Tag: Impact Investing

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As the impacts of climate change become more evident, the urgency to transition away from fossil fuels is clear. Investing in renewable energy is crucial for the future of our planet, yet it remains a challenge for many. Clean Energy Credit Union is poised to change that narrative. Our not-for-profit model focuses on making clean energy affordable and accessible to a wide range of people across the country by providing an attainable entry point for individuals to invest in the clean energy movement with a $5 minimum deposit. This innovative approach advances sustainability and democratizes access to renewable energy investing.

The Bold Mission of Clean Energy Credit Union

At the heart of Clean Energy CU lies the vision to create a world where everyone can participate in the clean energy movement. We are making this vision a reality by:

• Making it easier for everyone to afford clean energy and energy saving products and services by offering clean energy loans with amazing terms.
• Making it easier for everyone to invest in the clean energy movement by offering federally insured checking accounts, savings accounts, and clean energy CDs whereby the deposits are solely used to help others pursue their clean energy and energy saving projects.

Clean Energy CU operates as a not-for-profit financial institution, enabling us to prioritize the needs of members. This unique structure allows the credit union to offer competitive interest rates on clean energy loans, high dividends on share accounts including 3.5% interest on rewards checking, and minimal fees.

“We are proud to say that we have never charged an overdraft fee. We care about our members and are focused on helping more people be a part of this movement without deterring them with fees or high rates.”

– Clean Energy Credit Union CEO, Terri Mickelsen

The credit union’s mission isn’t just about dollars and cents — it’s a commitment to environmental stewardship, social responsibility, and a sustainable financial future.

Transformative Impact and Unmatched Benefits

Choosing to invest with Clean Energy CU isn’t just a financial decision—it’s a commitment to a brighter, cleaner future. Here’s why:

Environmental Impact: Every loan issued by the credit union reduces carbon emissions. Financing solar panels, electric vehicles, or energy-efficient upgrades contribute to building a sustainable future. To date, the credit union’s financing efforts have offset over 970,000 estimated tons of carbon dioxide equivalent.

Financial Savings: The competitive rates and favorable terms offered, can lead to substantial financial savings. Homeowners financing solar energy systems or energy saving home improvement projects often see lower energy bills, while EV loans make electric vehicle ownership more financially feasible.

High-Yield Savings and Checking Accounts: Beyond loans, Clean Energy CU offers savings and checking accounts that not only align with its clean energy mission but also provide attractive interest rates. These accounts give members a financially rewarding way to support renewable energy initiatives.

Ethical Banking: For those who prioritize ethical considerations in their financial choices, Clean Energy CU offers a transparent, values-driven alternative to traditional banks. Members can rest assured that their money supports initiatives aligned with their environmental values.

Take pride knowing what your dollars support, as every dollar that is deposited into the credit union goes towards funding other members clean energy or energy saving projects. Plus, our carbon offset calculator allows you to see what your dollars can do when deposited at the credit union.

Clean Energy Credit Union Overview

Clean Energy Credit Union solely finances clean energy / energy saving projects. Meaning you can leverage the competitive rates with the added bonus of working with an institution that prioritizes your best interest over profits.

Wide Array of Clean Energy Loan Options

Solar PV Loans: Clean Energy CU’s solar loans are a beacon for those looking to harness the power of the sun. With lower interest rates and extended repayment terms compared to traditional financing, these loans make solar energy systems a realistic and appealing option for homeowners and businesses alike.

Electric Vehicle (EV) Loans: In the race to reduce greenhouse gas emissions, electric vehicles are speeding ahead, and Clean Energy CU’s is right there in the passenger seat. Offering financing for new and used electric vehicles at competitive rates, as well as refinancing options.

Green Home Improvement Loans: For those with grander sustainability projects in mind, the credit union offers green home improvement loans. Whether it’s adding a heat pump, updating your windows or replacing a water heater, these loans provide the financial backing needed to improve the efficiency of your home and reduce your energy needs. See the full list of qualified improvements here.

Our Clean Energy Expertise

Renewable Energy Team: The credit union demonstrates its commitment to members by staffing a clean energy team. This team reviews each project to ensure pricing aligns with market standards and that the systems meet quality expectations. They identify and address any red flags with the contractor or member, ensuring a smooth and reliable process.

Green Lending Expertise: With over $250 million in clean energy loans, Clean Energy CU has established itself as an expert in the field. We leverage our expertise to develop products and processes that prioritize the best interests of our members.

Registered Dealer Program: To enhance service for members and contractor partners, Clean Energy CU requires solar contractors to become registered dealers before offering financing options. This involves a thorough review process to assess the financial stability and quality of the contractors, ensuring reliable and trustworthy service.

Clean Energy for All: Expanding Access and Equity in Renewable Energy Financing

Clean Energy Credit Union has recognized that clean energy has been disproportionately unavailable to underserved populations. In response, the credit union has taken proactive steps to address this disparity by creating the Clean Energy for All loan program. This initiative aims to dismantle financial barriers, enabling a broader range of individuals to invest in clean energy solutions. Through the Clean Energy for All program, Clean Energy Credit Union is expanding access to affordable clean energy loans by offering discounted loan rates specifically for low-income and BIPOC (Black, Indigenous, and People of Color) borrowers. Additionally, the program includes special credit considerations for those facing credit challenges, ensuring that more people can participate in and benefit from the clean energy movement. This initiative not only promotes environmental sustainability but also advances social equity, making clean energy more accessible and inclusive for all.

Your Money, Your Impact: Investing in a Greener Planet

By choosing a financial institution that prioritizes sustainable and socially responsible initiatives, your money can drive positive change – supporting renewable energy projects, community development, and ethical business practices. This awareness empowers you to make informed choices, champion causes you believe in, and avoid funding activities that harm the environment. In a time when financial influence has significant global impacts, being mindful of how your money is used can help create a better, more sustainable world.

Clean Energy Credit Union is more than just a financial institution; it’s a movement toward a sustainable future. Through our visionary mission and cutting-edge financial products, we are making it easier for individuals to invest in renewable energy and energy efficiency.

For those looking to make a meaningful impact on the environment while reaping financial rewards, Clean Energy Credit Union offers an unparalleled investment opportunity. Check out the rates here and open an account online today.

Article by Nicole Burford, Vice President of Market Development and Sustainability at Clean Energy Credit Union. Her passion for the environment is a driving force behind the credit union’s mission to combat climate change. With over 15 years of marketing expertise, Nicole leverages her skills to increase awareness of Clean Energy CU’s impact, foster community relationships, and enhance member experiences.

Her journey began at Iowa State University, where she honed her skills in advertising and communications, before landing a coveted spot in Gannet’s Talent Development Program. Colorado then beckoned, offering her the opportunity to refine her digital marketing skills at a content marketing agency. Now, Nicole collaborates with partners, implements green initiatives, and works to create a more sustainable future, both within clean energy and climate finance. Driven by her environmental passion, Nicole embodies the credit union’s values, proving that impactful marketing goes hand-in-hand with making a difference.

>> Back to September 2024 Issue

Devastating wildfires in Canada, Europe and California. Lingering droughts parching much of the globe. 1,000-year rainstorms occurring several times in a single month. Last year was hottest North American summer on record, and 2024 is shaping up to be even hotter. These extreme weather events have been persistent front-page stories in recent years. And meteorologists are warning that the increasing frequency and magnitude of severe weather will likely become the new normal for much of the world.

The most immediate and devastating effects of extreme weather have upended the daily lives of people who have lost loved ones, homes and livelihoods to storms and wildfires. Millions more are facing challenges from enduring triple-digit temperatures for weeks on end, from toxic wildfire smoke and from frequent and unpredictable storm patterns. With each new disaster, our hearts go out to the people enduring the unbearable consequences of these events.

Weather events and the impacts from natural disasters pose risks to individuals, businesses and financial markets. Strong company management teams anticipate such events as potential business risks and have established robust plans to address them and mitigate their impacts. There will be both leaders and laggards in how companies withstand, respond to and adapt to a changing and more volatile climate. We are working with our portfolio companies to evaluate their plans for climate resilience, to share best practices in navigating climate risks and to collaborate with them to improve in these areas through our engagements as well as through proxy voting.

As the increase in extreme weather incidents is unlikely to abate, we are building portfolios of leading companies that are more likely to be resilient in a changing climate through quality management, foresight and long-term strategic planning. We believe these leaders are not only working toward a low-carbon world but are best positioned to address extreme weather events in the meantime. 

Risk Assessment in an Era of Climate Change

When we evaluate potential investments for climate risks, we consider each company relative to its industry. Certain industries inherently have more risk than others. For example, companies with a lot of real estate and/or manufacturing facilities will have more risk than companies offering business services that don’t produce physical goods. The “footprint” in terms of where the offices and manufacturing plants are located is an important consideration as well as how that affects the entire supply chain.

In assessing a company’s climate resilience, we look at how well they can handle the risk of a climate event and can shift operations to other locations, considering both the impact to operations and their employees. Worker safety is paramount for the companies we consider for our portfolios. Evaluating impacts on the supply chain is also critical, as is understanding the potential effects on all contributors to the company’s operations.

The close partnership between our investment team and our stewardship team puts us in a position to identify and communicate with companies their potential risks from climate change, drawing on accepted disclosure frameworks. In our view, companies face two main types of climate risk that can be financially material—physical risks and transition risks:

Physical Risks

These include the impacts of a changing climate on a company’s assets, employee base and operations. These impacts can be acute or can emerge as chronic threats over time—for example, rising sea levels, prolonged and frequent heat waves or limited water availability. Exposure to climate events could affect a company’s geographic footprint when facilities are located near areas prone to floods, droughts or wildfires. Climate events can also disrupt company operations and reduce revenue through decreased production or interruptions in supply chains and transport. Employees can face health and safety risks that could be fatal or limit their ability to get to their jobs or complete a full workday, contributing to increases in absenteeism or furloughs and leading to lower productivity.

Companies can also face higher insurance premiums, increased capital costs to repair damaged facilities, shortages of water or other natural resources, and even the need to write off or relocate assets in locations with high exposure to severe weather. A recent example of this type of risk occurred last summer, when a tornado hit a Pfizer manufacturing plant that produced 8% of U.S. sterile injectables such as anesthesia and anti-infectives, shutting down production for more than two months. According to the FDA, the company lost inventory ready for shipment and restricted deliveries of some products with high medical needs.

Transition Risks

These include the impacts from adapting a business to reduce its use of fossil fuels and support a low-carbon economy. Every company in every industry is potentially exposed to transition risk. Such risks can slow or hinder a company’s ability to transition away from fossil fuels, especially in industries such as oil and gas and those with limited access to renewable energy: Airlines, transportation, steel, cement and fertilizers. Risks can include increased costs from regulation or lawsuits, policy changes and shifts in consumer demand toward climate-friendly practices. Failing to address transition risks can also lead to obsolete assets.

Manufacturing facilities and other physical assets are most vulnerable to extreme weather events. They can incur both physical risks if they endure a climate event and transition risks through renovation costs during the transition to a low-carbon economy. Where appropriate, we evaluate how well companies are managing these risks, for example, in diversifying manufacturing and physical assets.

With both types of climate risk, companies can be especially vulnerable if they lack the necessary technology or strategic planning. In general, best practices to mitigate these risks include setting emission reduction targets below 1.5°C, incorporating climate change into strategic planning and business decisions and increasing transparency through materiality assessments and regular climate disclosures.

We welcome a broader adoption of climate-disclosure practices and have already started to engage companies on climate risks. We typically target companies with the following three opportunities for climate-related engagements:

• Companies with limited climate actions or disclosures;
• Companies with stronger climate protections but some remaining areas of potential improvement; and
• Companies with a higher vulnerability to physical risks.

Engagement as a Risk Assessment Tool

Company engagement efforts are a core part of our approach. One helpful tool we employ is a materiality assessment, a process to identify and prioritize sustainability issues that are most material to a company’s business. A materiality assessment can uncover a variety of sustainability-related risks and lead to increased disclosure and productive conversations that help to identify strategies to reduce climate and other risks.

While there are many areas of physical risk we can explore, we are focusing on companies in several industries with high climate-risk exposure:

• Semiconductor fabrication plants can use millions of gallons of water a day. According to Stanford University, each manufactured chip can require 10 gallons of fresh water. In regions where water is scarce, chipmakers need to collaborate with local communities on water usage and develop solutions to conserve water. Intel, for example, has emerged as a leader in water conservation: The company is recycling more water than its fabrication plants use in the U.S., India and Costa Rica.

• Homebuilders and real estate companies are vulnerable to several kinds of extreme weather, such as wildfires, hurricanes, inland floods and droughts. They can also emit carbon emissions from construction. Climate-related risks can include lawsuits in the wake of a natural disaster. A shift to climate-resilient building materials could also lead to higher construction costs. Banks with considerable exposure to real-estate loans could also see credit officers incorporate climate risks into their underwriting.

• Utilities face risk from an increased frequency and magnitude of heat waves and wildfires, especially in California and the southeastern U.S. Regulators may push back if utilities try to recover capital spending while raising customer rates. Political, legal and further regulatory risks can also follow from perceptions of poor responses to extreme weather.

Global trends can have a significant impact on a company’s financial performance. That’s why our investment team pursues industries and companies that are positioned to remain resilient to physical climate risks. Extreme weather is occurring in different forms, posing risks to company operations, assets, workforces and long-term stock performance. While individual risks can be hard to predict, many industries are likely to be affected by extreme weather in multiple ways.

Article by Marian Macindoe, Head of ESG Stewardship; Robert Klaber, Director of ESG Research; and Lori Keith, Director of Research at Parnassus Investments.

Disclosures

To learn more, visit www.parnassus.com or call (800) 999-3505.

For the current holdings of the Parnassus Mid Cap Growth Fund; the Parnassus Core Equity Fund; the Parnassus Value Equity Fund; the Parnassus Growth Equity Fund; the Parnassus Mid Cap Fund; and the Parnassus Fixed Income Fund; please visit each fund’s individual holdings page. ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) GUIDELINES The Fund evaluates financially material ESG factors as part of the investment decision-making process, considering a range of impacts they may have on future revenues, expenses, assets, liabilities and overall risk. The Fund also utilizes active ownership to encourage more sustainable business policies and practices and greater ESG transparency. Active ownership strategies include proxy voting, dialogue with company management and sponsorship of shareholder resolutions, and public policy advocacy. There is no guarantee that the ESG strategy will be successful.

Past performance does not guarantee future performance or results. The views expressed are subject to change at any time in response to changing circumstances in the markets and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the Parnassus Funds. Current and future portfolio holdings are subject to risks. Mutual fund investing involves risk, and loss of principal is possible. © 2024 Parnassus Investments, LLC.

All rights reserved. PARNASSUS, PARNASSUS INVESTMENTS, and PARNASSUS FUNDS are federally registered trademarks of Parnassus Investments, LLC. The Parnassus Funds are underwritten and distributed by Parnassus Funds Distributor, LLC.

Before investing, an investor should carefully consider the investment objectives, risks, charges and expenses of the Funds and should carefully read the prospectus or summary prospectus, which contains this information. A prospectus or summary prospectus can be obtained on the website, www.parnassus.com , or by calling (800) 999-3505.

>> Back to September 2024 Issue

Above: Prologis, Venlo Distribution Center, Europe

Over the past several decades, the energy system has steadily evolved to include more renewable energy sources. The energy supply is mostly fossil fuels and renewables. The fossil fuels are coal, methane, natural gas, and oil. Renewables are solar, wind, hydro, and biofuels. The biggest users of energy are transport, industry and buildings. Buildings alone consume 40% of the world’s energy.

In our modern developed economies, we tend to think of the energy sector characterized by mostly oil and gas. But the energy supply looked much different in the late 1800s through the mid-1900s, where coal was the primary input into the energy system.

It has only been in the last 50 years that energy supply has become diversified across types of energy including oil, natural gas and nuclear. Depression-era domestic economic policies financed the construction of dams and reservoirs for an uptick in hydropower. US geo-politics in the 1970s created the impetus to explore renewable energy sources with domestic solar and wind farms. And the fracking boom in the US has made natural gas one of the country’s largest sources of energy.

The International Energy Agency (IEA) advocates energy policies to improve reliability and affordability. In 2023, the IEA recorded that global investments into renewable energy projects reached $1.74 billion, surpassing the $1.05 billion of investments into fossil fuel projects.

Source: IEA (2023), Global energy investment in clean energy and in fossil fuels, 2015-2023, IEA, Paris https://www.iea.org/data-and-statistics/charts/global-energy-investment-in-clean-energy-and-in-fossil-fuels-2015-2023 , License: CC BY 4.0

Following a similar pattern of the global energy investment profile, by the end of 2024, the US Energy Information Administration counts planned projects to increase US electricity generation in mostly solar and battery storage.

Real Estate Owners Make Use of Renewable Energy Sources in Various Ways

The most visible is solar which can be on-site at the building or through the utility provider. Industrial buildings with large expansive rooftops and just a few tenants with moderate energy needs can make use of on-site solar. For example, the largest industrial REIT – Prologis¹, has deployed 500 megawatts of capacity through rooftop solar. This amount is enough to power 49,000 homes. Tenants see benefits through reduced utility bills. Energy that is not used by tenants feeds back into the local grid. Another industrial REIT – Rexford², with a portfolio concentrated in Southern California, has increased its solar generation to 17 megawatts, nearly doubling its previous capacity of 9 megawatts. By adopting energy efficiency measures and procuring renewable energy Rexford has seen a 10.6% reduction in energy consumption from its properties between 2022 and 2023. In 2023, the company reported $300,000 of net operating income generated from solar.

Purchase power agreements (PPA) provide buildings access to renewable energy that is not local. Sometimes these are called virtual purchase power agreements because of the distance between energy generation and the end-user. The PPA provides new renewable energy supply into the grid and the building owner receives renewable energy credits (RECs) for an agreed price. For example, in 2021 Empire State Realty³ committed to source 100% of the power for its entire Manhattan-based portfolio via wind generation. The Empire State Building, their flagship building, had been run on wind since 2011. Empire extended this program to create more longer-term energy contracts providing them with energy savings at a negotiated price. Procuring renewable energy also helps to attract tenants in competitive markets with corporate clients. Empire State Realty finds that they can differentiate themselves from other landlords by providing a way to access renewable energy.

How Can Buildings Use Renewable Energy in the Future?

According to the Solar Energy Industry Association (SEIA), US solar installations have increased 22% per year on average over the last 10 years. This growth is driven by lower costs for solar installations and US federal policies including solar Investment Tax Credit (ITC) and more recently incentives for renewable energy in the Inflation Reduction Act (IRA). Solar energy is increasingly paired with storage. In the last 5 years, 12% of solar installed was paired with storage; SEIA estimates this will climb to 23% in 2028. Many other types of companies that own buildings benefit from on-site solar. The EPA (Environmental Protection Agency) ranks the top US companies generating on-site energy – among them are Proctor & Gamble and the University of California. The specialty mall REIT – Macerich⁴ is ranked 25^th, producing 4% of its overall energy with on-site solar.

Large scale renewable energy infrastructure is steadily gaining in roads among utilities. This allows building owners to access renewable energy supply through their local utility. Modernizing the grid to include distributive energy supply allows companies like Prologis to put unused energy back into the grid for local use.

Paradoxically, as technology has evolved to improve energy efficiency and reduce energy consumption overall, society is increasing its demand for electricity. Data centers lead this demand – powering our online activities like streaming, gaming, shopping, and telecommuting. The demand is projected to grow significantly alongside the demand for electric vehicles and the ramp up of artificial intelligence.

Going forward, building owners may explore ways to balance new energy demands by reimagining the role of the building in the energy value chain. One concept is to use buildings as energy storage. Currently we see this practiced most often as “demand response” which is when a utility customer voluntary reduces its electricity use, typically during times of peak demand or high outages, to help support the needs of the local grid. This is mostly used by large energy users such as data centers that can adjust their building’s energy needs in real time. For example, on extremely hot days where most Californians are running their air conditioning, Digital Realty⁵, a data center REIT, coordinates with the local Bay Area utility to reduce or reserve their energy load at specific peak times. The REIT and utility will have an agreement in place that results in energy cost-savings for the building owner that participates in these transactions.

Another emerging concept is vehicle-to-grid energy supply. As more building owners retrofit their properties for electric vehicle charging, vehicles can act as battery storage for the building and for the local utility. At the moment, this idea is more applicable to electric transport parked for extended stretches of time, ideally overnight. For instance, Essex Property Trust⁶, a residential REIT added 600+ chargers over the last 3 years at 73 of their properties. Building owners can benefit both the tenants’ concern for range anxiety, but also potentially help to reduce overall property energy costs if the vehicle’s energy is fed back to the grid at peak load times.

The energy supply system continues to evolve. Buildings have an interesting role to play not just as end-users but suppliers of energy too through more grid integration scenarios.

Article by Sarah Adams, Chief Sustainability Officer and co-founder at Vert Asset Management. Vert manages the Global Sustainable Real Estate ETF. Sarah leads on engagement at Vert which is three things – dialogue with the companies we invest in, advocacy with regulators and government, and being a model sustainable business. Sarah is passionate about sustainability education for financial services. She is a teacher for the Chartered SRI Counselor (CSRIC), and she sits on the USSIF Education Committee. She has a BA in History from UCLA (US), a MSc in Environment and Sustainable Development from University College London (UK), and a MA in Environmental Law from SOAS (UK).

Footnotes:

¹  Prologis is 4.76% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2024.

²  Rexford is 1.18% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2024.

³  Empire State Realty is 0.15% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2024.

⁴  Macerich is 0.40% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2024.

⁵Digital Realty Trust is 4.83% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2024.

⁶  Essex Property Trust is 1.87% of the Vert Global Sustainable Real Estate ETF (VGSR) as of June 30, 2024.

Disclosures

The Vert Global Sustainable Real Estate ETF holds publicly traded REITs.

Fund holdings and sectors are subject to change at any time and should not be considered a recommendation to buy or sell any security.

Investing involve risk. Principal loss is possible. Investors should be aware of the risks involved with investing in a fund concentrating in REITs and real estate securities, such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. A REIT’s share price may decline because of adverse developments affecting the real estate industry. REITs may be subject to special tax rules and may not qualify for favorable federal tax treatment which could have adverse tax consequences. The Fund’s focus on sustainability may limit the number of investment opportunities available to the fund and at time the fund may underperform funds that are not subject to similar investment considerations.

The Vert Global Sustainable Real Estate Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The statutory and summary prospectuses contain this and other important information about the investment company and may be obtained by calling 1-844-740-VERT or visiting www.vertfunds.com . Read carefully before investing.

The Vert Global Sustainable Real Estate Fund is distributed by Quasar Distributors, LLC

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