By: Fran Seegull
Accelerate the shift to climate investing. Leverage the power of public-private partnerships. And center the needs of communities.
These were some of my key takeaways from this year’s Climate Week NYC, where I had the privilege of convening with dozens of climate finance and community investing leaders. The U.S. Impact Investing Alliance teamed up with our partners at the Ford Foundation and ImpactAssets to organize a series of curated discussions on accelerating the shift to climate investing, the power of public and private sector collaboration, and the importance of investing at the intersection of climate and communities.
These discussions featured investors, philanthropies, community lenders, advocacy organizations and policymakers, all bringing a unique perspective and an earnest desire to act. In addition to extending my gratitude to our co-hosting partners, I also wanted to share a number of critical learnings that surfaced across the different panel discussions.
The event came on the heels of the one-year anniversary of President Biden signing into law the Inflation Reduction Act (IRA), the most significant U.S. climate legislation ever with the potential to usher in the next generation of climate solutions. Considering the combined magnitude of the IRA, the Bipartisan Infrastructure Law and the CHIPS and Science Act, we are presented with a once-in-a-lifetime opportunity to address the climate crisis while centering positive outcomes for people and places.
But alongside this tremendous opportunity comes a great deal of risk that we could perpetuate or even deepen existing inequities in the United States.
Public policy solutions do not operate in a vacuum. That means we must all point our efforts in the same direction across industries and sectors to pursue a just transition. If implemented well and with the enthusiastic partnership of the private sector, the IRA has the potential to be transformative, equitable and durable in its positive outcomes for our society, economy and planet. Failing to meet the moment across federal agencies and the private sector could spell widespread distrust in our country’s institutions, stunted progress toward climate solutions, greater burdens on impacted communities and deepened inequality in access to economic opportunity.
Given this sobering reminder, it is critical that the private sector consider its part to play in ensuring implementation that is effective and equitable, with environmental justice at its core.
Success will require authentic engagement with communities across the United States that centers the voices and experiences of those who are least likely to contribute to climate change, yet are most vulnerable to its impacts.
That is not to say that this engagement will come easily. The speakers at our event did not shy away from addressing the potential tradeoffs associated with swift climate action and continued economic security for workers and communities. In the impact investing space, we often comment that the ‘S’ is less widely understood than the ‘E’ in ESG, given the tangible and measurable impacts of environmental factors, such as risks posed by extreme climate events. This tension between the ‘E’ and ‘S’ is perhaps most prominent in these types of conversations, where the urgency around the climate crisis can result in social factors being deemphasized in favor of expediency.
Fortunately, the framework of the Justice40 Initiative – the Administration’s commitment to ensure at least 40% of climate and infrastructure investments benefit disadvantaged communities – provides a baseline by which public and private sector leaders can hold themselves accountable. The EPA’s new Greenhouse Gas Reduction Fund (GGRF), for example, has the express purpose of financing clean energy solutions in communities historically left behind. Through this program, the public and private sectors have the unique opportunity to create a new form of financial institution with all the best practices of green banks and community lenders combined.
Finally, perhaps the most resounding call to action repeated across panels was the need to go “all in” on investing for climate solutions and a more equitable economy.
Investors of all kinds urged attendees to consider a “whole portfolio” approach, and policymakers doubled down on the Administration’s “whole-of-government” strategy to address the climate crisis and achieve a just transition. Ultimately, we need bold action across institutions and sectors because advancing a just transition will impact and depend upon our whole economy.
In closing, I would like to thank those who joined us in September for these important discussions. Our goal in hosting this event was to urge attendees to consider where their institution can get engaged and lay the groundwork for future collaboration. We appreciate your partnership and look forward to the work ahead.