Funding A Just Transition

Keith Bisson, President of Coastal Enterprises, Inc. (CEI)

How CDFIs Can Lead the Way on Climate Action

My name is Keith Bisson and I am president of Coastal Enterprises, Inc. (CEI), a Maine-based CDFI. Maine’s is an economy heavily dependent on natural resources – from our iconic Maine lobster to leaf-peeping tourists, to forest products and small farms. From CEI’s location on the coast of the Gulf of Maine, which is one of the fastest-warming bodies of water on the planet, I see the impact of climate change – both environmentally and economically – first-hand.

It is well documented that the harmful consequences of climate change disproportionately fall on households with lower-incomes and communities of color. These are the people and communities that CDFIs serve. While CDFIs are no strangers to “green finance,” current circumstances demand an accelerated response from everyone concerned about environmental justice and a warming planet.

In this environment of increasing recognition of climate’s impacts, it was exciting to see climate shift from a niche interest to a core theme at this year’s OFN Conference, where it showed it up everywhere from a packed room at the climate roundtable, to numerous breakout sessions, to the main stage plenary with Mindy Lubber of Ceres and Jahi Wise of the White House Office of Domestic Climate Policy that I moderated.

Given CDFI’s experience and expertise in directing investment into underserved communities and industries, we are uniquely positioned to make sure that the necessary climate transition is just and that communities help design and benefit from the upsides of a more sustainable economy and are protected from the harmful consequences of the inequitable decisions that got us here in the first place.

Here are four steps that CDFIs can take to promote a just transition:

Make climate resilience and mitigation central to your organization’s mission

CEI has long operated with a “triple bottom line” emphasizing financial return, community development benefit, and environmental stewardship. Protecting the environment is central to the mission of other CDFIs as well. For CEI, this has meant helping to advancing a just transition to an environmentally sustainable economy and resilient climate future in Maine and rural America. We envision a radically transformed economy where clean energy is commonplace and the impacts of climate change are addressed and mitigated through rapid decarbonization, progressive policy, and creative and flexible financing for Maine businesses that are helping build a more resilient future. As we revised our strategic plan for the next three years, we made sure that climate was central.

Know What You Own

The movement for financial institutions to disclose their climate impacts has been steadily growing, evidenced most recently by the U.S. SEC proposal for public companies to provide specific climate-related information in their registration statements and annual reports.

This year, for the first time, CEI disclosed its financed greenhouse gas emissions for its small business lending portfolio using the methodology developed by the Partnership for Carbon Accounting Financials (PCAF). CEI also collaborated with two other community development financial institutions (CDFIs) – Partner Community Capital and Self-Help Credit Union – to create a step-by-step working guide that financial institutions, and particularly CDFIs, can use to understand the initial steps needed in the greenhouse gas emissions accounting journey.

Ultimately, as financial institutions gain a greater understanding of the carbon impact of their borrowers, they can serve as catalysts for a transition away from fossil fuels and other carbon-intensive sectors. As mission-driven lenders, CDFIs can demonstrate leadership among financial institutions and other community development organizations in addressing climate change.

Know Thyself

We can’t expect our borrowers to reduce their climate impact without demonstrating it first ourselves. We should all review our internal operations and practices, calculate our organizational carbon footprint, and identify and implement changes for improvement. It can be as simple as adding compost bins to the company kitchen, transitioning your website to a green hosting solution, and finding ways for employees to reduce their commuting footprint through carpooling or remote work. Your organization can support the clean energy transition by purchasing power through community solar or investing in on-site panels.

Put Your Money (Literally) Where Your Mouth Is

One of our greatest resources as CDFIs is capital. There are numerous individuals in our communities with great ideas for businesses that support either climate change mitigation or resilience. Find them and fund them. Energy is a critical component of that, but it’s not the only part.

At CEI we’ve made over 500 climate-impacting loans. These include clean energy production like municipal solar and tidal energy, but we’re also focused on supporting the people and businesses who grow and process our food, work on our waters and in our forests as we shift traditional industries towards economic and environmental sustainability. This can mean investing in workforce development programs that retrain workers in green industries or creating new loan products to meet sector needs, like our sea farm loan that has a flexible repayment structure and lower interest rate in acknowledgement of the seasonal nature of aquaculture and fishing businesses.

Stepping Up to the Opportunity

We can’t be naïve about the challenge we face, but I’m confident that we have the power to change this trajectory. I say that with lots of history to back me up. This October was the 50th anniversary of the passage of the Clean Water Act, which Maine senator Ed Muskie, a kid from the mill town of Rumford, helped shepherd to passage with the support of concerned and mobilized activists nationwide. That law profoundly improved the lives of people across the country.

As individual CDFIs, we can only do so much with our local and regional spheres of influence and resources, but together we cover the nation and manage more than $222 billion (more than 8 times the size of the Greenhouse Gas Reduction Fund!). Our nimbleness and connection to our communities gives us the perfect platform to be the leader in the financial industry when it comes to climate action. It’s a chance to step up and one we need to take.

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