers its VGreen program, which specifically provides financing for projects that improve the energy efficiency of a member’s home or transportation. With the VGreen Money Market Account, all the money members deposit goes directly to funding renewable and energy-efficiency projects, and purchases for VSECU members through VGreen loan products. That means members can take comfort knowing their money is staying in local, green projects, while still earning a decent return on investment.

One credit union launched in 2018 is going even further. Clean Energy Credit Union, based in Colorado, focuses solely on providing loans that help people afford clean energy products and services, such as solar electric systems, electric vehicles, home energy efficiency retrofits, electric-assist bicycles and net-zero energy homes.

To reduce its own carbon footprint, CECU is an online-only credit union. By avoiding the expensive operating costs of brick-and-mortar branch offices, more savings are passed along to members in the form of better loan rates.

A Global Effort

Great things are also being done to fight climate change throughout the international credit union movement.

Bank Australia – a customer-owned bank based in Melbourne – is a founding partner of the Victorian state government’s TAKE2 pledge and signed up to the “We Mean Business” climate action commitments following the Paris climate talks. TAKE2 encourages people and organizations to act on climate change and help keep global temperature rise under two degrees.

To meet its commitments, Bank Australia in May 2019 switched to 100% renewable electricity by installing rooftop solar and entering into a 10-year agreement with renewable energy developer Pacific Hydro – as part of the Melbourne Renewable Energy Project. Through the purchase of carbon offsets, the company’s operations were already carbon neutral.

Bank Australia even runs its own Conservation Reserve where it protects parcels of land equivalent in area to the new home construction it funds – and to provide more habitat for endangered species threatened by climate change.

In Canada, the Vancouver, British Columbia-based Vancity refuses to invest capital or assets in oil, gas or coal companies. It also does not provide investment banking services to companies in those industries that are looking for capital.

Vancity has a Sustainable Wealth Management division as well, which helps members invest in socially responsible solutions when environmental, social and governance issues are important to them – including fossil fuel-free mutual funds managed in-house by its portfolio management subsidiary.

Vancity also offers a line of green products encouraged to reduce energy consumption and use cleaner energy, as well as an enviro Visa from which Vancity allocates 5% of its credit card profits to local environmental projects.

Slowing the pace of climate change is arguably the greatest challenge facing mankind. To meet it, credit unions across the world can look to these pioneering institutions for inspiration to continue developing products, services and technological innovations that contribute to keeping global temperatures within safe limits.

World Council of Credit Unions, our members and the credit unions they represent look forward to continuing to meet that challenge.

Greg Neumann is Corporate Communications Manager for the World Council of Credit Unions. He can be reached at 608-395-2048 or gneumann@woccu.org.