How green was my banker

Our growing concern about global warming, energy consumption and all things environmental has reached an important milestone.

So serious is this trend that the banks are now exploiting it to sell mortgages and credit cards. Are the banks truly going green, or is it that green to them is the colour of money?

Let's just say the banks are helping themselves and, to varying extents, the environment as well. It's up to bank customers to tell the difference and put their money where it matters.

The latest enviro-initiative from the financial world is the green mortgage and home equity line of credit from Toronto-Dominion Bank's TD Canada Trust division. Customers get a break of one percentage point off the posted five-year rate with the green mortgage or credit line (that would be a fixed portion of a credit line). As well, they get a cash rebate of as much as 1 per cent of the amount they borrow to be used toward the purchase of energy-efficient appliances, home upgrades and renovations.

If you took out a $200,000 mortgage, you could be eligible for a rebate of up to $2,000 toward your upgrades. You have to spend the money first, and then submit the bills to TD within six months of taking out your loan. Eligible products include appliances, windows, doors and heating/cooling equipment approved by the federal Energy Star program.

TD's new mortgage is an example where the green cuts both ways - to the bank's benefit and to that of the environment if you end up using less energy at home. The key here is the size of the mortgage discount you get.

TD's posted five-year rate yesterday was 7.39 per cent, which means the discounted rate for the green mortgages would be 6.39 per cent. For comparison's sake the mortgage brokerage firm Invis has a best five-year rate of 5.99 per cent, which would save you about $18 a month in biweekly payments versus TD's rate. Over five years, the lower mortgage rate would save you about $2,360 in payments plus interest. In this light, the rebate doesn't sound all that great in pure financial terms.

Another green mortgage initiative is Canadian Imperial Bank of Commerce's new Enviro-Saver Mortgage. The name may be laughably overstated, but this product still represents a way that banks can offer environmental perks with practical value. CIBC is simply handing out $300 gift certificates for an environmental home audit that points out ways of saving energy. We've had one done at our house and it was well worth the money.

Citizens Bank of Canada is offering a green mortgage in Ontario that comes with a voucher that puts $250 toward a home energy audit as well as a blue curbside recycling box, coupons for energy-efficient services and compact fluorescent light bulbs. The bank will also donate $100 to the Conservation Council of Ontario, which is a coalition of environmental groups.

An example of banks going green as part of an exercise in trendiness is the new no-fee Eco-Logique MasterCard introduced last month by MBNA Canada. The idea here is to provide a way for people to offset the carbon (it's a greenhouse gas) they produce through activities like driving, heating their homes and flying on planes. For every $1,000 you spend on the card, MBNA will donate funds to a project to offset about one tonne of carbon emissions (the value is roughly $5).

The carbon-offset investments are automatically made on quarterly basis by MBNA, so there's no need to redeem your points. MBNA is looking for Canadian offset projects, but for now the money will be spent on a project located at an Indiana dairy operation that takes methane produced by cows and converts it into heat and electricity.

If you're dead serious about offsetting your personal car emissions, the Carbon Footprint website (carbonfootprint.com) will help you do the calculations and decide where to direct your donation dollars. The MBNA Eco-Logique card is a more like a token gesture you can make simply by buying stuff with your credit card.

MBNA has two other options if you want to direct your credit card rewards into something that helps the environment: co-branded MasterCards with the Canadian Wildlife Federation and Ducks Unlimited where spending by cardholders generates donations to these groups by MBNA.

Another green credit card option comes from the Vancouver City Savings Credit Union, one of the largest credit unions in the country. VanCity takes 5 per cent of the profit generated by its enviro Visa cards and places them in its enviroFund, which has so far paid out $1.7-million to local environmental projects. You also get Visa rewards points that can be redeemed for the usual stuff.

The early evidence suggests green financial products can be a net benefit to the environment. Bear in mind, though, that the banks never doing anything unless they see green in it for themselves.

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Going green

TD Canada Trust Green The underlying product

A five-year mortgage or five-year fixed portion of a home equity line of credit with a rate one percentage point below posted rate.

What's green about it?

TD offers a rebate of up to 1 per cent on money borrowed to buy energy-efficient appliances or home upgrades; It also donates to an environmental group.

MBNA Eco-Logique

MasterCard

The underlying product

A no-fee MasterCard.

What's green about it?

Spending on the card accrues points that are used to purchase carbon offsets.

rcarrick@globeandmail.com