A study revealed that a majority of one member’s customers face climate change impacts, sparking a shift toward sustainable banking solutions.
For one NeuGroup member company, a recent survey highlighted a critical reality: climate change is no longer a distant threat, but a present-day challenge. The report gauged the experiences of the company’s customers in regions such as North Carolina and Florida, revealing that more than half of them are already feeling the impacts of climate-related disruptions on their businesses. This insight became a turning point, fueling the company’s commitment to sustainable banking.
- NeuGroup Insights attended last month’s AFP conference in Nashville, where the member, who is the investment portfolio manager at the company, presented alongside Cat Berman, the co-founder and CEO of CNote, an impact investment platform. During the session, the member explained how moving FDIC-insured deposits into community development financial institutions (CDFIs) and minority depository institutions (MDIs) can drive corporate sustainability goals.
- He said that the company’s top consideration for these deposits is the preservation of capital, access to liquidity and maximizing yield, while also fostering climate resilience and creating equitable opportunities in underserved communities—building and strengthening relationships with the company’s customers. The company formed a cross-functional team comprising treasury, accounting, tax and ESG experts to identify banking partners that could support these priorities.
Strategic deposits. This team evaluated more than two dozen institutions, ultimately committing $25 million to three carefully chosen partners dedicated to carbon-reduction projects in low-income communities, such as funding affordable solar power, energy-efficient home upgrades and electric vehicle financing. They explored CNote’s Climate Cash deposit solution that directs funds into a network of mission-driven banks and credit unions to support climate action initiatives.
- The member said the fund this year led to the building of single-family homes made of recycled materials that have “improved thermal performance” over other standard homes.
- “Putting dollars to work with purpose has reshaped how we think about our role,” he said. With this approach, treasurers can align their capital strategies with sustainability and equity, creating measurable impacts for both their businesses and the communities they serve.
- The member said it was very helpful to use the Climate Cash solution to aggregate, organize and visualize data, allowing the team to assess counterparty risk and real-time financials—critical factors in making strategic deposit decisions.
An unintuitive solution to a global problem. “It’s not intuitive to use deposits to fight climate change,” Ms. Berman said in the session, “but community banks, which are often more nimble and deeply rooted in local needs, are a powerful tool for driving change.” She highlighted how investments in CDFIs and MDIs contribute to affordable housing, clean energy projects and small business energy efficiency, further addressing climate resilience and decarbonization goals.
- In a NeuGroup Insights video recorded at AFP, which you can watch below, Ms. Berman elaborates on this approach, emphasizing the importance of having every tool in the toolkit to achieve net-zero carbon goals—and the importance of transparency to ward off accusations of so-called greenwashing.
- She explains how using deposits to fund community-based green lending can be a scalable and transparent way to decarbonize—not only helping corporations reach their sustainability targets, but also strengthening resilience in the face of increasing climate-related risks, such as extreme weather events and natural disasters.
