Making your business a sustainable enterprise can be a daunting and seemingly impossible financial task. The bottom line often gets in the way of “the green line” despite our best intentions. Lucky for us, we’ve got a banking wiz here to help us crunch numbers, weigh the options and find financing for green investments. Umpqua Bank’s Dan Weldon, eco-banking manager, breaks it down for us—from federal and state incentives, to Umpqua’s Green Street lending program and where to get started saving green.
GG: Going Green can be seemingly expensive. Tell us about the benefits/incentives of spending more upfront for eco-friendly systems, construction, etc., what unique incentives Umpqua provides and why you encourage businesses to consider this option.
DW: With all investment, there are multiple approaches to cost and benefit: Short term vs. long term, prospective vs. actual, opportunity vs. risk.
It is true that often times “going green” can be more expensive than continuing with the current process and approach. Leading edge technology solutions often cost more than long established products. When comparing these two scenarios, what we should see is that the more forward leaning, higher efficiency improvements have an incremental benefit to the existing systems and equipment. The various state and federal incentives seek to bring efficiency investment more in line with simple maintenance. Often times, owners are looking for a very short simple repayment of the added investment ranging from 2-3 years.
A longer term perspective would recognize that the investment in energy efficiency acts as an annuity in future years as the owners continue to receive the improved cash flow from increased energy efficiency. Depending on the life of the equipment purchased, that annuity stream may extend far beyond the owner’s typical investment horizon.
Investment also acts as a hedge to rising energy costs. As energy costs continue to increase as a result of population growth fueled demand, early investment into efficiency translates into greater gains in cash flow.
Finally, early investment also serves as a hedge against governmental regulations which may seek to encourage energy efficiency and discourage excessive energy consumption. The current discussion of a Carbon Tax or establishment of a Cap and Trade system for Carbon emissions can result in either cost or income for company, based upon their decision to invest early in efficiency or to wait.
Umpqua Bank seeks to support and encourage energy efficiency investment through offering beneficial loan structures and pricing.
GG: What are the most effective places to start replacing outdated, inefficient systems with eco-friendly ones? Are the cost-savings as significant as the energy savings?
DW: Solar Oregon has a great model for energy efficiency and renewable energy projects; Reduce energy use, and then invest in renewable energy. The first and best place to focus is energy / resource conservation. Efficiency almost always outperforms expansion. At the point where we have become as efficient as we can be, we then look to invest in growth. Cost and energy savings go hand in hand. From a best practices perspective, companies who look closely at their operations first, identifying areas to reduce overhead or waste, are able to then optimize their investment in growth knowing that the investment will yield optimal returns.
So where do we look first? From a very practical standpoint, when sustainability is viewed as a value statement within an organization, it is truly amazing what saving can be had through the enthusiasm and behavioral changes of company associates. The energy provided by a few key associates can yield significant returns for little to no capital investment. Look to your people first.
Next, look for low hanging fruit … lighting fixtures have become much more efficient over recent years. Outdoor lighting, common area and grounds lighting, as well as task lighting all represent opportunities to significantly decrease the energy we use. Simple items such as motion detectors, day-lighting initiatives, and helping employees change habitual behaviors can all translate into savings.
GG: What kind of programs do you have in place to help offset those upfront costs and provide for customers wishing to take a sustainable route for running their home/business?
DW: Umpqua Bank’s GreenStreet loan program removes the fee barrier to energy efficiency investment. Our GreenStreet loans have no upfront fees, no 3rd party fees, and no pre-payment penalty.
Our larger commercial banking targeted eco-loans all have lower interest rates than our standard programs, reduced loans fees, and recognize the timing of the various incentive payments and tax credits available. We seek to structure the loan terms to work in concert with the various sources of cash flow available to service the loan request.
GG: What kind of partnerships does Umpqua Bank have in place to help customers with financing for sustainable initiatives/programs?
DW: Umpqua Bank has been very proactive in reaching out to organizations like the BEST business center, City government, Energy Trust, energy efficiency trade contractors; private and non-profit organizations and we continue to expand our networks within all of our Umpqua Bank communities.
Our collaboration with Energy Trust of Oregon was one of the first in the nation to offer both small business owners and consumers low cost financing for energy efficiency and renewable energy projects.
GG: You recently wrote a blog post about the incredible opportunity Greensburg, Kansas discovered to rebuild sustainably, when faced with a tragic natural disaster. What lessons can business-owners take from that experience?
DW: Business owners can look at the current economic climate as an opportunity to re-build their companies in the most efficient ways possible. This economy has prompted many organizations to lay off workers, reduce expenses, and streamline processes. We all have the opportunity to take what we have learned and are learning each and every day, and to apply those best practices to our businesses as they grow. The days of irrational exuberance are gone. Waste is now viewed as waste. We need to be smart in our investments, diligent with our management of scarce resources, and open to looking at new and better ways to serve our customers.
GG: Why is it so important to make these investments now?
DW: There is an African proverb, also attributed to Lao Tsu, which says, “The best time to plant a tree is 20 years ago; the second best time is now.”
In addition, incentives are subject to change at any time. By acting now, businesses and consumers can garner Local, State and Federal incentives which significantly reduce the cost to act now. Technology will advance and costs may come down over time. There is no guarantee that the economics will improve, but it is guaranteed that there is a cost for waiting.
GG: Anything else you’d like to tell our readers about?
DW: Oregon leads the nation in its support of sustainability initiatives. As exemplified by the Clean Energy Works program through the City of Portland, Portland Development Commission and Energy Trust, we have shown that we are willing to step out in new ways to help Oregonians reduce their energy use. The Oregon Business Energy Tax Credit, Renewable Energy Tax Credit ( for consumers ), Energy Trust incentives, and the various programs available to both financially encourage energy conservation, and to educate consumers and business owners on how to identify areas of improvement are all valuable resources for everyone to consider.
I believe the next step in this process will be to better understand the potential in collaborations between private enterprise and public institutions. We need to continue to focus on fostering vital and robust communication among the various stakeholders and resources within our communities.
Dan Weldon is the vice-president/eco-banking manager at Umpqua Bank. He’s also a speaker the GoGreen ‘09 Conference, October 7th, 2009 in Portland, Oregon. To hear more from Weldon and our other 40+ eco-visionary speakers on embedding your business with a sustainable commitment , register today at www.gogreenpdx.com/registration. Tickets are $175 per person or $150 per person for groups of two or more.
For more information about Umpqua Bank, please visit: http://www.greenstreetloan.com/