The United Nations has been promoting "green" lending for 15 years and counts some of the world's biggest banking companies as its partners.
Now Union Credit Bank in Miami has become the first community bank to join the U.N. Environment Program Finance Initiative, and officials with the program are hoping other small banks will sign on.
"In terms of making environmental improvements, it's almost more effective when things are done at the local community level," said Lisa Petrovic, a Toronto consultant working with the initiative.
The $132 million-asset Union Credit is offering lower interest rates and more favorable terms to borrowers that incorporate environmentally friendly features into their projects.
The bank's green lending program offers home equity loans and lines of credit to commercial and residential borrowers. To qualify for the loans, the project must include a minimum number of green components, such as energy-efficient windows or electric water heaters — "anything contributing in some small measure to protecting the environment," said Fernando A. Capablanca, Union Credit's president and chief executive officer.
His bank also has a hybrid car loan program that offers enhanced terms and conditions to consumers who purchase the energy-efficient automobiles.
"Protecting the environment and making sure that we have a nice planet for the children and grandchildren" is something that "we all have a stake in," Mr. Capablanca said in an interview last week.
Union Credit is not the only community bank to offer green loans. ShoreBank Corp. in Chicago, Wainwright Bank & Trust Co. in Boston, and New Resource Bank in San Francisco all offer lower rates to borrowers that use environmentally friendly materials in construction projects.
In creating its program, Union Credit joined forces with the Environment Program Finance Initiative, a partnership between the United Nations and financial institutions that seeks to tie financing to environmentally friendly principles.
On March 27 Union Credit became by far the smallest U.S. bank to join the initiative, which was established in 1992 and provides technical support, but not funding, to more than 160 financial institutions from around the world, including Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., and Wachovia Corp.
Ms. Petrovic said that community banks are underrepresented in the initiative because it has only a limited budget and cannot undertake large-scale marketing.
"I do think a bank like … [Union Credit] coming on board … will hopefully trigger others to come on board to the initiative," she said.
Mr. Capablanca said he became aware of the initiative only after researching ways that banks could get involved in the fight against global warming.
Though just over a month old, Union Credit's green program has been well received, he said. "We're getting a lot of phone calls, a lot of e-mails, a lot of letters from people interested in learning more about it."
Union Credit has launched a marketing campaign in newspapers and trade magazines to promote its green program. It has six green loans in the pipeline and expects to close its first within the next 30 days, Mr. Capablanca said. In addition, it is in discussions with the City of Miami about possibly financing a fleet of hybrid cars.
More information on the initiative is available at
