Self-Help Credit Union’s Green Impact Capital
[Article from the January 2016 issue of GreenMoney Journal]
Self Help Credit Union’s Green Impact Capital
By Melissa Malkin-Weber, Sustainability Director, Self-Help Credit Union
When I finished graduate school in 1994, I wanted to build a meaningful career using my training in law and public health. More specifically, I had two major goals: to create a more sustainable planet, and to invest my money in a way that was consistent with my social justice values. Ideally, I would weave the two together.
I was fortunate. Right away I became a contractor for the Environmental Protection Agency. As paychecks started coming in, I also became a member of Self-Help Credit Union, a community development financial institution (CDFI) that offered more than the usual checking and savings. Self-Help has long been known for its innovation, from its early days of helping worker-owned businesses to cutting-edge work in mortgage lending for low-income families. As a new member, I invested in a Green CD and watched with appreciation as Self-Help expanded its green focus, making more loans to land trusts and recycling businesses and adopting energy efficiency standards for its new residential developments, while my deposit earned a steady financial return.
In 2011, when I came on board as Self-Help’s first-ever Sustainability Director, Self-Help gave me an explicit challenge: implement sustainability solutions across every business unit of the organization, inside our walls and outside with construction partners, borrowers and allies. I had a head start on the challenge because of the foundation laid by an internal Environmental Stewardship Committee, a longstanding group of enthusiastic volunteers. They continued to provide legwork and a sounding board as we began to broaden and deepen the organization’s sustainability efforts.
In a short time, we have increased investments in green projects and become more strategic about integrating environmental sustainability into our day-to-day work, from encouraging more car-pooling among our staff to incorporating major energy conservation in multi-million dollar projects. We developed processes to weigh the benefits of energy upgrades against expenses, and we selected the most practical, cost effective options for our buildings. We received grants to supplement our own efficiency investments, updated our energy tracking and benchmarking, and engaged vendor partners in improving their environmental practices. At the same time, we worked on environmental awareness among all of our staff, emphasizing that even small actions count—such as using one paper towel instead of two.
At the end of two years, we measured all of the successes, large and small. We were delighted to find that we had greened Self-Help activities to the tune of $1.7 million (net present value) when we totaled projected energy savings, program benefits and new green loans.
Financing a Greener World
Building on the momentum of these successes, we expanded our lending for green businesses, buildings and nonprofits. Cumulatively, Self-Help has made $249 million in direct loans to sustainable businesses, nonprofits, and community facilities, ranging from healthy foods systems ($14.5 million); energy efficient buildings and homes ($137 million); recycling businesses ($15 million); and solar farms ($75 million and counting).
Our lending to solar developers has been the recent star of our green lending. A huge number of solar farms have been installed across North Carolina in recent years, fueled by state tax credits and other policies. We at Self-Help saw a unique opportunity to make a big impact in a short time, and we worked together to harness some of Self-Help’s strengths: an innovative spirit, a willingness to learn fast, and a committed staff that responds to a call for “all hands on deck” whenever necessary. We also drew on longstanding partnerships with the U.S. Department of Agriculture (USDA), leveraging its renewable energy loan guarantee program. As a result, the USDA Raleigh office has issued the agency’s highest number of loan guarantees nationally, fueled primarily by Self-Help’s solar loans.
In the past three years, Self-Help has closed more than $75 million in loans to utility-scale solar farms, and we expect that amount will more than double by the end of 2015. The benefits of these solar projects are cascading through the surrounding communities. Utility-scale solar, in particular, is compelling for its local economic impact. It creates thousands of jobs year-round in rural and often impoverished counties. These counties earn personal property taxes on solar farms, providing hundreds of thousands of dollars in new county revenue that can fund economic development, infrastructure and vital services. Landowners who lease their land to solar farms get double or triple the income generated from farming, while retaining possession of the land and putting it to a productive use with a negligible environmental impact.
Working with a Business that “Gets” Green
While it has been a heady experience to be part of the solar industry in North Carolina, I take particular pride in sharing stories of the remarkable borrowers we serve. One of our notable partners is Rush Creek Lodge, an eco-lodge now under construction in Yosemite National Park. It will become a certified B Corporation, which means it operates for profit and also to benefit society. When complete, Rush Creek will be the first new resort in Yosemite in over 25 years, offering more than 143 beautiful rooms and operating in ways that promote sustainability and social justice.
When Rush Creek’s leaders sought financing, they wanted a lender who shared their commitment to triple bottom-line goals—people, planet and profit. Thanks to an introduction by RSF Social Finance, a peer CDFI, Self-Help was fortunate to become that partner. We immediately recognized a kindred spirit in Rush Creek. In underwriting the project, Self-Help particularly valued Rush Creek’s focus on workforce development through a self-funded program developed and already in operation at Rush Creek’s sister property, the Evergreen Lodge. Working with agencies throughout the San Francisco Bay Area, the lodges provide internship opportunities and full-time social service staff to help high-potential young adults develop strong employment and life skills. This program has helped over 200 youth prepare for successful futures, often while exposing them to the great outdoors for the first time in their lives.
In addition, Rush Creek demonstrates a strong commitment to sustainability in a number of ways, including these:
• 100 percent of onsite water will be reused. When it opens this spring, Rush Creek will have the largest commercial grey water system in the state of California, followed in size by Evergreen.
• Rush Creek will employ a rooftop solar photovoltaic system. Any excess power generation will go back to the grid.
• All aspects of operations encourage energy conservation, including guest rooms with smart thermostats and water-conserving appliances, and meals created with local sourcing of organic produce, meats and baked goods.
Together with capital partners like Self-Help, the owners of Rush Creek have pushed the boundaries of traditional hotel development while maximizing positive environmental and social outcomes.
A Pioneering Partnership to Save Energy at Home
In addition to working with individual businesses to support exemplary practices, Self-Help also relishes opportunities to collaborate with other like-minded financial institutions. Our alliance with Craft3 breaks new ground in financing home improvements to amplify positive environmental and community impact.
Craft3, another peer CDFI serving Oregon and Washington, provides home energy-efficiency (EE) loans in partnership with a nonprofit called Enhabit. The program allows a homeowner to finance energy efficiency upgrades, such as insulation, duct-sealing and high-efficiency heat and hot water. A key innovation is that homeowners are able to access financing without putting any money down. They repay the loan through their regular utility bills, a mechanism known as on-bill repayment (OBR). Financed projects aim to reduce the homeowner’s energy use by 15 percent annually. The program also includes a workforce agreement with participating contractors that helps build energy-efficiency expertise among minority- and women-owned businesses.
Craft3 approached Self-Help with a groundbreaking proposition: Would we help establish a “secondary market” for their EE loans? In other words, Craft3 was looking to sell its loans in order to recycle capital and make more loans with the proceeds from the sale.
We jumped at the chance. Together, Craft3 and Self-Help packaged a first-of-its kind transaction, allowing Craft3 to sell its EE loans to Self-Help. Through two loan sales in 2013 and 2015, Self-Help has purchased 1,716 loans originated by Craft3 totaling $22 million. We hope this partnership with Craft3 will help spawn similar programs around the country to bring greater energy efficiency through OBR financing.
Commitment Meets Moxie
Sustainability at Self-Help is, at heart, a team sport, driven by passion and commitment. Our organizational culture celebrates the internal advocate who jumps in with two feet to champion new opportunities where mission impact and financial sustainability overlap. As the examples here demonstrate, we have developed a culture that constantly says yes to new ideas and new ways to pull together smart capital and measure success by a triple-bottom line.
I’ve been Sustainability Director here for almost six years, and I sometimes still pinch myself when I look at my business card. Every day I’m stretched to find the most creative and effective ways to save energy for our operations, to support our borrowers and communities where we work, and to learn new energy sectors so that we can make smart investments.
Self-Help’s work is fueled by the passion of our members and depositors who believe that impact capital can change the world. Funds invested in Self-Help’s Green Certificate of Deposit and other accounts support sustainability work by providing capital for the kind of loans described in this piece. Join us! Consider investing with us by emailing- email@example.com or visiting- www.self-help.org/invest
Article by Melissa Malkin-Weber, Sustainability Director, Self-Help Credit Union. Melissa has worked across a broad span of hands-on sustainability practices. At Self-Help Credit Union, she integrates the triple bottom line into the organization’s financial products, operations, and buildings portfolio. She led Self-Help to realize over $1.7 million in net present value from initiatives in this sector, including $180,000 energy savings in our own operations. Melissa previously directed the residential energy efficiency and indoor air quality research program at Advanced Energy and worked in industrial pollution prevention at RTI International. She earned her law degree from University of Michigan, and her Masters from UNC’s School of Public Health.