The Mass Solar Loan Program opened the doors for 17 community banks and credit unions to provide $185 million in financing for 5,800 solar power projects over five years.

Climate change is likely to pose a significant threat to financial institutions over the next 30 years, researchers say, but some banks and credit unions also see it as a business opportunity.  

Local lenders have adopted multi-million-dollar lending products, including residential solar power financing, to help consumers and businesses take steps toward mitigating the effects of climate change. 

Community banks and credit unions operate in sectors at risk from natural disasters and other disruptions brought by climate change, including residential mortgage, commercial real estate, small business and agriculture lending, said Dan Saccardi with Ceres, a nonprofit that examines sustainability challenges, including in the financial sector.  

By the nature of their role in the community, Saccardi said, these financial institutions are also in a position to help customers understand the risks they face and take steps to adapt. 

“There’s not just risk here – there’s also opportunity,” said Saccardi, the senior director of Ceres’ company network. “In order to do the important work that’s needed for climate adaptation and resilience, that requires capital. And there are real opportunities for community banks and credit unions to provide that community-based capital to shore up these communities and help them prepare.” 

Addressing the effects climate change needs to happen system-wide, Saccardi said, and for the banking industry, even creating innovative products and services like offering preferential mortgages for energy efficient homes could help. 

$185M in Solar Loans 

Massachusetts has already undertaken initiatives to help banks and credit union have a role in responding to climate change. Financial institutions can participate in the Mass Save program, which gives residents and businesses loans for energy efficiency projects through a partnerships between the Massachusetts Department of Energy Resource and the state’s electric and gas utilities. 

Another initiative was the Mass Solar Loan Program, a partnership between DOER and the Massachusetts Clean Energy Center. The program saw 17 Massachusetts community banks and credit unions provide $185 million in financing for 5,800 projects over five years before the program ended last December.  

The top five lenders in the Mass Solar program were Hadley-based UMassFive College Federal Credit Union, Hudson-based Avidia Bank, Weymouth-based Coastal Heritage Bank, Somerville-based Naveo Credit Union and Fairhaven-based First Citizens Federal Credit Union. 

With over 1,900 projects and $62.5 million in loans, UMassFive had more than double the lending of any other institution. 

Craig Boivin, UMassFive’s vice president of marketing, attributed the credit union’s success with Mass Solar to its work with Mass Save and other sustainable products, including a bicycle loan popular with members looking for sustainable transportation.  

Boivin said the Mass Solar program helped increase the credit union’s membership, which is primarily made up of the University of Massachusetts community and alumni. The program was geared toward low- and moderate-income borrowers, and Boivin said the credit union was most proud that 72 percent of its loans went to these customers.  

The credit union also saw opportunities to work with members who did not qualify for Mass Solar, Boivin said, by creating its own solar loan product even before the state program ended. Unlike Mass Solar loans, the credit union’s own product is available to members who live outside Massachusetts, and Boivin said this product has proved successful as well. 

He added that the credit union’s mission has a role in its approach to sustainable lending. 

“When we think about applying that mission, whether it be to environmental justice or helping combat climate change,” Boivin said, “I think we always first think about how we can make the biggest impact while focusing on that mission of helping people we serve to better their financial lives.” 

Commercial Opportunities 

With a commercial lending team that launched only four years ago, Boivin said UMassFive has focused its sustainable lending products on consumers. But he said the credit union plans to extend this focus to its commercial customers.  

Other institutions also see opportunities in the commercial space. 

Rockland Trust Co. announced last week that it had provided $6 million in loans to West Wareham-based Master Millwork. As the commercial architectural millwork and cabinetry firm expands its facility from 25,000 to 67,000 square feet, part of the financing will go toward upgrading to solar power, Rockland Trust said in a statement. 

Diane McLaughlin

Berkshire Bank plans to look opportunities to lend to low-carbon projects in commercial real estate as part of a three-year, $5 billion environmental, social and governance commitment announced last month. The commitment includes $300 million in lending for low-carbon projects. 

Berkshire Bank has historically done lending in the power production space, including solar and other renewable energy technology, said Gary Levante, Berkshire Bank’s senior vice president of corporate responsibility and culture. As part of the ESG commitment, Levante said, the bank will look at different opportunities for helping to finance the transition to clean energy.  

“We’re really exploring all of those various levers right now to figure out where are we going to be able to have the most impact and where do we have the expertise and core competencies to really do something meaningful for our communities,” Levante said.