Digital Federal Credit Union

Digital Federal Credit Union Sustainability Plan

Prepared by: Adam Brissette Fadwa Jaouane Tallis Salamatian

1 | P a g e Sustainability Plan Outline

1.0 Introduction 1.1 About the Company 1.2 Project Background 1.3 Objectives 1.4 Methodology 1.5 Recommended Initiatives

2.0 Green Financial Products and Services 2.1 Home Equity Loans 2.11 Borrower benefits 2.12 DCU benefits 2.13 ROI/Payback Period Home Equity Loan towards Solar Energy 2.2 Energy Efficiency Mortgages 2.21 Homeowner Advantages 2.22 DCU Advantages 2.3 Energy Focused Online Banking Application

3.0 How to implement your Green Lending Initiatives 3.1 Establish a sense of urgency 3.2 Create a powerful guiding coalition 3.3 Integrate DCU’s Vision into the Green Lending Campaign 3.4 Communicate the Vision by a Factor of 10 3.5 Empower others to Act on the Vision 3.6 Planning and Creating Short Terms Wins 3.7 Do not declare victory too soon 3.8 Institutionalize New Approaches

4.0 Performance Measurement

5.0 Roadmap for Green Lending

Addendum A DCU Sustainability Initiatives Addendum B Solar Energy Addendum C The Green Envelope Addendum D Energy Efficiency Mortgages Addendum E Preliminary DCU Sustainability Event Plan

2 | P a g e 1.0 Introduction:

Sustainability can be defined a number of ways depending on the context. A broadly accepted definition is that a sustainable society is one which satisfies its needs without diminishing the prospects for future generations. Sustainable behavior is cyclical and can remain viable in perpetuity, as opposed to unsustainable behavior, which is linear and must come to an end. Acting sustainably requires a decision making process that weighs economic benefit, social benefit, and the environmental impacts of one’s actions.

From DCU’s perspective, and that of any business, sustainability means remaining operational for the long term. The importance of sustainable development for DCU is clear when viewed through its stakeholders. As a financial institution, DCU’s members depend financially on the services DCU provides. Employees of DCU depend on the company to earn a living. The impact of sustainable behavior is far reaching for DCU, and with this premise we began our sustainability plan for the company.

1.1 About the Company

Based in Marlborough, MA, Digital Federal Credit Union (DCU) was chartered in 1979 for employees of Digital Equipment Corporation. DCU has grown its member base throughout the years and currently they serve 600 companies with 350,000 members. DCU offers a full range of financial services to its members. DCU identifies members and employees as its main stakeholders. Their motto, “The DCU Way”, details DCU’s people first philosophy. Among credit unions, DCU is a leader in innovation, particularly in the electronic services space. Currently DCU has $3.7 billion in assets, making it the 12th largest credit union in the United States.

1.2 Project Background

On September 1st, Craig Roy, Senior VP of Support Services and Kris Van Beek, Senior VP of IS and Risk introduced our class to their company and also discussed sustainability. Internally DCU had implemented several sustainable initiatives throughout their operations, and realized the costs savings of reduced paper consumption, and reduced energy and electricity usage in their buildings. A more detailed summary of DCU’s initiatives prior to the start of this project is detailed in (Addendum A).

Services currently offered by DCU also promote sustainable behavior to members as well. Services include expanded paperless banking, where members receive statements online—reducing paper usage as well. Innovative service offerings, such as remote

3 | P a g e deposit capture also promotes sustainability-- allowing members to make deposits from their phone, eliminating any paper from deposit transactions.

Our team at Clark University was tasked with creating an actionable plan to further sustainability at DCU, building on of their previous initiatives. The first step in creation of our plan was identifying the objectives.

1.3 Objectives

We identified two primary objectives for our sustainability project based on our initial meeting. The first objective was to identify innovative green financial services and products that will provide incremental income to DCU while expanding the member base. Secondly, our objective was to involve key stakeholders in the sustainability initiatives.

1.4 Methodology

In identifying the scope and direction of our plan, we initially focused on three areas— DCU’s core business and vision as a company, DCU’s main stakeholders and lastly the objectives of our plan.

DCU’s mission statement is based on doing business “the DCU way”, which is based on three principles. The first principle is people come first, indicating the importance of employees and members in the company’s decision making. The second principle is ‘Do the Right Thing,’ emphasizing DCU’s commitment to offering services that look out for the best interests of members. The final principle is to make a meaningful difference in the lives of members. DCU’s vision is to “help all members achieve their financial goals through providing members with superior value through low rate loans with caring professional service”.

The key stakeholders for DCU are clearly integrated into their company goals. Employees and members are tied to all three principles. Given the nature of a credit union, DCU’s members are also the owners further unifying the needs and goals of all key stakeholders in the company.

The scope of our project for DCU includes identifying potential sustainable services that would earn DCU incremental revenue, expanding their member base, and promoting sustainability to key stakeholders.

4 | P a g e 1.5 Recommended Initiatives

Based on DCU’s core business, vision, main stakeholders, and our plan objectives; our initial research focused on the member and how DCU could better serve them within the lens of sustainability. Given that for a majority of DCU’s members, their major financial asset is their house; thus we began to assess the costs and energy usage associated with homeownership. We identified multiple energy efficient home improvements that will allow consumers to reduce yearly energy costs. Through our research we also determined that renewable energy such as solar can further reduce a member’s utility bill, even after factoring in the financing costs of the purchase of solar panels. The main barrier for members interested in energy efficient upgrades and renewables is availability of financing, creating a great opportunity for DCU.

Through offering a range of financing options to members for energy efficient home upgrades and installation of renewables, DCU can make meaningful impact towards reduction of its stakeholders’ carbon footprint; while at the same time: growing its member base, earning revenue through lending and helping members reduce their yearly energy costs.

We propose specific financial products DCU could offer that would finance energy efficiency upgrades and renewables for homeowners. Included with this detail is an ROI analysis and payback period for the investments. This section will provide more hard data making evident that offering these loans is mutually beneficial economically to DCU and the members taking out the loans.

Addendums B, C and D provide an analysis of each energy efficiency improvement or renewable investment that we propose DCU provide financing for—specifically home retrofits (the green envelope) to reduce energy usage and costs, and investments in solar energy. The analysis details the environmental benefits of each offering along with the economic case for both consumer and DCU.

The product offerings are followed by a section on change management targeted towards DCU’s members who are the target market for the loan offerings. This section serves as a road map for implementing the green lending campaign. We propose a marketing and education campaign that will motivate potential borrowers to act, highlighted by a sustainability conference targeted towards educating DCU members to the potential benefits of residential energy efficient investments and upgrades.

5 | P a g e 2.0 Green Financial Products and Services

The financial products that we propose DCU offer target homeowners that are investing in energy efficient upgrades to their home or investing in renewable energy such as solar. In this section we will detail specific financing options that DCU can provide, explain how these loans fit into DCU’s business plan and quantify the return on investments (ROI) and payback periods of the different loans.

2.1 Home Equity Loans

Home equity loans are an excellent financing option for home energy retrofits or investment in renewables as they provide access to funds for a one-time expense.

2.11 Borrower benefits

From the borrower’s perspective, there are multiple benefits to a home equity loan. First, the borrower gets the full amount of the loan upfront. The fixed interest rate option for a home equity loan brings predictability to the consumer through fixed monthly payments and also reduces their interest rate risk. The member receives a certain payment schedule that provides them with security. Also, DCU currently does not charge closing costs on home equity loans, further providing the member good value with value. The appraisal fee for a home equity loan is also returned if the borrower qualifies.

2.12 DCU benefits

Offering home equity loans to members for energy efficiency fits into DCU’s core business given that they currently provide members with multiple home equity loans and lines of credit. As of August 2010, near $714 million, or 21.5%, of DCU’s loans to members were of the home equity variety. To put that into perspective, 20% of DCU assets (before accounting for allowance for loan losses) are home equity products (DCU Financials, 2010). Marketing these products towards consumers looking to invest in home energy projects in order to reduce their monthly costs would also coincide with their current offerings of the second chance car loans.

2.13 ROI/Payback Period Home Equity Loan towards Solar Energy

In analyzing investments on solar energy, we analyzed cash flows from both the borrowers and banks perspective. The payback and ROI analysis is based on the following framework.

 Home equity loan 10 year fixed rate loan

6 | P a g e  Tax incentives and rebates (generally received within 1 year) used to pay down principal on loan

 DCU lends at 7%

 Solar energy credits (SRECS) sell for $400 (conservative est., recently sold for $500)

 Initial Cost per KWH .12, increasing 5% each year

 Solar system is 3kW (real life case Sun Bug Solar $25,200)

 Homeowner reduces electricity bill 25% (conservative)

 Borrowers payback period and IRR based on project energy savings, and sale of SREC credits (see Addendum B for more information), and monthly payments for the life of the loan

 IRR based on reinvestment of cash flows at 7%

Based on this model, we calculate that the bank’s yields an APR of 7.32%. This yield on assets would provide DCU with a spread of approximately 6.12% based on their most recent cost of liabilities, approximately 1.20% (DCU Financials, 2010).

The borrower’s payback period would be 9 years. The ROI of the solar investment over 10 years is 106%. However, using the most recent price SREC’s sold for in August, $500 per solar renewable energy credit, the homeowner’s payback period is reduced to 7.25 years. The ROI with SREC at the selling price would be 11.4%.

After the payback period, the investors will continue to receive the benefits of reduced energy bills and the sale of SRECs, providing borrowers a positive return on their investment. For a more in-depth review of the economic, social and environmental benefits of solar energy refer to Addendum B.

7 | P a g e 2.2 Energy Efficiency Mortgages

The use of Energy Efficiency Mortgages, which give the opportunity to finance cost- effective measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans, have therefore gained momentum across the nation. Indeed, they present a great vehicle and have a significant potential of making the housing marketplace more environmentally friendly, as well as inducing consequential money savings that could be invested in productive projects otherwise.

2.21 Homeowner Advantages

By increasing the cash flows gained from efficient houses as the energy savings are usually bigger than the up-front investment, EEM’s enhance the borrowers’ ability to qualify for loans, as well as increasing the size of the mortgage loan amount. Indeed, EEM’s do not require borrowers to qualify for additional financing as cost-effective energy improvements result in lower utility bills, making more funds available for mortgage payments. For already existing houses, EEM’s enable homeowners to refinance their property to add energy efficiency upgrades and improvements to their house as part of the underlying mortgage financing transaction. This process allows the energy retrofit to be financed over a longer period of time, with lower monthly payment, as the costs are folded into the total mortgage amount. Overall, EEM’s allow homeowners to increase their housing affordability, borrowing power, comfort, house performance, resale value, as well as reducing their energy bills and consumption.

Addendum C further discusses the types of upgrades that can be financed through an EEM.

Practical example

Energy-efficient homes provide their occupants with interesting opportunities in terms of cost-savings when combined with an EEM.

Older Existing Home Same Home With Energy Improvements

Home Price $ 150,000 $ 154,816

8 | P a g e Older Existing Home Same Home With Energy Improvements

Loan Amount (90% mortgage, $ 135,000 $ 139,334 8% interest)

Monthly payment $ 991 $ 1,023

Energy bills $ 186 $ 93

The true monthly cost of $ 1,177 $ 1,116 home ownership

Monthly savings $ 61

Source: http://www.hud.gov/offices/hsg/sfh/eem/eemhog96.cfm

EEM’s also provide homeowner with an increased borrowing power.

For a standard home without energy improvements:

Buyer's total monthly income $5,000

Maximum allowable monthly $1,450 payment 29% debt-to-income ratio

Maximum mortgage at 90% of $207,300 appraised home value

For an energy- efficient homes:

Maximum allowable monthly $1,650 payment 33% debt-to-income ratio

Maximum mortgage at 90% of $235,900 appraised home value

9 | P a g e For a standard home without energy improvements:

Added borrowing power due $28,600 to the Energy Efficient Mortgage

Source: http://www.hud.gov/offices/hsg/sfh/eem/eemhog96.cfm

Interest rate 7.5%, downpayment of 10%, 30-year term, principal & interest only (tax & insurance not factored.)

This buyer got into a home worth thousands of dollars more, just because it was energy efficient. That could mean a home with more space, in a better location, or in better overall condition.

2.22 DCU Advantages

Financial Institutions have the opportunity to write more and bigger loans, through an increased borrowing power as well as house value, with less risk. Indeed, since these loans are based on strict quality home audit and rating, lenders have more confidence that the improvements made will result in a positive cash flow for the consumer. By marketing this financial product as well team up with local builders, lenders can actually become leaders in the community in terms of green lending. Moreover, Financial Institutions which promote EEM’s will have the advantage of differentiating from the competition by demonstrating environmental leadership and commitment to environmental issues.

Refer to Addendum D for a more detailed discussion of EEM’s.

10 | P a g e 2.3 Energy Focused Online Banking Application

There are two major barriers for homeowners to invest in energy efficiency or renewables: financing and quality of information. DCU can address the financing barrier through offering the loans discussed above—energy efficiency mortgages and home equity loans. The information barrier we discuss now.

People want to reduce energy costs and reduce energy usage. The difficulty however is choosing the right project in order to spend less and save more, determining which rebates and incentives are available, and then identifying the best way to finance the project. DCU can remove this barrier by providing this information; educating members and helping them make intelligent and informed decisions.

We propose implementing an online banking platform that quantifies energy usage on the same website where members manage their money DCU could help members answer three very important questions: How much energy do I use? What can I do to reduce it? How can I pay for it? Developing this user application to provide the consumer with knowledge—quantifying energy savings, calculating the cost of projects, maintaining vendor information—can be time consuming and potentially costly for DCU. There are however, companies that offer online banking solutions to banks for minimal or no cost.

A start-up company perCent Inc. (http://www.percentinc.net/) has created an online solution they offer to banks that allow people to manage their energy where they manage their money. To start, the user would update a personal profile including information such as the amount and types of cars they drive and the size of their house. After the profile is created, the online application would automatically calculate the users carbon footprint based on the actual bills that would hit their DCU bank accounts —oil bills, electric bills, and fuel bills. In implemented, bank members could log into their DCU bank account and receive a real time auto-generated energy statement at the same time viewing their bank statements. In addition to allowing members to better

11 | P a g e understand their energy usage, the online platform also allows them to identify and research cost effective solutions appropriate for their needs.

The service would allow DCU to attract and retain members, spotlight their financing options for home energy projects and further promote sustainability.

Example of Energy Statement:

Example of Project research:

12 | P a g e 3.0 How to implement your Green Lending Initiatives

The success of the green lending initiatives we are proposing center on changing the behaviors of DCU members.

The act of offering these products may not be sufficient to make people act and take out loans. You need to change the consumer’s behavior, motivate them to demand these products.

During the next section we will outline a plan to change the behavior of the DCU member, making the environmental, social and economic benefits of these loan offerings a reality.

3.1 Establish a sense of urgency

“Without a sense of urgency, desire loses its value.” Jim Rohn

For a majority of individuals change is uncomfortable. Unless the benefits of change are clear, or the negative consequences of not changing are evident, people in general will not change their behavior. This pertains to changes in behavior at work and at home, from changes in eating habits to changes in purchasing behaviors.

13 | P a g e In terms of green lending, DCU needs to motivate people into action by creating a sense of urgency within its employees and members alike. Change will require cooperation from both stakeholder groups in order to be successful.

From an internal perspective, marketing or creating a product requires buy-in from all different areas and levels of the company. Marketing needs to understand the environmental, social and economic benefits of the products, the sales area needs to be able to communicate these benefits to members, and all employees need to understand that these loans are not a temporary pilot but a permanent program.

For the members, DCU must communicate directly through multiple channels the benefits of renewables and energy efficiency loans. Education through a steady stream of information will engage people and force them into action. What needs to be communicated? Communicate the fact that energy and electricity costs are rising and will continue to do so. Educate consumers on the savings of energy efficiency measures, and the potential return on investment on solar energy as we have detailed above. When consumers view the borrowing as an intelligent investment as opposed to simply borrowing money with no purpose, they will act.

The goal is to drive people out of their comfort zone. Make them realize the potential risks of not acting—throwing money away in perpetuity on an energy inefficient house and leaving themselves vulnerable to yearly increases in energy costs. People do not like change unless the benefits of change are clear, or the negative consequences of not changing are impactful. In communicating the benefits and risks of not acting a sense of urgency is created within the consumer, breaking down the first and major barrier to change. The next step is to create a powerful coalition who can guide this change.

3.2 Create a powerful guiding coalition

“ Efforts that don’t have a powerful enough guiding coalition can make apparent progress for a while. But, sooner or later, the opposition gathers itself together and stops the change.” John Kotter

As we have discussed, the change effort is two-fold. Internally, the change is a commitment to offering loans promoting sustainable behavior. The second portion is changing the behavior of the consumers to borrow money and demand these loans. The powerful guiding coalition driving both of these changes must be managers with enough power inside the organization to develop these products and with the resources to educate and market these products to members. The most effective coalition would be managers or executives from marketing, product development, sales and lending.

The presence of employees with power across all areas of the company on the coalition is integral, in order to obtain buy-in through all areas of the organization. If a few mid- 14 | P a g e level staff members were researching or developing a new potential line of loan offerings, the signal to the rest of the company is that there is no long term commitment from senior management to the initiatives. Alternatively, a group of executives spanning different areas of the organization working on initiatives to develop and market green loans would signal a commitment to these offerings as opposed to a short term fad.

Once created, the coalition members must be on the same page and share the same vision. Creating that vision brings us to the third step in change management.

3.3 Integrate DCU’s Vision into the Green Lending Campaign

“ Effective leaders help others to understand the necessity of change and to accept a common vision of the desired outcome.” John Kotter

DCU’s vision, highlighted by the DCU Way, is member centered. The vision is to help all members achieve their financial needs by doing business the DCU Way: people come first, do thing right thing, make a difference. In many cases of transformational change, a company will need to alter their vision as a company and communicate the change in direction. The initiatives we are proposing; however, simply require expressing how the new product offerings fit directly into DCU’s current vision.

Offering loans for energy efficient household upgrades and residential use of renewables fits directly into DCU’s current vision. This strong connection needs to be communicated with members and employees. Offering loans promoting sustainability IS doing business The DCU Way.

People Come First— through providing these loans DCU will help you lower energy costs a substantial amount and save money over time. Do the Right Thing—these choices are in your long term best interest, financially and environmentally. Make a difference—through taking a loan to invest in your house, you are also investing in the future. Helping save you money while helping save the environment through reducing carbon footprint.

3.4 Communicate the Vision by a Factor of 10

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion” Jack Welch

15 | P a g e Green lending fits into DCU’s vision, but unless this connection to the company’s vision is communicated, the financing opportunities will not be utilized by members. A recent study showed that more than three quarters of bank members are interested in discounts on interest rates to purchase energy efficient appliances, homes and cars, but two-thirds did not know whether their financial institution offered those (Informa Research Services, December 2008). This statistic underscores the importance of communicating your vision as a company, and the products you are offering to members through all possible channels.

Prior to marketing or providing green loans, DCU must first demonstrate to members how it has acted sustainably and benefited from these actions. In other words, the company must demonstrate it “walks the talk.” Creating a section on the DCU website dedicated to informing members of its green initiatives would do just that. DCU has benefited from energy conservation, paper reduction, waste reduction and recycling initiatives. The credit union also promotes sustainability through online banking services that reduce trips to the bank and paper usage in banking transactions. Members need to be made aware of these initiatives, further connecting the company’s own actions to the green financing products they it offers.

DCU must also communicate how sustainability and offering green loans ties into its vision. We propose holding a seminar directed towards educating consumers on the importance of sustainability and how individuals can benefit through sustainable behaviors in their home. Through this event DCU could begin the education process and promote its green financial product offerings at the same time. The conference would include professionals that work in sustainability, companies that develop and install renewables in residences, contractors that perform energy efficient upgrades on households, and most importantly DCU professionals who would provide members with the financing to make members’ residences sustainable. The seminar would kick off a multi-channel marketing campaign to promote DCU’s energy efficient lending program.

After the seminar, the green lending campaign would be reinforced through different communications channels. Online banking, ATM’s, radio ads and messaging on cell phones all provide vehicles to educate the public on energy efficiency, renewable energy and sustainability in general. The content does not have to be solely advertisements for products, the messages could include facts on household energy usage, tips on how to reduce energy costs, or a quick example of an energy efficiency initiative DCU has implemented (i.e. low flow faucets, T8 light bulbs, HVAC controlled thermostats). Consistent messaging through all media channels will further connect the green lending to DCU. These efforts will ensure all members or perspective members to know the answer to the following question, “Does DCU offer lending for energy efficient and renewable energy investments?”

For a preliminary event plan of the DCU sponsored sustainability seminar see Addendum E.

16 | P a g e

3.5 Empower others to Act on the Vision

“As we look ahead to the next century, leaders will be those who empower others.” Bill Gates

DCU’s vision involves helping all members meet their financial needs. Providing financing for residential energy efficient upgrades or investments in renewable energy can assist members with meeting their financial needs while subsequently helping the environment.

Implementing an online interactive dashboard dedicated to energy usage and solutions would provide members with the knowledge required to choose intelligent investments.

Through offering financing for green investments and educating their members, DCU would empower their members to further achieve their financial needs.

3.6 Planning and Creating Short Terms Wins

“Seeing is believing”

Educating members on benefits of energy reduction is a powerful change agent; providing members with real life examples of these benefits makes them tangible. A DCU member only presented with statistics and data on hypothetical returns from investing in energy efficiency or renewables may still have some hesitancy to make an investment. Real life examples of members that have realized the benefits of sustainability prove that the grass really is greener on the other side, removing ambiguity from the benefits received through financing energy solutions.

The DCU website can be used as a vehicle to communicate the short term wins. Sharing facts about the realized gains members have achieved through energy efficiency signals to other DCU members that they could benefits from green loans as well. The quick wins should be demonstrated to other members soon after the green lending campaign has begun. Failure to do so will cause you to lose the interest of skeptical members, making the green lending initiatives less impactful.

Celebrating quick wins is integral for communicating the benefits of the program. Considering these wins the end goal of the lending initiatives would cut short their impact of the green lending program. This is discussed further in step 7.

3.7 Do not declare victory too soon

17 | P a g e “Congratulations Red Sox, 1986 World Series Champions.” Message on Shea Stadium Scoreboard

If our first six steps are followed, we contend that the implementation of the green lending initiatives will be successful, and that many members will have realized the benefits of the loan programs. The program however is meant to have a meaningful and lasting impact to many generations of DCU members, not simply the first borrowers.

A main reason we believe lending for energy efficiency and renewable energy is a great opportunity is the bright future of sustainability. Investing in sustainability is a megatrend that will have lasting implications (Harvard Business Review, 2010). Failure to continue to promote green lending after its initial success would undermine its potential long term economic and environmental benefits to both DCU and its members.

3.8 Institutionalize New Approaches

If ‘The DCU Way’ is successfully integrated into the green lending program and DCU remains committed long term to the initiatives long term, then institutionalizing the new financing options should be a natural progression.

A public commitment to sustainability would further institutionalize a green lending campaign that promotes energy efficiency. Through creating a sustainability report annually, DCU would ‘talk the walk,’ detailing their own internal sustainability initiatives. In doing so, sustainable behaviors is ingrained into the corporation and the green lending program likewise is further institutionalized as an important part of DCU’s business.

4.0 Performance Measurement

For performance measurement and reporting we have metrics focused in three areas; member awareness of loans, number and size of loans made, and the performance of the specific loans.

18 | P a g e Perhaps the most integral part of implementing the green lending initiatives is communicating the types of loans and educating members on the benefits of energy efficiency. As such, DCU needs to measure the effectiveness of the marketing initiatives. We propose performing a survey of DCU members a month after the green lending campaign begins followed by quarterly surveys following the first.

The questions asked can be simple, not time consuming for members and can be done at branches or online:

a. Were you aware DCU offers loans and mortgages promoting energy efficiency and investments in renewables? If yes, how did you find out about these offerings?

b. Have you/would you consider taking advantage of the opportunities provided by these loans? If no, why?

The data from the surveys will provide valuable information. Management can determine if communication efforts have generated sufficient awareness in the member base, and what the most effective communication techniques have been. Second, management can determine what percentages of members with an awareness of the program would consider borrowing money to invest in energy efficiency or renewables. For members who are not interested, DCU can determine if their non-interest can be changed through more clear communication and education. The goal we set for awareness metrics is that the percentage of members aware of the green lending initiatives should increase each quarter, and by the end of the year, over 75% of members should be aware.

The number of loans and total dollars of both home equity lines for solar and energy efficiency mortgages should be tracked and reported on a monthly basis by senior management. The number of loans made and totals dollars lent ultimately drives the success of the campaign. The more loans made, the more energy savings realized by the member, the larger the impact on the environment, and the more incremental loan income raised by DCU. In addition to tracking sheer number and size of loans, repayment and delinquency rates should also be monitored closely on a monthly basis to determine the quality of the loans.

19 | P a g e 5.0 Roadmap for Green Lending

Our sustainability plan began with identifying green loans and services to offer ended with measuring the performance of our implemented initiatives. In this section, we will provide a timeline for specific actions.

1. Develop green financing options

We specifically identified offering home equity loans for purchase of solar energy, and becoming a lender of energy efficiency mortgages. Offering home equity loans is a key component of DCU’s core business thus offering home equity loan type products specifically for solar should only take minor adjustments (i.e. refinancing option when tax credit received to pay down principal). With regards to energy efficiency mortgages, DCU currently offers FHA and VA loans, and FHA and VA also sponsor energy efficiency mortgages that DCU could offer.

2. Provide energy focused online banking application

People need to understand their energy usage and costs before making investments to reduce them. This online banking application would allow members to quantify their household energy usage, research appropriate solutions to reduce energy use, and identify financing options to invest in their energy solutions.

3. Hold a DCU Sponsored Sustainability Seminar

The benefits of holding a seminar on sustainability are multiple. First, DCU can educate members on the benefits of the sustainability through the experiences of many sustainability professionals. The seminar can also serve as a vehicle to make consumers aware of different home energy solutions and the available options to finance them. From the perspective of

20 | P a g e branding, the event can also connect green lending to DCU’s vision. Lastly, the event will expose DCU to potential new members.

4. Reinforce Green Lending Campaign through Multiple Channels

The seminar begins the member education process on energy efficiency and green lending. Education should then be perpetuated through a steady stream of communication via different media channels. Online banking, ATM’s, radio ads and messaging on cell phones all provide vehicles to educate the public on energy efficiency, renewable energy and sustainability in general.

5. Demonstrate Benefits of Energy Efficiency through Real Life Examples

Statistics on expected return on investment from home energy solutions will peak a homeowners interest. Real life example of actual proof return on investment is more powerful and will motivate many members into action. As members begin taking advantage of the benefits provided through DCU’s lending, these should be communicated to members as soon as gains are realized.

6. Performance Measurement and Reporting

Management should review certain metrics on a monthly basis to determine the effectiveness of the lending initiatives. The metrics reviewed should include areas such as customer awareness and loan specific data such as number of loans, dollars lent, repayment rate and delinquency rate. The data on the loans will detail the quantity of loans and quality of loans.

The goal of performance measurement is to determine if your communication efforts are effective (awareness) and to determine if the company if benefiting from the lending initiatives (loan specific data).

21 | P a g e Addendum A DCU Sustainability Initiatives Prior to September 2010

22 | P a g e

DCU's Green initiatives and Cost effective solutions as of 2010

Facilities Current solution Type of Solution Description Location(s) Purpose Computerized Energy Management Software /Hardware Controls the schedules of HVAC and Lights HQ Energy conservation Computerized Energy Management Software Controls the HVAC OC Energy conservation Lights timer Hardware Controls the light schedules per floor OC Energy conservation Light fixtures Hardware Energy efficient super T8/T8 bulbs and Electronic ballast HQ Energy conservation Light fixtures Hardware Energy efficient T8 bulbs and Electronic ballast OC Energy conservation EL Harvey & Son and Allied Waste Waste management Recycles up to 90% of our trash at their facilities OC,HQ,Some Recycling EL Harvey & Son Waste management Recycles all DCU's paper All Recycling Copy machines Hardware LED Cathodes and Cool operation copiers (Low BTU emitions) Energy conservation 800 Got Junk Waste management Lamps, bulbs and hazardous materials disposal All Green initiative 7 day thermostats Hardware HVAC controlled with 7 day thermostats Branches Energy conservation

Information Systems Current solution Type of Solution Description Location(s) Purpose Power Generators Hardware Generates electricity during power outages (Ultra low sulfur Diesel Fuel) HQ/OC Emergency power Energy Efficient PC's and Monitors Hardware Small Factor PC's and LCD Monitors (Energy Star OK) All Energy conservation

Various Departments Current solution Type of Solution Description Location(s) Purpose Deposits via Scanner or Smartphone PC Deposit Members able to deposit checks with Scanner or Smartphone's All Save on paper, transport and labor Electronic Archiving Electronic file archive Scan to archive,Efax,email attachments vs. print or send forms Various Scan vs. store at Iron mtn. Save on transport Electronic Statements and forms Eforms and statements Members opt-in their electronics statements and forms All Save on paper,transport,archiving and labor e-Loans application Web Software Members apply for loans electronically All Save on paper,transport,archiving and labor Message Center Web Software Members receive communication and promos from DCU All Save on mailings(Paper),postage and labor. Check 21 Software Check 21 captures the image of check and archives in house All Save on transport (fuel),archiving and info calls Member self serve Web Software Members can view and make changes to their products and services All Save on mailings(Paper),postage and labor.

23 | P a g e Addendum B – Solar Energy A Brief History of Solar

Photovoltaics is the process of converting solar radiation into electrical power. In other words, converting sunlight into electricity. Although many consider solar power a relatively new and developing technology, the solar industry is more mature. The roots of the technologies used in solar panels today date back to the 1940’s and 1950’s. In 1954, Bell Telephone laboratories successfully developed a solar cell that was able to transform sunlight into electrical power with which to power electrical equipment—a true breakthrough in solar technology (US DOE).

As application of solar as a practical and efficient energy source advanced, through the 1960’s and 1970’s photovoltaics were commonly used in the aerospace industry by NASA, the communications industry in satellites, and in the shipping industry to power lighthouses and warning lights on gas and oil rigs (ironically enough). Domestic uses for solar energy were identified around this time as well. In 1973, the University of Delaware constructed a house powered through photovoltaics, one of the first such residences in America (US DOE). http://www1.eere.energy.gov/solar/pdfs/solar_timeline.pdf

Environmental Case for Solar:

For the average person, one would not associate the electricity required to watch television or power a light with greenhouse gas emissions. The traditional energy means used to create electricity do however cause these negative impacts on the environment. In fact electricity generation is perhaps the largest contributor to our environmental footprint as humans.

In Massachusetts, natural gas, petroleum and coal are the predominant energy sources used in electricity production. Natural gas accounted for 43.2% of electricity produced in 2008, with petroleum at 23.1% and coal at 12.3% as reflected (see table 1).

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Table 1. Electric Power Industry Capability by Primary Energy Source, 1990 Through 2008 (Megawatts)

Massachusetts

% Share Energy Source 2008 2008

Total Electric Industry 13,505 100.0 Coal 1,662 12.3 Petroleum 3,120 23.1 Natural Gas 5,839 43.2 Nuclear 685 5.1 Hydroelectric 258 1.9 Other Renewables 299 2.2 Pumped Storage 1,643 12.2 * = Value is less than half of the smallest unit of measure - (dash) = Data not available. Source: U.S. Energy Information Administration, Form EIA-860, "Annual Electric Generator

Energy production used to develop electricity results in the emission of greenhouse gases—carbon dioxide, sulfur dioxide, nitrogen oxide. During peak hours, to account for the rising demand in electricity utilities are forced to produce electricity using the more environmentally damaging forms of energy such as coal plants. While the burning of all fossil fuels to produce electricity emits GHG’s, coal is clearly the most harmful. For example, producing 1 megawatt of electricity with coal results in the emission of 6,000 metric tons of carbon dioxide in the atmosphere, compared with 592 and 1,560 metric tons from petroleum and natural gas, respectively. To put that into perspective, an average household uses 7.5 megawatts per year. The amount of greenhouse gas emissions (CO2, SO2 and NO2) released into the air through the production of electricity in Massachusetts during 2008 is listed in table 2. The emitting of sulfur dioxide and nitrous oxide into the atmosphere leads to acid rain and smog respectively.

25 | P a g e Table 2. Electric Power Industry Emissions Estimates, 1990 Through 2008 (Thousand Metric Tons)

Massachusetts

Emission Type 2008

Sulfur Dioxide Coal 38 Petroleum 6 Natural Gas * Other Renewables * Other * Total 44 Nitrogen Oxide Coal 8 Petroleum 1 Natural Gas 3 Other Renewables 7 Other * Total 19 Carbon Dioxide Coal 9,963 Petroleum 1,847 Natural Gas 9,108 Other Renewables - Other 1,330 Total 22,248 R = Revised. * = Value is less than half of the smallest unit of measure - (dash) = Data not available. Source: Calculations made by the Electric Power Division, U. S. Energy Information

By contrast to the traditional forms of energy, production of electricity through solar energy emits near zero harmful chemicals into the atmosphere. Emissions of carbon dioxide, sulfur dioxide and nitrogen oxide are brought to zero through the use of solar energy. Thus, using solar reduces ones impact on climate change, as well as their contributions to acid rain and smog.

Given the electricity production levels of a typical 3kW solar energy system, over the 25 year life of the system a household could reduce the following emissions, and also save 90,000 pounds of coal from being burned:

 180,000 lbs of carbon dioxide (CO2)

 600 lbs of nitrous oxide (NOx)

 500 lbs of sulfur dioxide (SO2)

Alternatively, one DCU member that installs solar panels would cut carbon dioxide emissions 7,200 lbs per year for twenty-five years, a very significant reduction. A recent Bloomberg study has suggested that by 2020, 2.4% of households will be powered by solar energy (http://www.cleanenergyauthority.com/solar-energy-news/study-shows-

26 | P a g e solar-growth-102710/). Among DCU members alone, that would account for approximately 7,000 households. The environmental savings of a transition to solar energy for 7,000 DCU members per year would be:

 50.4 million lbs of CO2

 168,000 lbs of NOx

 140,000 lbs of SO2

The environmental benefits of solar panels are clear. Next we will identify the benefits to the consumer; the DCU member.

The Consumer Benefit of Solar:

The cost benefit for consumers to invest in solar energy is multi-tiered, and government subsidies promoting the development of clean energy further creates a benefit for consumers.

Utilities cost reduction and net metering: First and foremost, installation of solar panels will reduce your utility bill immediately. Every minute of sunshine results in the production of electricity from the photovoltaic system. Whatever electricity you are consuming residentially at a specific point in time costs you nothing, as long as your generation exceeds usage.

Furthermore, through a process known as net metering, PV owners can actually make their utility meter spin backwards. At times when solar production of electricity is higher than usage, during the day for example, you actually can send electricity back to the grid and essentially bank electricity for use during times of zero production (nighttime).

The average cost for a kWh in Massachusetts in 2008 was $17.68. A 5kW system can produce over 6,000 kWh per year—leading to a potential cost savings of $1,060 per year. Given that the cost of generating electricity from conventional sources has continued to rise (The McKinsey Quarterly), savings in future years are even greater.

SRECs: Residents in Massachusetts in particular are further given an economic incentive to invest in solar through the issuance of Solar Renewable Energy Certificates (SRECs) by the Massachusetts Department of Energy (DOER).

Individuals with solar generating systems are given an SREC for each megawatt of electricity produced. The SREC’s have economic value similar to a stock. The reason for the value is that utility companies such as National Grid and NSTAR are mandated through state law to produce a certain level of megawatts per year. The utility companies do not have the capacity or funds to generate the electricity, and thus 27 | P a g e purchase SREC‘s from individuals and other producers of solar kWh in order to avoid paying fines.

The value of an SREC varies, but has a floor and a ceiling, providing consumers with a specific range of return on investment. Currently in Massachusetts, the price ceiling is $600 per SREC—which also represents the fine levied for failing to generate solar energy or obtain 1 SREC. The price floor is $300 as established by the DOER’s Solar Credit Clearinghouse.

For a consumer who installs a 5 kilowatt PV system, they will earn 6 SRECs per year, earning them a guaranteed $1,800 per year with the potential of earning up to $3,600 depending on the market.

Government subsidies: Admittedly, the main barrier for consumers to invest in solar panels is the upfront cost for purchase and installation of the PV system. The government however is lowering this cost through government subsidies at the state and federal level.

Under the Massachusetts Commonwealth Solar II Rebate Program, those who purchase and install a PV system are given rebates diminishing the out of pocket upfront cost to buyers. Residents would receive $1/watt capacity of the system, $.10 per watt for purchasing a system with parts made in Massachusetts and an additional rebate of $1/ watt based on housing value. For a 5 kilowatt system, that would result in a $10,500 rebate.

The consumer benefit for solar panels is clear. On a yearly basis homeowners can save money on their utilities, and minimize their risk of bearing the burden of increasing electricity costs in the future. SREC’s provide a further benefit, acting as an annuity, providing a consumer with a predictable cash flow based on their solar generation. The government assistance helps offset the upfront cost, but not the entire cost. That is where DCU can step into the picture and provide financing.

In facilitating the financing of solar panel installation DCU would help reduce the environmental footprint of its members, serving an environmental benefit, and save their members money, providing a huge social benefit. There is also an economic benefit for DCU which we will explore next.

DCU’s Business Case for Solar

As for most capital investments such as solar, the largest barrier to entry is financing. DCU can help their members remove that barrier. The business case for providing financing is threefold. Through providing financing to members to install PV systems DCU will increase their member base, generate loan revenue in a growing residential

28 | P a g e lending market, and further their overall business vision of helping their members meet their financial needs.

Consumer Demand The residential demand for solar panels has seen unprecedented increase the past few years, making solar lending a great space for a lending institution such as DCU to expand.

Table 3 below reflects data produced by the U.S. Energy Information Administration that confirms the increasing trend towards residential consumption of Solar/PV energy. In the course of ten years, residential consumption of energy and electricity has nearly doubled in the U.S. In Massachusetts in particular, installation of grid-connect PV systems on residences doubled in 2009 (Interstate Renewable Energy Council, “US Solar Market Trends 2009).

Table 3 Renewable Energy Consumption: Residential Sector

Year Solar/PV Energy Consumed by the Residential Sector (Trillion Btu) 2000 Total 61.355 2001 Total 59.846 2002 Total 58.747 2003 Total 58.151 2004 Total 58.736 2005 Total 60.628 2006 Total 67.186 2007 Total 74.896 2008 Total 88.14 2009 Total 100.6

Source: U.S. Energy Information Administration

Demand for residential solar continues to rise with the cost of electricity. Since the year 2000, the average retail price for electricity across the U.S. has increase from 8.24 cents per kWh to 11.55 cents (see table 4). That represents a near 40% increase. As the cost of electricity continues to rise, consumers stand to gain more through investing in a PV system, leading to an increased demand.

29 | P a g e Table 4 Average Retail Prices of Electricity

Year Average Retail Price of Electricity, Residential Sector (Cents per Kilowatthour Including Taxes) 2000 Average 8.24 2001 Average 8.58 2002 Average 8.44 2003 Average 8.72 2004 Average 8.95 2005 Average 9.45 2006 Average 10.4 2007 Average 10.65 2008 Average 11.26 2009 Average 11.55

Risk Mitigation

Above we detailed the economic benefits of SREC’s and how consumers can receive an economic benefit from them. The SREC’s could also provide a guaranteed cash flow to a company such as DCU, mitigating the risk of default on the loan. In a worst case scenario where a member defaulted on the loan, DCU could have a direct claim on the SREC’s produced by the PV system. The presence of SREC’s provides a built in insurance for default, making solar lending an intelligent product.

Solar Lending and DCU’s Vision

DCU’s business is based on doing things the DCU way where people come first. Integral parts of that vision are making a meaningful, positive difference in people’s lives. DCU strives to help all members achieve their financial goals. Offering loans for residential use of solar coincides with the DCU vision. DCU members would reduce energy costs on an annual basis, furthering their financial goals. DCU would also be providing a vehicle with which their members reduce their environmental footprint—a meaningful difference in their lives and the community as a whole.

30 | P a g e Addendum C: The Green Envelope –

For most Americans their home it their biggest asset, and their biggest liability. Investing in improving the home’s energy efficiency can both add value to the home itself but also decrease the cost associated with owning the home. Furthermore the generation of electricity is a major contributor to environmental degradation and climate change, by renovating homes to be more energy efficient homeowners can reduce the overall carbon footprint as well as the overall energy costs associated with the home. The parts of the home that are exposed to the elements are called the green envelope. The green envelope includes: windows, doors, walls and floors.

While upgrading a home’s green envelope will save money, the exact dollar amount of energy savings per month is dependent on how energy efficient the home was to start with, the overall square footage of the home, and where the home is located. There are two main reasons the New England area is a prime area to invest in retrofitting a home to be more energy efficient. The first reason to upgrade is because there are a large amount of homes that are old thus making them less energy efficient than newer homes. Secondly, because New England is located in a region that has severe winters homeowners can save a great deal in heating costs by improving energy efficiency.

Windows:

blog.hobofarm.com While there are many ways to increase energy efficiency often the easiest to remedy is upgrading to more efficient energy Star approved windows. According to Energy Star a New England homeowner can expect to save about $465 if upgrading from single-pane windows, and about $91 if upgrading from double-pane windows.

According to a study conducted by Lawrence Berkeley National Laboratory, the energy lost through inefficient residential windows accounts for 2% of total U.S. energy consumption or 9% of total residential energy consumption. Many technological improvements have been made during the last 30 years to increase the performance of windows’ insulation, and are nowadays available and relatively inexpensive for most residential applications.

31 | P a g e High Performance Windows

- Higher upfront cost but lower long-term costs - Increased comfort in summer and winter - Savings on heating and cooling costs - Less outside noise - Less fading from UV light - Less interior condensation

(http://www.homeworks.ca/blog)

Conventional Windows

-Lower upfront cost and higher long-term costs

-Less comfort in summer and winter -More expensive heating and cooling costs -High noise transmission -Fading from UV light

(http://www.homeworks.ca/blog)

32 | P a g e www.energystar.gov/

Weather Proofing:

Another place to look for savings is weather proofing. Insuring that the home is keeping as much heat or cool inside is essential in realizing energy savings. For example making sure that the exterior doors have proper weather stripping can reduce the amount of heat or cool that is escaping by about 11%, according to www.thebarrierinsulation.com. Indeed, the better the insulation of a house is and the tighter its exterior seals are, the lower the heating and cooling costs are. If a homeowner has solar panels they can multiply their savings by ensuring that their home is properly weather sealed. In addition to keeping the heat or cool in properly sealing a home can keep water and humidity out, preventing mold and mildew to grow, which can have negative health effects and can weakens the structure of the home. Overall, a sound thermal envelope increases the health and comfort of the house occupants, while reducing their energy bills and overall effect on the environment.

33 | P a g e www.thebarrierinsulation.com/ www.precisionwindowsystems.com

In order to avoid the stuffiness due to tight home, household owners can either choose between opening the windows periodically in order to air the house, or install an energy recovery ventilation unit, which continuously circulates fresh air through the house.

34 | P a g e Insulation: www.simplyrenewable.com

The roof is the most important part of a house to insulate. The insulation in roofs should have a high “R” rating (minimum of R-30), the higher the R rating the more the insulation will keep in. In the winter natural process of convection, heated air rising to the roof can cause heat loss if the roof is not appropriately insulated. If the home has high ceilings, it could be beneficial to install ceiling fans to better circulate air thought the home. In the summer time, the sun beats directly on the roof, which accumulates heat in the attic and radiates into the lower floors. A highly insulated roof will therefore keep a house warm when the temperatures are low, and cool when the temperatures rise.

Insolating the home’s floors and walls are also ways to save money on energy costs. However the benefits of installing insulation under the floor are mainly realized in very cold climates for example areas where the ground freezes. Unfortunately to insulate exterior walls of homes that are already built is very expensive because it involves taking off the existing wall’s surface to get between the studs.

35 | P a g e Addendum D – Energy Efficiency Mortgages

Boosting energy efficiency of American houses offers unequalled opportunities for communities throughout the country. Indeed, there are almost 130 million homes across the United States of America generating more than 20% of the nation’s carbon dioxide emission, making them a significant contributor to global climate change. According to Diana Farrell and Jaana K. Remes, technologies that the energy efficiency of homes can reduce the energy use by up to 40% per home, as well as reducing the associated greenhouse gas emissions by up to 160 million metric tons annually by the year 2020, and the energy bill by $21 billion annually.1 Increasing houses’ energy efficiency would therefore not only slow down the increase in carbon emissions from power plants and fossil fuel combustion, but also stretch energy resources.

As most of people spend as much as two-thirds of their time at home, their environmental footprint is largely determined by the efficiency of their residential heating and cooling systems, as well as the resources they consume to keep their houses up and running. Moreover, according to John Shipman, President and CEO of Energy Efficiency Management, more than 70% of residential and non residential buildings predate current energy efficiency standards, which leaves a wide area of improvement and presents immense opportunities for the energy efficiency market. Investments in energy-saving measures, including more efficient central heating and cooling systems, energy-saving water heaters and less drafty windows can make a difference.

However, capital constraints prevent many households from seizing these opportunities. Indeed, even in developed economies which benefit from advanced mortgage markets, people who have been granted with a loan for defined amounts often face trade-offs, as the investments required to increase a house efficiency is often higher than a homeowner’s budget. High upfront costs and a lack of credit and financing options therefore dissuade many homeowners from completing or even considering energy efficiency improvements in their houses. Insufficiency of information on these possibilities also makes it hard for this market to thrive regardless of the opportunities and advantages it offers. Some efforts have been made towards addressing these issues, such as the Recovery Act which extended a 30% tax credit for investment in residential energy efficiency property, up to a cap of $1,500 per primary residence over two years. Nevertheless, this attempt has not succeeded in making significant inroads in the market at a larger level.

Financial Institutions have therefore an important role to play in this picture, by providing their members with more transparent, and accessible modes of financing, and

1 http://www.midwestsustainable.com/pdf/Biden%20Plan.PDF Recovery Through Retrofit, October 2009, Middle Class Task Force Council On Environmental Quality. http://besustainable.pbworks.com/f/McKinsey+Quarterly_How+the+world+should+invest+in+ener gy+efficiency.pdf 36 | P a g e by marketing those options to them. Improving the energy efficiency of the U.S. housing stock as well as developing financing possibilities can result in significant benefits for different actors within the economy, as well as the environment.

The use of Energy Efficiency Mortgages, which give the opportunity to finance cost- effective measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans, have therefore gained momentum across the nation. Indeed, they present a great vehicle and have a significant potential of making the housing marketplace more environmentally friendly, as well as inducing consequential money savings that could be invested in productive projects otherwise.

History

First introduced in 1979 when President Carter ordered all federal lending agencies to institute programs encouraging energy efficiency, EEM’s have been idling in relative obscurity for its first two decades due to significant barriers to their widespread utilisation. First of all, EEM’s required back then a complex registration process and extensive paperwork which dissuaded people from applying for them. Moreover, the access to the information was limited, and consumers could not get hold of straightforward, understandable and reliable facts and figures on the investments required and possible savings. Finally, the access to skilled workers was limited, which made the implementation to energy efficiency programs such as the green envelope insulting system or solar panels hard to become a reality on a national scale.

Efforts were however still being made by the government towards a more environmentally friendly housing stock: in 1992, Congress mandated a pilot demonstration of Energy Efficient Mortgages (EEM’s) in five states, and by 1995, the pilot was expanded as a national program in order to increase its use across the USA. Furthermore, the process to qualify for an EEM has become easier for applicants over time. Indeed, the ratings’ results assessing a house energy efficiency are now made available on a single sheet of paper, and lenders can quickly incorporate the findings into a loan package they know will be backed by Fannie Mae.

Process to qualify for an EEM

EEMs are sponsored by three actors: federally insured mortgage programs, the Federal Housing Administration (FHA), and the Veteran’s Administration (VA), and the conventional secondary mortgage market (Fannie Mae and Freddie Mac). Lenders can therefore offer conventional EEMs, FHA EEMs, or VA EEMs.

To qualify for an EEM, potential applicant must first hire a certified Home Energy Rater to inspect and evaluate the home’s energy features, prepare a home energy rating, also called «green» rating, and estimates the cost of the improvements as well as expected energy savings. The rater determines how tight and well insulated the dwelling is by

37 | P a g e examining it from floor to ceiling for leaks and cracks, which will in turn give the home’s efficiency rating. Such factors as window efficiency, heating and cooling system efficiency, wall-to-window ratios, insulation levels, local climate and the solar orientation of the home determine a home's HERS rating. In order to evaluate the potential savings (Energy Savings Value) from the upgrade through time, the Rater needs to estimate the cost of electricity and natural gas in the future. As energy resources become less available, prices are expected to skyrocket, which makes the savings increase through time. While Home Energy Rating System’s inspections can cost as much as $400, the energy efficiency are considered part of the borrower’s income and can help homebuyer qualify for larger mortgages. The cost of the energy improvements can be included in the homeowner's mortgage; however, the improvements cannot exceed 15 percent of the home's value.

New homeowners can qualify for an EEM if the house was built according to the guidelines set by the Energy Star Builder Option Program (BOP), a project of the U.S. Environmental Protection Agency (EPA) to encourage energy-efficient design and building. Once construction on the new home is complete, a HERS report is conducted to determine the building's energy efficiency, which will in turn dictate the terms of the EEM. Eligible borrowers can obtain an EEM backed by Fannie Mae with only a three percent contribution.

38 | P a g e Addendum E Preliminary DCU Sustainability Event Plan

DCU Sustainability Seminar Event Plan

Name of event DCU Sustainability Seminar

Date of event 3/1/2011 Time of event 3:00 PM Location of event Clark University – Tilton Hall

Event coordinator/contact person Adam Brissette, Fadwa Jaouane, Tallis Salamatian Target audience – DCU members, general public (perspective DCU members)

Objectives –  Educate homeowners of benefits of . sustainability  Make DCU members and perspective members aware of different home energy solutions  Create awareness of DCU green lending initiatives  Connect Green Lending to DCU’s vision  Attract new customers  Branding for DCU

Event Description The event is an educational opportunity for homeowners, both DCU members and perspective members. Through bringing together multiple professionals from the sustainability field to discuss energy usage, the audience will receive valuable information. The audience will leave the seminar aware of beneficial cost saving home energy solutions, and aware that DCU provides financing for these solutions.

Timeline (Speakers and Topics) Speakers: For an Weekend Day Event 3:00 Doors open 39 | P a g e 3:30-3:50 (Confirmed) Will O’Brien: Professor at Clark University and seasoned consultant. Professor O’Brien will give an introduction to the topic of sustainability and how individual homeowners can make an impact in greening the community.

4:05-4:20 (Confirmed) Bill Pratt: National Grid executive will discuss the new “Smart Grid” that is being implemented in the North East. Mr. Pratt will also discuss where the energy in their homes comes from and how consumer choices effect the environment.

4:35-4:50 (Tentatively Confirmed) Energy Star: A representative from Energy Star will give a presentation on why energy efficiency is important and give examples of best practices.

5:05-5:20 Architect / Home Depot: Home Depot will give a short description of products that they offer that can save homeowners money and limit their environmental footprint.

5:35-5:50 Solar Power: A representative from the solar power industry will give a presentation on why solar panels are a good investment and how a “Smart Grid” can make savings even more viable.

6:05-6:30 DCU: DCU will give the keynote speech at the seminar highlighting how the new Green Lending initiatives will allow homeowners to upgrade their homes to be more sustainable.

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