Featured Articles

Finding Resiliency Through Designing an Aligned Life

By Jina Penn-Tracy, Centered Wealth

November 25, 2024
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At Centered Wealth, we believe in a guiding principle: the alignment between inner values and outward actions brings a sense of personal wholeness that creates resiliency.

Our mission is to empower clients to make financial decisions that reflect their personal ethics, fostering a sustainable, purpose-driven world.

The journey that led me to impact investment advising has been one of resilience and transformation. It started with a pivotal moment at 19 when I faced a cancer diagnosis. This experience made me see the need for ongoing activism, specifically advocating against environmental and food toxins. This health challenge catalyzed my career, inspiring me to work towards a future where health and sustainability are priorities.

In the 1990s, I cofounded a successful import business. Yet, despite our success, I felt a need to make a more profound impact. By 2004, I transitioned into financial advising, motivated by a vision of what finance could become. I wanted to be the kind of advisor I wished I could find — one who prioritized sustainability, complex planning and social impact. A significant influence in this career choice came from reading The Politics of the Solar Age by Hazel Henderson.

Henderson’s work on sustainability and the interconnected nature of economic systems resonated profoundly. She showed me that finance could be more than a tool for wealth accumulation – it could drive positive social and environmental change. She is the godmother of the impact investing movement and passed away in 2022. Hazel was a prolific writer and thought leader, and her legacy can be found on ethicalmarkets.com. Everyone interested in this field would benefit from reading her works.

*Hazel Henderson in 1995. ©photo Dana Gluckstein*

Her perspective has shaped our approach at Centered Wealth, where we help clients invest in ways that align with their vision for a better world. We focus on assisting clients to feel empowered and aligned. This concept of “centeredness” has guided my own journey — a synthesis of values and financial choices that fosters clarity and purpose.

Working alongside my daughter, Anya Gage, has been one of the most rewarding parts of my career. Anya shares my commitment to ethical investing, and together we help clients align their financial goals with their values. Anya has extended her focus to planning for non-normative families. As more folks feel free to form the social ties that best suit them, we use the frameworks of financial planning to support their best life plans together.

In addition to my daughter, our team includes Stuart Valentine, co-owner of Centered Wealth, and fellow advisor, Annalisa Clifford Gold. Stuart, a pioneer in sustainable finance since 2000, brings extensive knowledge in social venture capital and community development. Annalisa has developed expertise in guiding clients through significant life transitions that impact them financially. Part of the beauty of founding a company based on values-alignment means that we support each other as human beings and not just as colleagues. The resiliency created through being committed to an ethical framework means we can weather storms together, both personal and market ups and downs. I am deeply grateful for that sense of fortitude.

My personal advocacy has extended beyond finance, particularly in support of fellow trauma survivors. In 2019, I cofounded the Children’s Theatre Alumni Survivors Fund (CTA Wellness) after a lengthy legal battle 16 survivors waged against an institution that housed dozens of perpetrators over decades. This nonprofit provides essential resources for survivors, including counseling, legal assistance, and community-building activities. Founding CTA Wellness was necessary, as many survivors lacked the health or resources to pursue justice in the narrow time allowed to file lawsuits. Providing a platform where they feel supported has been challenging but vital, reinforcing my commitment to social change and systemic support.

The challenges I’ve faced have also strengthened my resolve to inspire other women to trust their instincts, pursue their passions and stand up for what they believe is right.

Throughout my career, I’ve faced obstacles that have tested my commitment, but they’ve ultimately deepened my dedication to creating meaningful change. For women especially, trusting one’s own voice and taking bold steps are essential to making an impact.

The work we do at Centered Wealth isn’t without challenges. Engaging with complex issues — politics, climate change, corporate accountability, and more — can feel overwhelming. These are long-term commitments that require resilience and focus. But it’s crucial not to disengage, no matter how insurmountable these issues seem. Small actions, like voting in local elections or participating in shareholder activism, are meaningful steps toward broader systemic change.

In navigating these issues, self-care is essential. Taking breaks to recharge is necessary to stay focused on our goals. Building a community of like-minded individuals has also been vital; the support of others provides strength during difficult times. Our team meets weekly with a larger community of Impact Investment advisors, sharing ideas, frustrations, and general comradery. Continuing to educate myself on topics like climate science and corporate governance empowers me to advocate for these causes with confidence and knowledge, inspiring others to join the mission.

Living my values is central to my personal life and my work at Centered Wealth. In 2020, my husband and I completed a Net Zero home near our office in Minneapolis, reflecting our commitment to sustainable living. Gardening, spending time outdoors, and sharing life with our spirited dogs keep me grounded and connected to nature. These daily practices remind us of the importance of living intentionally and sustainably, a mindset that drives our work with clients.

On another personal front, I cofounded SYNCRIS in 2019, a climate tech company that aims to enhance microgrid accessibility. This venture has been an exciting step, aligning with my vision for a sustainable future. The hard-won funds received from my legal battles have been transformed into supporting the development of critically needed technology for stabilizing the grid as we add renewable energy. My hope is to inspire others in the finance sector to consider how their investments can contribute to broader social and environmental goals, creating a world where finance benefits both people and the planet.

Every step in my journey reinforces my belief that we can create systems that serve everyone. I encourage folks to reflect on how their choices — financial and otherwise — can contribute to positive change.

Through ethical investing, advocating for survivors, and living sustainably, we can each make a meaningful impact. At Centered Wealth, alongside inspiring partners like Stuart, Annalisa and Anya, we are dedicated to using our voices and resources to create a more equitable and sustainable future for all.

As we face challenges like climate change and social injustice, I invite everyone to consider how they can make a difference within their own spheres of influence. With a shared commitment to a better future, we can build a world where our financial decisions align with our values and create a legacy of integrity, resilience, and purpose.

Article by Jina Penn-Tracy, wealth manager, co-owner and co-founder of Centered Wealth. She is passionate about leaving this world a better place. Jina believes that comprehensive planning allows individuals, businesses, and nonprofits to make more ethically aligned and influential decisions regarding the spending and investing of their money. After co-founding a rapidly growing import company in the 1990s, Jina shifted careers in 2004 to become the type of financial advisor she wished she could find; an advisor focused on utilizing the power and influence of money to make positive changes in the world.

Jina has been quoted in Financial Advisory Magazine, The Wall Street Journal, and Investment News as well as local Minneapolis media. In 2020, Jina hosted an event at Climate Week for the UN. Jina and her husband just completed the construction of their Net Zero home walking distance from the Minneapolis Centered Wealth Office. Jina enjoys world-wide travel, gardening and her energetic dogs, Matteo and Guinness.

Centered Wealth and Vanderbilt Financial Group are separate and unaffiliated entities. Jina Penn-Tracy is a registered representative of Vanderbilt Securities LLC and investment advisor representative of Vanderbilt Advisory Services. Vanderbilt Financial Group is the marketing name for Vanderbilt Securities, LLC and its affiliates.

Securities offered through Vanderbilt Securities, LLC. Member FINRA, SIPC. Registered with MSRB. Advisory Services offered through Vanderbilt Advisory Services.

For additional information on services, disclosures, fees, and conflicts of interest, please visit www.vanderbiltfg.com/disclosures

Energy & Climate, Featured Articles, Food & Farming, Impact Investing, Sustainable Business

Investing in Gender Equality Offers a Bridge to a Healthier and More Stable Future

By Margret Trilli, ImpactAssets

November 25, 2024
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In 1738, the world was a vastly different place. Benjamin Franklin was still early in his pioneering work in Philadelphia; the Ottoman Empire was at war with Russia; and American independence was still decades away.

Fast forward 286 years, and much has changed. We’ve landed on the moon, decoded the human genome and built technologies that can connect people across the globe in an instant. Yet despite all of this progress, a stark fact remains: At our current pace, it will take another 286 years to achieve true gender equality globally. This timeline, laid out by the United Nations, is not just a projection; it’s a wake-up call.

Pursuing gender equality is both a moral and economic obligation. We cannot wait three more centuries to close the gap –the world’s four billion women and girls deserve better. It is a worthy goal on its own merits, but it also has the potential to add $12 trillion in global gross domestic product (GDP), while advancing many other global priorities. Ultimately, a more gender-equal world will foster a healthier, safer, increasingly productive, and more stable future.

For impact investors, the question is not why gender equality matters — it’s how to effectively allocate capital in ways that empower women and catalyze meaningful progress far more quickly.

To be sure, impact investing alone cannot be a panacea for gender inequality, but it is an indispensable component of a larger solution. Gender equality can itself be an impact objective or, for portfolios targeting other impact themes, gender equality can be an awareness that impact investors incorporate into their work.

At ImpactAssets, we focus on three essential areas of need where capital of impact investors can be most effective at driving gender equality: 1) advancing economic inclusion; 2) delivering products and services that improve lives and outcomes; 3) and increasing representation and voice.

Together with our clients and partners, we are driving progress in these areas, and many other gender lens impact investors are scaling up capital flows in similar ways. However, addressing a challenge as entrenched and widespread as gender inequality requires significantly more investment.

Expanding Economic Opportunities for Women

Women around the world continue to face significant barriers in accessing financial resources: from inherent bias to structural discrimination to limited collateral for loans. Despite being key drivers of economic growth, women-owned businesses secure only a fraction of global venture funding, leaving many unable to grow their enterprises and build financial independence. In the U.S. alone, women own nearly 40% of the country’s 33+ million small businesses, but businesses owned by men receive the overwhelming majority of (71.6%) loans.

Although data suggests that women tend to be more conservative in financial decision-making, lenders typically view women borrowers as riskier, thanks in part to modeling that considers the paucity of female versus male borrowers. As a result, women are allocated less credit or denied credit altogether, perpetuating the bias.

In this context, creating pathways to economic inclusion is a cornerstone of advancing gender equality. Impact investors have a unique role to play by championing financial inclusion, access to capital, and home- and landownership for women.

Investment opportunities in this realm take various forms. Of course, impact investors can support women-run businesses with funding. Such a focus may manifest with investments to a lender whose portfolio demonstrates commitment to cultivating women-owned businesses or to a microfinancier working in the sub-niche of very small businesses dominated by women.

Such investments can drive economic inclusion and catalyze profound social transformation. More than just bridging gender gaps, this channel of investment is critical for rewriting the narratives of financial power and providing women with the tools to build their own wealth, autonomy, and resilience. Impact investors can help turn gender gaps into gateways of economic prosperity.

Improving Lives and Outcomes Through Better Services and Products

To create meaningful progress toward gender equality, it’s essential to also target investments in areas that directly impact women’s everyday lives and their long-term prospects, such as healthcare, education, housing, childcare, agriculture, and beyond.

Impact investors can finance career and life services, as well as investments that remove the systemic barriers that prevent women and girls from participating in education and the workforce. For example, investing in access to clean water can dramatically reduce the hours women and girls in developing countries spend collecting clean drinking water for their families, enabling them to work or go to school.

Similarly, persistent disparities in access to healthcare mean women are more likely to experience longer periods of poor health, significantly impacting their daily lives and their economic potential. Further, diseases that predominantly affect women have historically received significantly less funding for medical research that would advance cures, treatments, diagnostics and prevention. Addressing these gaps is critical for engaging women’s full participation in society, as well as the global economy.

Improving women’s lives and outcomes creates ripple effects of positive change, because women’s well-being helps catalyze a host of broader societal benefits – ranging from reduced poverty to improved family welfare. As such, this strategy is a testament to the belief that when impact investors uplift women, they uplift entire communities.

Elevating Women’s Voices in Leadership

Increasing the representation of women in leadership roles is a powerful lever for accelerating gender equality. But it’s about far more than filling quotas — it’s about genuinely valuing women’s perspectives in order to more fully reflect whole communities and inform equitable solutions.

Women often face challenges in employment stability and career advancement. For instance, women are more likely to be vulnerable workers, and their representation diminishes as they ascend the corporate ladder: Only one in four C-suite roles are filled by women, even fewer of whom are women of color.

By investing in funds and companies that promote and amplify women’s voices, impact investors can generate real progress toward more inclusive decision-making and leadership. Team and leadership composition should be important considerations for all potential investments. Ideally, when a fund or company appropriately values women in its work, their teams and their portfolios will reflect the population – especially in senior positions, given the challenges women face in advancement. At ImpactAssets, we strive to practice this principle in our own work: of ImpactAssets’ active portfolio of 1,000+ impact funds and companies, 38% are women-led.

Culture and policy also matter. Impact investors can support companies that accept the disproportionate role women play in bearing children and that design their systems to prevent motherhood from derailing advancement. Progress in this realm will bring diverse perspectives to the forefront, while ensuring that the journey towards gender equality is shaped by those who are most impacted.

Investing in Women Catalyzes Deep, Transformative Impact

The urgency of the gender inequality crisis is impossible to ignore. At ImpactAssets, we believe that impact investors have a unique responsibility to direct their capital toward areas where it can truly spark transformational change for women and girls around the world.

With an expanding range of tools and a growing understanding of what drives real impact, the moment is right to embed these approaches across the entire landscape of impact investing. Investors today find themselves at a pivotal moment: Primed with knowledge and resources, they have the power to drive progress in ways that can reshape the future.

Note to reader: If you are interested in hearing more about impact investing for gender equality, join us on January 22 for an inspiring conversation with Grameen America’s CEO, Andrea Jung; SoGal Venture’s Co-Founder and Managing Partner Pocket Sun; and ImpactAssets Capital Partners Deputy Chief Investment Officer, Sandra Osborne Kartt, CFA.

Article by Margret Trilli, the CEO & Chief Investment Officer for ImpactAssets and ImpactAssets Capital Partners, which together steward more than $3.5 billion in private impact investments. Margret’s 25+ year career includes executive leadership, investment, operating, strategy and acquisitions roles for companies including Intentional Capital, Barclays Global Investors/Blackrock and Charles Schwab.

Outside of ImpactAssets, Margret is a recognized voice on impact investing and philanthropy. Her leadership has been invaluable to family offices, wealth managers, foundations and corporations. Margret also serves on the Board of Trustees for Natural Resources Defense Council (NRDC) and the Boards of WaterEquity and the Justice Climate Fund.

Margret graduated from The Stanford Graduate School of Business and holds a degree in Economics from University of California Santa Barbara. Margret lives in San Francisco, CA with her husband and children.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

How I Found My Way to Impact Investing & Why I Hope More Women Will Join Me

By Jenn Pryce, Calvert Impact

November 25, 2024
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Above – Jenn Pryce (middle) with Calvert Impact Chief Investment Officer Catherine Godschalk (left) and Chief Risk Officer Lauri Michel (right)

Two decades ago, Impact Investing found me at a theater in New York.

I’d recently moved back to the US after nearly a decade abroad, first working in investment banking at Morgan Stanley in London and then teaching yoga in Australia. I was living in New York City, searching for what to do next that could marry my finance skills with something more purposeful. I wanted to learn more about arts organizations, so I decided to volunteer at the Public Theater, an iconic nonprofit known for supporting emerging playwrights and incubating productions like “Hair,” and “A Chorus Line” and, most recently, “Hamilton.” It was there that I came across the gap in financing available for arts organizations.

Despite its critical success and its status as a beloved anchor in the neighborhood, the theater was in financial distress. They didn’t own their building, and no one wanted to lend them money. I quickly realized this financing “gap” was more like a gaping hole that all sorts of community organizations – charter schools, health clinics, community centers – fell into. All these organizations were challenged by getting a loan from banks that didn’t understand their business models or their value propositions. The inability to access capital made owning a building, growing operations, or investing in new programs almost impossible. I was distressed to learn this, but I knew I’d found my calling: connecting capital to community-serving organizations. For the last 15 years I’ve been working at Calvert Impact doing just that.

Calvert Impact is a nonprofit financial institution creating innovative investment programs that drive social and environmental impact. Our platform, reach, and impact have grown significantly over the past decade. In addition to growing our flagship product the Community Investment Note® to over $625 million assets under management, in the last five years we’ve brought multiple new products and partnerships to market, including the Cut Carbon Note®, Access Small Business Program, and the Mission Driven Bank Fund. This spring Climate United, a coalition led by Calvert Impact, Self-Help and Community Preservation Corporation, won a nearly $7 billion award from the Environmental Protection Agency’s National Clean Investment Fund.

Calvert Impact is unique in a number of ways – we’re a nonprofit investment firm, we invest around the globe and across multiple sectors, we have a nearly three decades-long track record, and we have extremely accessible products with minimums as low as $20 ¹, meaning everyday investors can participate.

We also stand out in another way that is often overlooked: we are one of only 18%² of all financial firms managed by women. And not only is Calvert Impact led by a woman, 80% of our senior leadership team are women. Although a minority of financial firms are led by women, the good news is that this number is growing and projected to be 21% by 2031³. But that growth isn’t fast or good enough.

When impact investing focuses on women, it’s typically as beneficiaries of capital – and that’s very important. More than 10%⁴ of women globally live in extreme poverty and women are disproportionately affected by poverty due to lack of access to capital, opportunities for education, and discrimination in the workplace amongst many other factors. Deliberately investing to provide women with access to these critical resources is essential to creating a better world for all of us.

But I want to encourage impact investing to be equally thoughtful in getting women into roles managing and deploying capital as well. I often think of the work we’re doing in impact investing as providing a “demonstration effect” for the broader capital markets, proving that you can earn a financial return while also creating the social and environmental solutions communities need, and normalizing what we and our impact partners have been doing for decades. We can also normalize women as leaders of financial firms and work to ensure that there are women at every professional level of impact investing organizations, seeding a strong pipeline for the next generation of finance leaders. Firms like Quona Capital led by Monica Brand Engel, ImpactAssets led by Margret Trilli, and Anthos whose impact investing strategy is led by Dimple Sahni are setting great examples.

It’s especially important to include more women in finance as we transition to a clean energy economy. Investments to adapt to climate change and develop low-carbon technologies will generate trillions of dollars of investment and millions of new jobs over the next decade. Ensuring women are at the table making these investments and are part of the wealth building story needs to be the legacy of this generation of leadership. And the data indicates that they’ll be good at it too – women overall make better investors and generate higher returns when making investment decisions at financial firms, outperforming men by 1.8 percentage points annually⁵.

So, for women looking to break into impact investing, or who are working in impact investing, here’s my advice: the time is now. Get started by engaging with local networks like – WISE (Women Investing in the Sustainable Economy) or national and global networks like – GIIN (Global Impact Investing Network) and – US SIF (The Sustainable Investment Forum).

There are great opportunities emerging and we need leaders who can create a different ending to the typical story that accompanies extreme economic transition where wealth becomes more concentrated amongst a small number of winners. We need you to help us create a better future: join us.

Article by Jennifer Pryce, CEO of Calvert Impact, a global nonprofit investment firm. Under her more than 10 years of leadership the organization has tripled the size of its flagship Community Investment Note – which supports impact funds around the world and launched multiple new products, including the Cut Carbon Note, an asset backed security for building decarbonization; Access, a program that leverages government funds with private investment dollars to provide access to capital for the country’s smallest businesses; and the Mission Driven Bank Fund, a growth capital fund for minority-owned banks.

Most recently, Climate United, a coalition lead by Calvert Impact, Community Preservation Corporation and Self-Help was awarded $6.97 billion to invest in U.S. energy and climate sustainability initiatives through the federal National Clean Investment Fund.

Jenn began her career in the Peace Corps before working for Neuberger Berman, the investment banking team in Morgan Stanley’s London office, and Nonprofit Finance Fund, a Community Development Financial Institution. Jenn studied engineering at Union College and holds an MBA from Columbia University.?She currently serves as a lecturer at Oxford Saïd School of Business and is a board member of UNICEF USA Impact Fund for Children as well as a member of the Advisory Board of Ecofin and the Operating Principles for Impact Management.

Footnotes:

[1] https://calvertimpact.org/investing/community-investment-note

[2] https://www.weforum.org/stories/2024/06/women-shape-influence-revolutionize-financial-markets/

[3] Ibid

[4] https://www.unwomen.org/en/what-we-do/economic-empowerment/facts-and-figures

[5] https://www.weforum.org/stories/2024/06/women-shape-influence-revolutionize-financial-markets/

Energy & Climate, Featured Articles, Food & Farming, Impact Investing, Sustainable Business

A History of the Women who Nurtured the Roots of CDFIs

By Amy Domini, Domini Impact Investments

November 25, 2024
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Trailblazing women mentioned in Amy’s article – (L to R, top row: Katherine Graham Peden, Patricia Harris, Sr. Corinne Florek; bottom row: Nancy Andrews, Julie Eades, Kirsten Moy)

My personal interest in CDFIs began with the tale of a woman.

Early in my career, I had the chance to join a panel discussion that changed the trajectory of my life in advocacy for ethical investing. The speaker before me was named Chuck Matthei. He was an unpresuming looking man who had started something called the Institute for Community Economics. He started quietly, “I would like to share with you the story of Maria and her eleven dependents, living in squalor, in Cincinnati. I’d like to convince you to help her out with a loan.” His words helped me to understand that my own message was nothing if my work did not directly affect the lives of Maria and her dependents.

The Early Seeds of CDFIs were Planted and Nurtured by Trailblazing Women

The roots of modern community development financial institutions (CDFIs) stretch back to the late 1960s, to the racial riots that had rocked America, causing the Lyndon B. Johnson administration to commission a group to study the sources of unrest. The National Advisory Commission on Civil Disorders ‘discovered’ that racism had starved many low-income neighborhoods by denying access to capital. Our nation was stunned but motivated to act. On April 28, 1968, the National Council of Churches announced its Investment Program for Ghetto Community Development. On June 5, 1968, the Episcopal Church announced its decision to start a Ghetto investment program, and five days later the New York Urban Coalition followed suit. Life insurance companies began their “social investment” programs and invested primarily in affordable rental properties in hollowed-out communities. These were top-down initiatives, reliant on the funding of a single entity.

Only one woman had been named to the Commission, Katherine Graham Peden, was later one of the first women to join a Fortune 500 company’s board of directors. The committee’s efforts led to the creation of the Community Development Block Grant (CDBG) program, a vital source of funding enabling state and local governments nationwide to develop affordable housing and provide essential services to improve the health and prosperity of low- and moderate-income communities.

President Jimmy Carter had tasked HUD secretary Patricia Harris to head a policy group tasked with addressing the credit and wealth inequities the race riots had so starkly revealed. Harris’s own career broke many barriers, as the first Black woman to hold any cabinet position (she held two), to serve on a Fortune 500 company’s board (she would serve on four), and to be Dean of a law school. One of the group’s core initiatives was to create a budget to fund Community Development Credit Unions. This was soon enhanced by the 1977 Community Reinvestment Act, which established the mechanism for larger banks to invest in the poorest neighborhoods, even if they did not have branches there. The strength of borrowing from the many to lend to the many was recognized. Top down do-good efforts continue, but with a dynamic new partner — the modern CDFI.

Women in the Movement

Soon, entities that borrow from many in order to come up with the funds to lend to those in need began to take on new forms. In addition to banks and credit unions, non-profits began to borrow and make loans. While tiny and few in number, in Chuck Matthei they nonetheless found a voice. He became the Johnny Appleseed of the Community Development Loan Fund concept, convincing them to band together and learn from one another as a fledgling coalition. On October 16, 1985, when the few initiatives dedicated to borrowing from the many and lending to the poor met together to strengthen each other, a truly powerful movement for community investing was born.

The National Association of Community Development Loan Funds (NACDLF), as it became known, was founded a year later, and soon I was asked to serve as a board member, where I represented investors. Over the next few years, we grew to 50 lending organizations, always sticking to a few simple standards, worth repeating here:

Our members were intermediaries, borrowing to lend. Member mission statements specifically stated the goal of economic justice.
Member boards would be made up one third by people with technical stills that were needed, one third by those with access to sources of capital and one third by those representing or advocating for the borrowers.
Members were subject to in-depth peer reviews

Early leaders in the CDFI field included Sr. Corinne Florek, a member of the Dominican Sisters of Adrian, MI. She brought the nuns to the table and became a spokesperson for economic justice. Joan Shapiro from South Shore Bank crisscrossed the nation advocating for and raising funds for the model, which her bank took a leadership role in shaping. Nancy Andrews, who had been the Deputy Director of the Ford Foundation’s social investment portfolio, worked in the Clinton administration Departments of Treasury and HUD to head its Low Income Housing initiatives, and then helped grow the Low Income Investment Fund over 30 years from $35 million to over $1 billion in assets. Julie Eades of New Hampshire Community Loan Fund tirelessly reminded the industry that not all poverty was urban, and that multiple investment and lending models were needed to address it.

The Federal Program Begins

One early leader deserves a special call-out. A self-described nerd, Kirsten Moy oversaw the Social Initiative Investment Department at The Equitable Life Assurance Society. As such, she was managing a budget unimaginable in scale by the community loan funds. Her willingness to partner with the small hardscrabble peers was noted. On January 26, 1995, President Clinton announced his intention to nominate Kirsten Moy as the first administrator of the new federal program within the Treasury Department, the Community Development Financial Institutions Fund. At the Rose Garden ceremony where most of the above listed women, myself included, were present, it felt like witnessing a miracle.

The year before Newt Gingrich managed a takeover of Congress. Target number one was the CDFI Fund. Kirsten managed to steer $35 million out to the network against great adversity, and she and her successors protected the program year after year. The community investing movement’s sprouts and saplings were nourished by this new flow of federal funds and sprung up within the broader financial canopy. Between 1994 and 2024, CDFIs originated over $22 billion that supports 564,000 quality jobs, 105,000 units of housing and over 151,000 community health clinics, nonprofits, daycare centers, job training programs, and more.

The fact that today our nation has a healthy CDFI network makes financial services accessible and economic prosperity possible for millions. NACDLF, now known as Opportunity Finance Network, which is now celebrating 40 years, and its members have distributed $111,087,489,003 over those four decades. Behind the figures are million new jobs and over 800,000 new businesses in addition to the housing and community services provided to millions. Further, just this past year, CDFIs received roughly $16 billion in federal grants for the development of clean energy, decarbonization of transportation and the built environment and pathways to a clean energy economy by and for disadvantaged communities. All this grew from an initial disbursement of $35 million, thoughtfully handled, from the US Treasury. And the women are still strong in support. OFN CDFI’s women’s network has 1,600 members in 15 local chapters.

Community Development Financial Institutions are an essential component in bending towards justice, and women were essential architects of the field.

Article by Amy Domini, Founder and Chair of Domini Impact Investments (“Domini”). She has been a leader and innovator in the development of impact investing for over 30 years. Widely regarded as one of the world’s eminent authorities in the field, she was named to Time magazine’s list of the world’s 100 most influential people in 2005.

Ms. Domini began her career as a stockbroker and became especially interested in working with clients that were concerned with ecological sustainability and universal human dignity. She co-founded KLD Research & Analytics and, in 1990, was instrumental in the launch of the Domini 400 Social Index*. She later co-created the Domini Impact Equity Fund. Ms. Domini serves as a voting member of Domini’s Impact Review Committee and Standards Committee. She also serves as co-Portfolio Manager for the Domini Impact Equity Fund, Domini International Opportunities Fund, and Domini Sustainable Solutions Fund.

Ms. Domini was acknowledged with the Clinton Global Initiative citation for innovation and finance. She has also received an honorary Doctor of Business Administration degree from Northeastern College of Law, an honorary Doctor of Laws degree from Flagler College, and an honorary Doctor of Humane Letters from Yale University’s Berkeley Divinity School. Ms. Domini was named to Directorship magazine’s Directorship 100, the magazine’s listing of the most influential people on corporate governance and in the boardroom, and Barron’s selected her as one of the 30 most influential people in the mutual business. In 2009, she was named to Time magazine’s list of 25 “Responsibility Pioneers” who are changing the world.

Active in her community, Ms. Domini is a board member for the Center for Responsible Lending. She is also a past board member of the Church Pension Fund of the Episcopal Church in America; the National Association of Community Development Loan Funds, an organization whose members work to create funds for grassroots economic development loans; and the Interfaith Center on Corporate Responsibility, the major sponsor of shareholder actions. A frequent guest commentator, Ms. Domini has appeared on CNBC’s Talking Stocks and various other radio and television shows.

Ms. Domini holds a B.A. in international and comparative studies from Boston University and holds the Chartered Financial Analyst designation.

* Now known as the MSCI KLD 400 Social Index, owned by MSCI, Inc. MSCI and Domini Impact Investments LLC are not affiliated.

Select publications: Ms. Domini is the author of Thoughts on People Planet, & Profit (2021), Socially Responsible Investing: Making a Difference and Making Money (Dearborn Trade, 2001) and The Challenges of Wealth (Dow Jones Irwin, 1988), and a coauthor of Investing for Good (Harper Collins, 1993), The Social Investment Almanac (Henry Holt, 1992), and Ethical Investing (Addison-Wesley, 1984).

Featured Articles, Impact Investing, Sustainable Business

Are Your Bonds Green, Social or Sustainable? And Climate Resilient Too?

By R. Paul Herman and Liana Lan, HIP Investor Ratings LLC

September 25, 2024
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Above Infographic excerpt, shown below – HIP Climate Threat Resilience Ratings of US Counties

When sailing your portfolio into the future, would you want a top-heavy boat? Or a boat that is stable through the waves of future risks? “Green bonds,” “social bonds” and “sustainability bonds” – these labels bring comfort to impact investors. Yet, are all green, social and sustainability bonds fully safe for the forthcoming 30 years?

Our HIP Investor Ratings of 270,000 bonds – whether issued by more than 100,000 municipalities, 14,000 corporates, or 200 sovereigns – evaluate the possible future risks and future opportunities of the underlying issuers and use of proceeds.

As of August 30, 2024, HIP has evaluated 11,487 bonds that are labeled “green,” “social” or “sustainability-linked,” which seek to bring solutions like reducing pollution, delivering cleaner water, spurring more affordable housing, or bringing climate action forward to society as well as to your portfolio.

These positive impacts can build a better world and could bring more stable income and a higher-confidence of principal repayments in the future. Yet they also need to be evaluated for climate risk and resilience.

What are Green, Social and Sustainable Bonds Funding?

What are the key uses of proceeds in green, social and sustainable labeled bonds?

Of the 6,058 green bonds we have evaluated, more than a third of bond proceeds mention a (37.5%) focus on water quality improvements, while a tenth of them (10.9%) target effective treatment of wastewater; overall, about half of Green Bonds are issued by Water and Wastewater Utilities.

Additionally, energy solutions (5.3%) and pollution reduction (5.8%) are the focus of green bonds. Top issuers of Green Bonds are: Transportation District of New York and New Jersey (415 bonds), and state water bonds from New York state (313), Indiana (259), Iowa (193) and Massachusetts (175); yet also include educational institutions, energy utilities, and healthcare entities.

Of the 3,512 social bonds HIP has evaluated, more than a third of bond proceeds (34.2%) target housing, including affordability (25.5%), single family properties (13.7%), moderate-income families (12.7%), and can be linked to Ginnie Mae (GNMA, 4.5%). Overall, 88% of Social Bonds are from Housing authorities, while Education issuers cover about 7% of issuances. Top state-housing authorities of social bonds include: Illinois (226 bonds), Ohio (184), Massachusetts (172), Pennsylvania (163) and Rhode Island (160).

Of the 1,917 sustainability-linked bonds, just as the 17 UN Sustainable Development Goals are wide-ranging, so are these issuances. One-fifth (20.7%) focus on multi-family housing solutions, and one-sixth mention “rehabilitation” (16.6%). Efficiency in energy or water is a tenth of these (9.9%), and LEED-standards are present in 7.8% of these bonds. Poverty reduction (3.9%) and tenant-occupied housing (3.1%) seek to cover renters not just home-owners. Top issuers of sustainable-linked bonds include: New York City housing (778), New York State housing (352), and Massachusetts housing (212).

The average impact of green, social, and sustainability bonds are generally “net positive” (over 50 on a 100-point scale of sustainable to extractive). Impact investors typically want to hold higher-impact bonds in their portfolios.

Climate Risks Persist, Possibly Offset with Resilience

In the USA’s 3,100 counties, more than 40 years of FEMA’s (Federal Emergency Management Administration) recovery funding from intense and extreme weather events illuminate the risks across geographic regions of the United States.

Four main categories of weather – cold, heat, water, wind – summarize a range of events that can overwhelm buildings, roads, and infrastructure of energy and water.

In addition, facilities in each geography may add risks – nuclear power plants, toxic waste sites, waste dumps – which can negatively impact the ecosystem, from polluting drinking water from coal ash ponds that are flooded to a nuclear meltdown from a river overflowing.

These risks can be mitigated by resilience factors. For example, forests can absorb winds and rain more than farmland which can carry excess nitrogen fertilizer into waterways. Also, stronger community relationships can help regions recover when under stress. Of course, government policy and planning, including climate actions and defensive posturing, enhance the resilience of a region. Whether 3,100 counties, 84,000 census tracts, or 8 million census blocks, these future risks and resilience factors can be evaluated to specific GPS coordinates.

In the US map of 3,100 counties, the more red-colored areas are subject to more intense climate events and riskier physical sites that amplify the ripple effects of climate events, like hurricanes, tornadoes, ice storms, and heat waves.

Yet the bluer-colored areas are not immune to intense weather (e.g., El Nino storms in the Pacific, or the “perfect storms” of the Atlantic coast), the resilience in the Northern states and counties benefit from more forest areas, more community organizing, and more proactive government policy and climate-action plans.

Hence, for any corporate bond, municipal bond, or sovereign bond, a “climate threat resilience” rating as we call it at HIP Investor can be applied to your fixed-income portfolio holdings.

Credit Ratings Seem to Ignore Higher Climate Risk

Our analysis of 270,000 bonds from 3,860 issuers shows that Credit Ratings (such as Moody’s) may not incorporate the full set of meaningful future risks over the duration of the bond.

The scatterplot below charts the actual near-zero correlation (0.02%) among Moody’s Credit Ratings and HIP’s Climate Threat Resilience Ratings. This means a AAA bond from Texas, Florida, or Puerto Rico may not fully factor in the next three decades of hurricanes, floods, or winds – nor the lack of resilience in those geographies.

In fact, there may be opportunities to arbitrage these future risks. For most investors, avoiding these risks could be a prudent strategy – just as muni-bond ETFs do, such as the VanEck HIP Sustainable Muni ETF (ticker: SMI). In the SMI ETF, as of August 30, 2024, there are no holdings in Florida or Texas, due to higher climate risk and lower climate resilience, despite an elevated bond rating from Moody’s.

Are Green, Social and Sustainability Bonds also Climate Resilient?

While the bond proceeds for those labeled Green, Social, and Sustainable typically fund positive-impact projects, programs, and infrastructure, investors need to be aware of the climate risks too.

As you can see in the chart below, plotting 291 issuers of the 11,400 bonds, some of the issuers are in riskier geographies, such as Louisiana, the Florida Housing Agency and Harris County’s (including Houston) water utility.

The super-majority of green, social, and sustainable bonds evaluated by HIP have a “higher-impact” rating (above 50 on a 100-point scale) based on the data-driven performance, including schools, hospitals, energy and water utilities, and local governments.

Yet even the “green” or “sustainable” or “social” purposes of the bond may be at risk from future intense climate events, or lack of resilience defenses.

How to Optimize Risk and Return in Your Bond Portfolios

Bonds of corporates, munis and sovereigns are intended to be the ballast in your portfolio, just as a ship needs a strong hull and rudder. To evaluate these future risks requires analyzing the effectiveness of achieving the issuer’s mission, the actual benefits of the planned proceeds, and the potential surprises like climate in the coming years.

As we have shown above, the traditional credit ratings may not evaluate the full future risks of a 30-year bond. Our experience at HIP has shown that many lower-income communities can have highly effective hospitals saving patients, above-average school outcomes for kids, and cleaner water and energy for communities. This is not always consistent with the traditional belief that higher tax revenues collected in higher-income areas automatically generate better outcomes – it is a matter of competence to deliver its mission.

Evaluating future risk can be accomplished with data-driven factors: achieving its mission, specific results from use of proceeds, and optimizing risk and resilience from future climate intensities.

Impactful investors keep an open mind about the full spectrum of risks, and of opportunities. Your bond holdings can anchor a higher-impact portfolio that can both “do good” and “make money” in the coming decades.

Article by R. Paul Herman, founder and the managing member of HIP Investor Ratings LLC and Liana Lan, Climate and Impact Investing Analyst at HIP Investor Ratings LLC.

DISCLOSURES:

HIP Investor Inc. is a state-registered investment adviser in several jurisdictions (CA, IL, LA, NC, NY), and HIP Investor Ratings LLC is an impact-ratings firm evaluating impact and ESG on 410,000 investment ratings, including 126,000 municipal entities, 270,000 muni-bond issuances, and 14,000 corporates for equities and bonds. HIP Impact Ratings are for your information and education – and are not intended to be investment recommendations. Past performance is not indicative of future results. All investments are risky and could lose value. Please consult your investment professionals to evaluate if any investment is appropriate for you, your goals, and your risk-return-impact profile. This is not an offering of securities.

HIP Investor, Inc. (“HIP”) is a provider to Van Eck Associates Corporation (“Van Eck”) of proprietary research products and services, including ESG ratings, Sustainable Development Goal ratings, Opportunity Zone mapping, Climate-Threat and Resilience ratings, and Human Impact + Profit ratings (collectively, the “HIP Ratings”). HIP is the exclusive provider to Van Eck of HIP ratings and similar data used in connection with any sustainable municipal-bond ETF provided by Van Eck, including the VanEck HIP Sustainable Muni ETF.

HIP Investor, Inc. (“HIP”) receives certain fees related to the assets under management (AUM) of the VanEck HIP Sustainable Muni ETF, which creates a conflict of interest with actual and prospective clients of HIP, and biases the objectivity of HIP when discussing, evaluating, and recommending the VanEck HIP Sustainable Muni ETF to actual or prospective clients of HIP. The determination to purchase or utilize the VanEck HIP Sustainable Muni ETF is an important decision and should not be based solely upon HIP’s recommendation, guidance, or services. HIP is an independent contractor of Van Eck Associates Corporation; however, HIP does not control or supervise the services or products of Van Eck Associates Corporation, and reference to the VanEck HIP Sustainable Muni ETF does not mean that HIP has performed any level of due diligence on the services or products of Van Eck Associates Corporation. Users of HIP’s website, as well as actual and prospective clients of HIP, are urged to perform their own due diligence on, or consult with a separate registered investment adviser with respect to, the VanEck HIP Sustainable Muni ETF.

There is no obligation to purchase or utilize the VanEck HIP Sustainable Muni ETF.

Energy & Climate, Featured Articles, Food & Farming, Impact Investing, Sustainable Business

30 Years of Impact Bonds: Q&A with Benjamin Bailey of Praxis and Cliff Feigenbaum

September 25, 2024
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An Interview with Benjamin Bailey of Praxis and Cliff Feigenbaum, GreenMoney

This year marks the 30^th anniversary of the Praxis Impact Bond Fund, which gives faith-based and other investors access to a broadly diversified core bond portfolio with a focus on green, social and other types of impact bonds.

Over the years, the fund’s appeal has broadened from faith-based investors to include sustainability and social-impact focused investors. Its assets have grown from $11 million in 1994 at the fund’s inception to nearly $1 billion today.

Over time, as more impact-oriented bonds have come to market, Praxis has increased their allocation to 36% in the Praxis Impact Bond Fund.

GreenMoney Journal founder Cliff Feigenbaum recently spoke with Benjamin Bailey, CFA, Vice President of Investments and Senior Fixed Income Investment Manager for Praxis Mutual Funds, on a variety of topics. Here’s the interview –

Cliff: What’s the History of the Fund?

Benjamin: Originally called the Praxis Intermediate Income Fund, the Praxis Impact Bond Fund launched in 1994 to give Mennonite and Anabaptist investors a way to invest in bonds consistent with their values. Praxis brought retail investors an approach to fixed income investing that religious institutions in these faith traditions had utilized for decades.

I joined the fund’s portfolio management team in the early 2000s at the start of my investing career. In those years, we screened out issuers that didn’t meet our specific values criteria—so we were avoiding “the bad”—but we hadn’t yet envisioned a way in which we could really make a deep, positive impact in the world.

A watershed moment came in 2006 when we invested in the International Finance Facility for Immunization (IFFIm). Learning about this opportunity in vaccine bonds opened my eyes to the specific impact that investing in positive impact bonds can have in a fixed income portfolio.

The introduction of green bonds in the U.S. in 2009 and subsequent growth of the impact bond market have allowed Praxis to ramp up the percentage of the portfolio that is dedicated to positive impact bonds. By 2016, that percentage had grown to nearly a quarter. That’s when we changed the name to the Praxis Impact Bond Fund, wanting to make clear that our focus was on making a positive impact through this fund, to the degree the market made it possible. Today, the percentage of impact bonds is even higher – about 36%. And we look forward to growing this percentage even further.

Cliff: How Does Praxis Define “Positive Impact Bonds”?

Benjamin: Positive impact bonds are bonds that make a specific positive impact to the climate and/or communities. A specific part of this market is in bonds called green bonds, social bonds and sustainability bonds. These have generally accepted guidelines from the International Capital Market Association on what projects are acceptable in each of these categories and establish general expectations for future reporting and signoffs from management and auditors.

As investors, we want the bonds to have a level of rigor and depth to them in terms of impact, but we also don’t want to discourage potential issuers with too many firm regulations and rules.

As committed impact bond investors, we often engage the issuers, encouraging them to take this opportunity seriously and pursue the highest standards that are feasible.

Cliff: How Has the Positive Impact Bond Market Changed Over the Past Few Years?

Benjamin: The market went through a large period of growth, with consistent issuance increases year after year for over a decade. According to Bloomberg, the broader impact bond market went from an issuance of about $600 billion in 2020 to nearly $1.2 trillion in 2021, with 2022 and 2023 remaining at similar levels. There is still strong growth this year. According to Bloomberg, there has been $700 billion of green, social, sustainability, and sustainability-linked corporate and government bond issuance this year as of Aug. 23, 2024, up 9.5% from the same period last year. But the vast majority of that growth is in international markets. There hasn’t been strong growth in the U.S. dollar domestic market. Specifically in 2023, U.S. dollar-denominated ESG bonds issuance was down 49% from 2022, and the 2024 issuance of these bonds has continued to be slow.

Cliff: How Do You Go About Ensuring Diversification and How Important Is It in a Fund Like Yours?

Benjamin: We want investors to be able to utilize this fund as part of their core fixed income allocation and not view this investment as a niche part of their portfolio or as a form of charity.

To achieve that, we aim to generate performance similar to the Bloomberg Aggregate Bond Index – a common benchmark for core bond funds – over market cycles, while maximizing our ability to have a positive impact in the world we share.

While it might be great to say in the short term that a fund has “100% positive impact bonds,” in the long term, I don’t feel that fund would be appropriately benchmarked to a broad fixed income index. This would fail our understanding of our fiduciary duty to our shareholders.

Most people don’t want to sacrifice returns that could impact their retirement in a large portion of their fixed income allocation. We believe people shouldn’t have to make that choice. Most faith-based and sustainable investors are looking for a mix of solid, long-term performance, proper diversification and an ability to make a real impact through their investments.

Cliff: How Has Investor Interest/Investor Makeup Changed Over the Years?

Benjamin: Over the years, we’ve increasingly attracted faith-based, SRI and sustainable investors, especially as the green, social and sustainability bond space has grown in visibility. In addition, the fund is included in many sustainable and values-based models for advisors, across different platforms, which has been important to asset growth. Just over a decade ago the fund had $350 million in assets under management and now we hold just under $1 billion.

In a social climate fraught with division, Praxis is grateful to attract investors with a wide range of convictions. Some of our investors may be motivated by traditional values that emphasize personal morality while others prefer more progressive engagement of systemic social and environmental challenges. However, all these investors want to be productive stewards of the resources entrusted to their care.

Cliff: How Can Investors Know That Their Investments Are Making a Difference?

Benjamin: There are many ways to make a difference with your financial resources – through charity or purposeful purchasing, for instance – but investing with your values in mind allows you to use the power of your investment portfolio to promote a better world. It is important to consider the full range of impact opportunities available, including positive impact bonds. Our annual Praxis Real Impact Report and Real Impact Quarterlies document seven different impact strategies, available across a range of fund types, that can help investors understand the impact of their investment dollars.

About Praxis

Praxis Mutual Funds is a leading faith-based, socially responsible family of mutual funds designed to help investors integrate their finances with their values. Praxis is the mutual fund family of Everence Financial^®, a comprehensive faith-based financial services organization helping individuals, organizations and congregations. To learn more, visit praxismutualfunds.com and https://everence.com .

More about Benjamin Bailey:

Benjamin Bailey, CFA^®, Vice President of Investments. Benjamin joined Everence in 2000 and was named Co-Portfolio Manager of the Praxis Impact Bond Fund in March 2005, and Co-Manager of the Praxis Genesis Portfolios in June 2013. In 2015, he was named Senior Fixed Income Investment Manager, providing leadership to the fixed income team and oversight to external sub-advisory relationships. Benjamin is a 2000 graduate of Huntington College in business-economics. Connect with Benjamin on LinkedIn.

Consider the fund’s investment objectives, risks, charges and expenses carefully before you invest. The fund’s prospectus and summary prospectus contain this and other information. Call 800-977-2947 or visit praxismutualfunds.com for a prospectus, which you should read carefully before you invest.

Praxis Mutual Funds are advised by Everence Capital Management and distributed through Foreside Financial Services, LLC, member FINRA. Investment products offered are not FDIC insured, may lose value, and have no bank guarantee. Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in price, especially for longer-term issues and in environments of rising interest rates. The Fund’s investment strategy could cause the fund to sell or avoid securities that may subsequently perform well.

The Bloomberg U.S. Aggregate Index is an index of widely held fixed-income securities often used as a proxy for the bond market. It is comprised of the U.S. Treasury and U.S. agency bonds, mortgage-backed bonds, and higher-grade corporate bonds. Indexes are unmanaged, do not incur fees, and it is not possible to invest directly in an index.

Bloomberg Aggregate Bond Index: A broad-based benchmark that measure the investment grade, US dollar-denominated, fixed-rate taxable bond market. You cannot invest directly into an index.

Diversification neither assures a profit nor guarantees against loss in a declining market.

ESG: environmental, social, governance. The Fund’s investment strategy could cause the fund to sell or avoid securities that may subsequently perform well, and the application of ESG and/or faith-based screens may cause the fund to lag the performance of its index.

Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in price, especially for longer-term issues and in environments of rising interest rates. The Fund’s investment strategy could cause the fund to sell or avoid securities that may subsequently perform well.

Praxis Mutual Funds, 1110 N. Main St., P.O. Box 483, Goshen, IN 46527

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Climate+Community Development: Emerging Investment Frameworks Fuel Transformative Impact

By Anna Smukowski and Laura Mixter, Enterprise Community Partners and LISC

September 25, 2024
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Above: HopeWorks Station in Everett, WA, a housing and jobs training development project. Enterprise provided a suite of support including a loan, LIHTC, NMTC, grant funding and technical assistance.

This article includes excerpts from What’s Possible: Investing Now for Prosperous, Sustainable Neighborhoods, a collaboration of Enterprise Community Partners, LISC and the New York Fed. What’s Possible offers practical solutions for clean energy, resilience and equity. It’s intended as a playbook for taking collective action to build a stronger, more inclusive future.

In the early 1950s, predominately white neighbors in Bedford, NY, worked to protect a 60-acre hemlock forest in the Mianus River Gorge, a “wild and free river running through a primeval forest,” that was at risk of being turned into a housing development.¹ They formed a new conservation group, pledged their life insurance policies, and gained financing from The Nature Conservancy to preserve the land. In the following decade, Rachel Carson published Silent Spring, a book largely seen as launching the modern environmental movement that also became a rallying point for social activists in the 1960s.²

At the same time, in another Bedford not so far away, real estate agents and speculators employed “blockbusting” to stoke and profit from middle class white flight in the Bedford-Stuyvesant neighborhood of Brooklyn.³

Economic investment declined, with more than 50 percent of its housing stock being classified as dilapidated and insufficient.⁴ By 1967, recognizing something had to change, the first community development corporations (CDCs) were formed—including the Bedford-Stuyvesant Restoration Corporation—to design, implement, and secure financing to reduce poverty and spur economic growth. This was paired with other positive changes driven by the civil rights movement, righting some of the wrongs of decades of discrimination, redlining, and economic disinvestment.

Over the years, both the environmental and community development movements have grown and evolved, and both have had numerous successes. But until recently, they have rarely intersected.

We can no longer afford to work like this. Communities with a history of economic disinvestment bear the greatest costs of environmental disasters and face the greatest risks from climate change. If we are to comprehensively address the challenges facing people and the planet in the twenty-first century, leaders from both the environmental and community development movements need to integrate their approaches.

Climate issues are community development issues and vice versa. Those in community development finance must address the impacts of climate change in order to meet impact goals for economic opportunity and growth. Likewise, those in climate finance need to adopt an equity lens to focus investments in areas grappling with significant pollution and heat challenges, making sure that low-income communities and communities of color are not left behind. What do investors need to replicate and expand innovative funds and strategies that account for climate and community? How should they evaluate their existing portfolios for risks, and what frameworks do they need to effectively deploy capital in the future?

The tools already exist. Tools include data and reporting frameworks that can help investors analyze projects and investments and standardize impact measurement and discussion. From that vantage point, we can see the challenges in aligning climate and community development work, better understand the missteps of the past, and develop strategies that can help us work more equitably and holistically going forward.

Integrated Investment Solutions: Using Green, Social, Sustainability, and Sustainability-Linked Bonds

In 2007, research from the Intergovernmental Panel for Climate Change strongly linked human action to climate change⁵ It spurred a group of Swedish pension funds to think about how their role as fiduciaries could finance projects that would create climate benefits while reducing risk for their investors. Without a ready-made investment opportunity, they turned to the World Bank, which issued the world’s first green bond in 2008. That effort formed the basis for the Green Bond Principles coordinated by the International Capital Market Association (ICMA).⁶

The principles apply a framework for issuers to raise capital for projects with environmental and climate impacts. Green bonds are evaluated based on use of proceeds, process for project evaluation and selection, management of proceeds, and reporting. These four components create a clear disclosure process for issuers, which investors, banks, underwriters, arrangers, placement agents, and others can use to understand the characteristics of any given green bond.

*Lakota Ridge – Senior Housing Project in New Castle, Colorado; Enterprise provided grant funding to the project. Photo by Scott Dressel Martin*

Once the green bond market took off, issuers noticed that bonds could address persistent market gaps in ways that go beyond pure environmental projects. That recognition gave rise to the Social Bond Principles, sustainability-linked bonds, transition bonds, and the Sustainability Bond Guidelines—all of which incorporate a focus on both green and social projects or activities. Over time, the influence of these designations has grown. In 2017, LISC became the first CDFI issuer to align with the Sustainability Bond Guidelines in a rated bond offering. In 2019, the Low Income Investment Fund (LIIF) became the first CDFI issuer to receive a second-party opinion confirming that its bond was aligned with the Sustainability Bond Guidelines. With these precedents, CDFI issuers increasingly aligned their offerings with the ICMA Sustainability Bond Guidelines, with six out of ten rated bond offerings aligning with the guidelines and four receiving a second party opinion.⁷

While social and sustainability bonds that incorporate target populations have grown, the green bond subset of the market still holds the majority market share by dollar volume. There is great potential to integrate the target population definitions in the social bond designation further with green use of proceeds bonds to educate stakeholders on how climate finance impacts communities. In 2020, ICMA introduced its Climate Transition Handbook to help investors craft approaches to climate risk that mitigate both environmental and social externalities and contribute to progress on the UN Sustainable Development Goals.⁸

*ECD Solar – Enterprise provided financing for Enterprise Community Development’s long-term goal to install solar panels across its entire portfolio in Washington DC.*

Looking Ahead: Climate and Community First-Approaches to Capital Allocation

In order to equitably drive capital into communities and to support their climate resilience, it is imperative that community and climate investors coalesce around frameworks that send a clear market signal. Like green, social, sustainability and sustainability-linked bonds, these tools should be:

Standardized – The market needs to be able to measure and report the same types of metrics in order to easily compare one investment to another. An impact measurement tool can reflect the priorities and mission of an organization while also aligning to an industry-wide standard.
Accessible – Navigating the ecosystem for sustainable and impact investing data and reporting requires time, staff, and financial resources—making it inaccessible for smaller organizations, especially those serving low-income communities. For them to participate, and to promote widespread adoption, those organizations need access to free or, at the very least, tiered pricing.
Scalable – Investors need to work together to invest in and leverage technology platforms, as well as to build the requisite capacity to educate the market on what platforms exist. The resulting standardized data can be aggregated and reported to stakeholders, driving scalable solutions.

While we recognize there is not a one-size-fits-all approach, finding shared tools and a common language can help organizations be explicit about their climate and community impacts. In doing so, organizations can learn best practices from one another and create a community of practice.

Partnering with Enterprise and LISC puts climate and community frameworks into action and can help drive capital into projects and investments that build a resilient, just, and equitable future for all American communities. Visit Enterprise at www.enterprisecommunity.org and LISC at www.lisc.org to learn more.

Article by Anna Smukowski of Enterprise Community Partners and Laura Mixter of LISC.

Anna Smukowski is responsible for ECLF’s Impact Note program in addition to supporting capital raising, fund structuring and impact measurement and management efforts for on- and off-balance sheet lending. Prior to joining ECLF in 2022, she led LISC’s $200 million retail note offering, coordinated investor relations and positioned LISC’s capital raising within ESG, impact and social bond frameworks. She also managed $50 million in LISC’s Paycheck Protection Program (PPP) deployment and has structured and managed affordable housing and economic development funds, as well as pay for success work through a Social Innovation Fund grant award. Anna started her career as a strategy and operations consultant at Deloitte, where she was seconded to the UN Global Compact to examine corporate trends in carbon disclosure. She serves on the EPA’s Environmental Financial Advisory Board. She received her B.S. from NYU Stern and her M.B.A. from Columbia Business School.

As LISC’s first ESG & Impact Reporting lead, Laura Mixter oversees LISC’s impact measurement and management work, including the implementation of the LISC Impact Matrix, for all loans financed through LISC’s loan fund. Laura joined LISC in December 2021 after spending six years at our affiliate New Markets Support Company (NMSC). At NMSC, she held a number of different roles on the Asset Management, Advisory Services, and Impact teams. Laura has a BA in Public Policy from Duke University and an MBA from Duke’s Fuqua School of Business. While at Fuqua, Laura performed research on successful impact investing firms as a CASE i3 Associate.

Footnotes:

[1] Mianus River Gorge, The Early Years, available at- https://mianus.org/the-early-years/

[2] Katharine Rooney, “This is how climate science went mainstream,” International Institute for Sustainable Development, November 5, 2019. Available at- https://www.iisd.org/articles/insight/how-climate-science-went-mainstream

[3] Blockbusting is an illegal practice used to convince homeowners to cheaply sell their property by appealing to fears of a new minority group moving in, then reselling at a higher price.

[4] Jack Newfield, “Bedford-Stuyvesant: Giving a Damn About Hell.” In Robert Kennedy: a memoir, (New York: New American Library, 1988).

[5] Rajendra K. Pachauri and Andy Reisinger, “Climate Change 2007: Synthesis Report. Contribution of Working Groups I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change.” (Geneva, Switzerland: Intergovernmental Panel on Climate Change, 2008). Available at- www.ipcc.ch/report/ar4/syr/

[6] “10 Years of Green Bonds: Creating the Blueprint for Sustainability Across Capital Markets,” The World Bank, March 18, 2019. Available at- https://www.worldbank.org/en/news/immersive-story/2019/03/18/10-years-of-green-bonds-creating-the-blueprint-for-sustainability-across-capital-markets

[7] Elise Balboni, Kathleen Keefe, and Anna Smukowski, “CDFIs and the Capital Markets: Trends in Investment & Impact Measurement.” (Enterprise and LISC, May 2023). Available at- www.enterprisecommunity.org/sites/default/files/2023-05/CDFIs-and-the-Capital-Markets-May2023.pdf

[8] ICMA, Climate Transition Finance Handbook, available at- https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/climate-transition-finance-handbook

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Lifting the Lid on Impact Bonds: 5 Questions for Investors

By Ross Pamphilon and Mark Duffy, Impax Asset Management

September 25, 2024
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In this Q&A, Ross Pamphilon and Mark Duffy of Impax Asset Management explore the nuances of the asset class of Impact Bonds and how rigor and expertise can help investors navigate an expanding opportunity set.

Executive Summary

We believe it is worth taking a nuanced view of impact bonds, considering both non-labelled and labelled green, social and sustainability bonds.
Thorough issuer-specific research helps us to understand the environmental and social merits of each bond, assess the impact of financed projects, and maintain flexibility in labelling sustainable securitizations.
Within a portfolio, impact bonds can offer stability, transparency, and diversification alongside attractive risk-adjusted returns.

Introduction

Over the last 25 years of investing in impact bonds, we have learned the value of looking beyond labeled green, social and sustainability (GSS) bonds.

By broadening the definition of impact bonds, investors can access a wider range of opportunities to generate positive environmental and social outcomes while pursuing attractive risk-adjusted returns. However, navigating this market requires a nuanced understanding of innovative security structures, evolving standards and project-level impact assessment.

Here, we look at how to define the asset class and explain why we look ‘off-label’, how the global impact bond market has grown, whether impact bonds involve higher credit risks, and the role these instruments can play in an investment portfolio.

1. How are Impact Bonds Defined?

The bond market generally defines impact bonds as labelled GSS bonds that finance projects with positive environmental or social outcomes (or both). These labelled bonds adhere to recognized principles like the Green Bond Principles and offer investors the extra assurances of use of proceeds reporting and third-party verification.¹

We take a more nuanced view and define impact bonds as use-of-proceeds and general-purpose bonds that raise capital for projects or activities with positive impacts, either environmental, social or both. We consider a breadth of securities – including asset-backed securities (ABS) and mortgage-backed securities (MBS) – issued by companies, supranational bodies and government-backed entities like local municipalities and state-owned entities.

Some of these investments have obvious positive environmental and social outcomes; others require a deeper dive to understand the impact.² Importantly, we consider both labeled and non-labelled bonds across fixed income sectors and activities. Our perspective is rooted in the search for additionality: unlike investments in equities, which are inherently tied to general corporate activities, bond proceeds can be directed towards a pre-defined use and so contribute to a targeted non-financial impact.

2. Why Should Investors Look ‘Off Label’?

We believe companies that take steps to adapt to and mitigate environmental and social risks have the potential to outperform over time, and we have developed our process to avoid overlooking this potential in non-labelled impact bonds.

Non-labelled corporate impact bonds often provide investors with the opportunity to invest in longer-dated maturities (more than 10 years) and larger deal sizes (more than US$750mn) compared to their labelled counterparts. Labelled bonds often have tenors of six to eight years as the maturity is intended to align with the project life. Longer duration allows investors to potentially realize greater returns if the credit thesis plays out as intended.

To effectively evaluate and select non-labelled impact bonds, we employ a multi-faceted approach:

Thorough issuer-specific research to understand the environmental and social merits of each bond
Assessing the impact of financed projects
Maintaining flexibility in labeling sustainable securitizations

We have identified and categorized these bonds based on sustainability-related focus areas, illustrated below.

We include below three examples of non-labelled issuances that we believe deliver impact.

Corporate Debt: Xylem is a market leader in sustainable water management and net-zero goals, with a strong market position addressing global water challenges. The US company finances green projects that improve water accessibility, affordability, and resiliency through bonds like its US$1.9mn 2028 bond for improving water access, affordability, and resilience. We evaluate measurable impacts like water efficiency and conservation, quality and treatment, and climate resilience enabled by Xylem’s solutions. Xylem provides annual impact reporting aligned with Green Bond Principles, allowing investors to quantify its outcomes achieved. The company reports that its issuance of green bonds has resulted in 2.9mn megaliters of water saved or treated for reuse annually.³

Read about Impax’s approach to green bonds here.

First Help Financial provides securitization of auto loans made to Latin American immigrants in the US with limited financial history, promoting financial inclusion in underserved communities. To better verify customers’ ability to pay, the company accepts alternate forms of identity and income verification, and the entire underwriting and servicing team is bilingual. The company reported that it’s 2022 US$150mn issuance supported over 4,800 borrowers with limited English proficiency, almost 1,500 borrowers who were self-employed and financed over 1,600 work trucks or vans. Impax has invested in the 2024 round, sized at $US345.6mn.

Learn more about Impax’s approach to asset-backed securities (ABS) here.

Supranational debt: Women’s Livelihood Bond – issued by Impact Investment Exchange, the Women’s Livelihood Bond (WLB) mobilizes private capital to invest in high-impact enterprises that aim to empower women. The WLB has raised US$228mn through six debt offerings, two of which are considered aligned with the Orange Bond Principles, focusing on gender-positive capital, gender-lens capacity and transparency. The WLB series reports that it has provided 180,472 female entrepreneurs in India, Cambodia, Indonesia, Kenya, and Vietnam with credit access.

Read more about Impax’s collaboration with supranational bodies in support of women and girls here.

3. Is Impact Bond Issuance on the Rise?

The impact bond investment universe has expanded significantly in recent years, creating a broader opportunity set for investors.

The chart below illustrates the increasing issuance of labelled impact bonds over the past decade. Total issuance topped US$1tn in 2021, though it dipped below this threshold in 2022 and 2023 as a result of factors like investor concerns around greenwashing.⁴ Issuance of non-labelled impact bonds has also grown over the past decade, but measuring that market is more nuanced.

Looking ahead, we see several key trends pointing to renewed growth in the labelled impact bond market, including the emergence of transition bonds and securitized products, a gradual shift in issuance activities from Europe to the Asia-Pacific region in response to investor demand, and large-scale policy initiatives like the US Inflation Reduction Act (IRA).⁵

4. Do Impact Bonds Involve Higher Credit Risk?

A common misconception is that investors must pay significantly more for impact bonds compared to conventional securities or accept greater risks for equivalent returns. Our experience (and industry research and analysis) suggests that such views are misplaced.⁶

The credit risk for corporate impact bonds is typically the same as conventional bonds, as the coupon and principal are legally deemed general obligations of the issuing entity. This is why our due diligence process looks beyond single bond issuances to incorporate a holistic view of corporate issuers.

We have observed that disclosure, a crucial window into credit risk, varies widely among fixed income sectors. Public corporate issuers generally provide the most comprehensive disclosure and government and private corporate issuers provide the least. A thorough analysis of both material quantitative and qualitative factors, including sustainability factors, is necessary to assess fundamental credit risk.

5. What Role Can Impact Bonds Play in a Portfolio?

Impact bonds can primarily offer three diverse qualities within portfolio allocation.

First, stability: the buy-and-hold nature of many sustainability-focused investors can lead to lower price volatility as these bonds often trade less frequently than conventional securities. Investors that engage in relatively small transactions can remain nimble, however; our team leverages specialized sell-side relationships that allow us to break up larger trades into more digestible sizes and provide sufficient liquidity.

Second, transparency: regular impact and allocation reporting adds a layer of transparency and insight into issuances.

Third, diversification: investors with the resources and expertise to identify investments aligned with sustainability themes can go beyond standard business practices, employing a flexible, multi-pronged approach that identifies a broad range of opportunities.

A Growing and Impactful Opportunity Set

To navigate this expanding but complex market, we believe a nuanced understanding of innovative security structures, evolving standards and project-level impact assessment is key.

As the impact bond market continues to expand and evolve, we believe that investors who allocate resources and expertise to this area will be well-positioned to generate both carefully considered impact and risk-adjusted returns.

Article by Ross Pamphilon and Mark Duffy, CFA^® of Impax Asset Management

Ross Pamphilon is based in London and leads the global fixed income team overseeing the fixed income investment process including credit research and idea generation together with portfolio management. He is also responsible for the strategic development of Impax’s fixed income platform to provide a range of global credit solutions that are fully aligned with the transition to a sustainable economy.

Prior to joining Impax, Ross spent over a decade at Wells Fargo Asset Management, where as Head of Fixed Income EMEA he led the Global Fixed Income and European Credit teams. Previously, he was a co-founder of European Credit Management (“ECM”), where he built a career as a portfolio manager and held the positions of Head of Portfolio Management, Head of Investments and Chief Investment Officer, with responsibility for portfolio management, credit research and investment strategy. Prior to ECM, Ross was an emerging markets debt trader at Merrill Lynch in London, and also based in New York. He is a Chartered Accountant, having qualified with PwC.

Mark Duffy, CFA^® is a Fixed Income Analyst on the US Investment Grade Fixed Income team at Impax Asset Management. He is responsible for covering the consumer goods and diversified manufacturing sectors.

Mark has over seven years of experience in buy-side investment research across Investment Grade, High Yield and ESG. Prior to joining Impax in 2023, Mark was a Senior ESG Analyst at Invesco, a Corporate Credit Analyst at Longfellow Investment Management and a Senior Associate at State Street. Mark holds a bachelor’s degree in economics from the University of Connecticut and a master’s in finance from Bentley University. He is both a CFA® charter holder and an FSA credential holder, as well as an active member of CFA Society Boston.

Footnotes:

[1] International Capital Markets Association, 2022: European Green Bond Principles

[2] In our 2023 Impact Report, we reported that 39% of the issuers in one of our fixed income strategies reported GHG emissions avoidance data, and we were able to estimate GHG emissions avoidance data for about 25% of the portfolio. The remaining 36% of issuers in the portfolio either did not report data, or we were not able to make an estimate.

[3] Xylem, 2023

[4] Labelled impact bonds shown are those with third-party assurances as reported to Bloomberg. The assured impact bond data follows industry standard and is most widely cited across institutions. For our broader Impax universe, we also consider bonds that are not assured, preferring to judge each bond’s impact via our own framework. S&P Global, February 2024: US Muni Sustainable Bonds

[5] The White House, January 2023: Building a Clean Energy Economy

[6] Karoui, L., Lynam, A. et al, February 2022: ESG in credit: A costless benefit to portfolios (Puempel), Goldman Sachs

Energy & Climate, Featured Articles, Food & Farming, Impact Investing, Sustainable Business

Powering a Sustainable Future with Clean Energy CU

Powering a Sustainable Future with Clean Energy Credit Union

By Nicole Burford, Clean Energy Credit Union

August 22, 2024
No Comments on Powering a Sustainable Future with Clean Energy Credit Union

>> Back to September 2024 Issue

As the impacts of climate change become more evident, the urgency to transition away from fossil fuels is clear. Investing in renewable energy is crucial for the future of our planet, yet it remains a challenge for many. Clean Energy Credit Union is poised to change that narrative. Our not-for-profit model focuses on making clean energy affordable and accessible to a wide range of people across the country by providing an attainable entry point for individuals to invest in the clean energy movement with a $5 minimum deposit. This innovative approach advances sustainability and democratizes access to renewable energy investing.

The Bold Mission of Clean Energy Credit Union

At the heart of Clean Energy CU lies the vision to create a world where everyone can participate in the clean energy movement. We are making this vision a reality by:

Making it easier for everyone to afford clean energy and energy saving products and services by offering clean energy loans with amazing terms.
Making it easier for everyone to invest in the clean energy movement by offering federally insured checking accounts, savings accounts, and clean energy CDs whereby the deposits are solely used to help others pursue their clean energy and energy saving projects.

Clean Energy CU operates as a not-for-profit financial institution, enabling us to prioritize the needs of members. This unique structure allows the credit union to offer competitive interest rates on clean energy loans, high dividends on share accounts including 3.5% interest on rewards checking, and minimal fees.

“We are proud to say that we have never charged an overdraft fee. We care about our members and are focused on helping more people be a part of this movement without deterring them with fees or high rates.”

– Clean Energy Credit Union CEO, Terri Mickelsen

The credit union’s mission isn’t just about dollars and cents — it’s a commitment to environmental stewardship, social responsibility, and a sustainable financial future.

Transformative Impact and Unmatched Benefits

Choosing to invest with Clean Energy CU isn’t just a financial decision—it’s a commitment to a brighter, cleaner future. Here’s why:

Environmental Impact: Every loan issued by the credit union reduces carbon emissions. Financing solar panels, electric vehicles, or energy-efficient upgrades contribute to building a sustainable future. To date, the credit union’s financing efforts have offset over 970,000 estimated tons of carbon dioxide equivalent.

Financial Savings: The competitive rates and favorable terms offered, can lead to substantial financial savings. Homeowners financing solar energy systems or energy saving home improvement projects often see lower energy bills, while EV loans make electric vehicle ownership more financially feasible.

High-Yield Savings and Checking Accounts: Beyond loans, Clean Energy CU offers savings and checking accounts that not only align with its clean energy mission but also provide attractive interest rates. These accounts give members a financially rewarding way to support renewable energy initiatives.

Ethical Banking: For those who prioritize ethical considerations in their financial choices, Clean Energy CU offers a transparent, values-driven alternative to traditional banks. Members can rest assured that their money supports initiatives aligned with their environmental values.

Take pride knowing what your dollars support, as every dollar that is deposited into the credit union goes towards funding other members clean energy or energy saving projects. Plus, our carbon offset calculator allows you to see what your dollars can do when deposited at the credit union.

https://www.cleanenergycu.org/resources/carbon-offset-calculator/

Clean Energy Credit Union Overview

Clean Energy Credit Union solely finances clean energy / energy saving projects. Meaning you can leverage the competitive rates with the added bonus of working with an institution that prioritizes your best interest over profits.

Wide Array of Clean Energy Loan Options

Solar PV Loans: Clean Energy CU’s solar loans are a beacon for those looking to harness the power of the sun. With lower interest rates and extended repayment terms compared to traditional financing, these loans make solar energy systems a realistic and appealing option for homeowners and businesses alike.

Electric Vehicle (EV) Loans: In the race to reduce greenhouse gas emissions, electric vehicles are speeding ahead, and Clean Energy CU’s is right there in the passenger seat. Offering financing for new and used electric vehicles at competitive rates, as well as refinancing options.

Green Home Improvement Loans: For those with grander sustainability projects in mind, the credit union offers green home improvement loans. Whether it’s adding a heat pump, updating your windows or replacing a water heater, these loans provide the financial backing needed to improve the efficiency of your home and reduce your energy needs. See the full list of qualified improvements here.

Our Clean Energy Expertise

Renewable Energy Team: The credit union demonstrates its commitment to members by staffing a clean energy team. This team reviews each project to ensure pricing aligns with market standards and that the systems meet quality expectations. They identify and address any red flags with the contractor or member, ensuring a smooth and reliable process.

Green Lending Expertise: With over $250 million in clean energy loans, Clean Energy CU has established itself as an expert in the field. We leverage our expertise to develop products and processes that prioritize the best interests of our members.

Registered Dealer Program: To enhance service for members and contractor partners, Clean Energy CU requires solar contractors to become registered dealers before offering financing options. This involves a thorough review process to assess the financial stability and quality of the contractors, ensuring reliable and trustworthy service.

Clean Energy for All: Expanding Access and Equity in Renewable Energy Financing

Clean Energy Credit Union has recognized that clean energy has been disproportionately unavailable to underserved populations. In response, the credit union has taken proactive steps to address this disparity by creating the Clean Energy for All loan program. This initiative aims to dismantle financial barriers, enabling a broader range of individuals to invest in clean energy solutions. Through the Clean Energy for All program, Clean Energy Credit Union is expanding access to affordable clean energy loans by offering discounted loan rates specifically for low-income and BIPOC (Black, Indigenous, and People of Color) borrowers. Additionally, the program includes special credit considerations for those facing credit challenges, ensuring that more people can participate in and benefit from the clean energy movement. This initiative not only promotes environmental sustainability but also advances social equity, making clean energy more accessible and inclusive for all.

Your Money, Your Impact: Investing in a Greener Planet

By choosing a financial institution that prioritizes sustainable and socially responsible initiatives, your money can drive positive change – supporting renewable energy projects, community development, and ethical business practices. This awareness empowers you to make informed choices, champion causes you believe in, and avoid funding activities that harm the environment. In a time when financial influence has significant global impacts, being mindful of how your money is used can help create a better, more sustainable world.

Clean Energy Credit Union is more than just a financial institution; it’s a movement toward a sustainable future. Through our visionary mission and cutting-edge financial products, we are making it easier for individuals to invest in renewable energy and energy efficiency.

For those looking to make a meaningful impact on the environment while reaping financial rewards, Clean Energy Credit Union offers an unparalleled investment opportunity. Check out the rates here and open an account online today.

Article by Nicole Burford, Vice President of Market Development and Sustainability at Clean Energy Credit Union. Her passion for the environment is a driving force behind the credit union’s mission to combat climate change. With over 15 years of marketing expertise, Nicole leverages her skills to increase awareness of Clean Energy CU’s impact, foster community relationships, and enhance member experiences.

Her journey began at Iowa State University, where she honed her skills in advertising and communications, before landing a coveted spot in Gannet’s Talent Development Program. Colorado then beckoned, offering her the opportunity to refine her digital marketing skills at a content marketing agency. Now, Nicole collaborates with partners, implements green initiatives, and works to create a more sustainable future, both within clean energy and climate finance. Driven by her environmental passion, Nicole embodies the credit union’s values, proving that impactful marketing goes hand-in-hand with making a difference.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Sunwealth - intersectional opportunity of solar addressing climate and inequality

The Intersectional Opportunity of Solar: Addressing Climate and Inequality

By Jonathan Abe and Martha Buckley, Sunwealth

August 22, 2024
No Comments on The Intersectional Opportunity of Solar: Addressing Climate and Inequality

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Above: Sunwealth’s 60kW solar installation on the roof of the Bornstein and Pearl Food Production Center in Dorchester, MA, helps reduce electricity costs for the building’s common areas. The center hosts over 50 community-focused businesses, including many led by women and minority entrepreneurs.

The U.S. Energy Information Administration (EIA) forecasts a 75% increase in solar generation from 2023 to 2025. As the solar industry races to address climate change and meet escalating demand from electrification and data centers, there lies a valuable opportunity to simultaneously address socioeconomic inequalities across the nation.

At Sunwealth, we challenge ourselves to ask: Who is benefiting from the growth of the solar economy? What other community needs could this opportunity meet? Who else can be included? How can we scale the solar economy while uncompromisingly pursuing justice?

By persistently posing these questions and staying vigilant to potential gaps, we identified a critical financing void in the solar industry and founded Sunwealth to finance and manage small to medium-sized projects in the built environment, particularly in traditionally underserved areas.

Projects for essential community institutions like houses of worship, daycares, or fire departments are more difficult to underwrite than residential projects and offer slimmer profit margins than utility-scale projects. Typical financiers and developers are not interested in paying the same amount of work (surveys, inspections, engineering reports) for a 20-megawatt (MW) project as for a 20-kilowatt (kW) project. Without the financial resources to put up hundreds of thousands to millions of dollars for solar, the projects for these organizations are sidelined and often left behind or left with burdensome cost structures.

By partnering with local solar installers and mission-aligned investors, we’re not just funding these crucial projects — we’re pioneering a better energy future. Founded in 2014, Sunwealth has invested over $200 million in more than 650 operational solar installations across 18 states, reducing 1.2 million metric tons in carbon emissions and generating $125 million in lifetime energy savings for our customers. 57% of these projects directly benefit low-to-moderate income communities, ensuring that the advantages of clean energy reach those who need it most. Together, we’re empowering communities, boosting local economies, and leading the way toward a more sustainable and just energy landscape.

We are committed to continuously broadening our impact by listening closely to our partners and communities. Among other initiatives, we have recently been focusing on alleviating energy burdens for non-homeowners and providing critical early-stage capital to underrepresented developers, further enhancing our efforts to drive equitable and sustainable growth in the solar sector.

Alleviating Energy Burden for Renters

Electricity costs in the US have risen by 4.4% over the past year, surpassing general inflation rates.¹ This increase disproportionately affects low-income households, which spend on average 8.1% of their income on energy while non-low-income households spend only 2.3% on average.² Consequently, approximately one in five households has had to cut back on necessities like food and medicine to cover energy costs.³

Sunwealth solar roof project - NYC Housing Authority Queensbridge house — *A Sunwealth solar project on the roof of a New York City Housing Authority (NYCHA) Queensbridge house in Queens, NY. Sunwealth has financed over 3 MW of solar capacity across NYCHA rooftops.*

Although low-income households stand to benefit the most from lower electricity costs, many are renters and thus cannot install solar panels or other energy efficiency measures in their homes. Community solar projects address this challenge by generating electricity for the grid and allowing individuals to purchase energy through credits on their electric bills. This allows families to economically benefit from solar energy without needing to own their own roof.

Sunwealth’s most expansive community solar portfolio is with the New York Housing Authority (NYCHA), which spans 67 rooftops across NYCHA’s buildings (pictured above). The projects total 3 MW of solar and offer an average 16% discount on energy costs to more than 970 community solar subscribers, with 73% of them categorized as low-income participants.

There is significant opportunity for energy savings to positively impact low-income households, alleviating economic burdens and fostering greater financial stability, and Sunwealth is committed to growing our community solar portfolio to meet the opportunity.

Fostering Economic Growth for Underrepresented Developers

Solar jobs are projected to double by 2033, presenting significant opportunities for wealth creation within the sector.⁴ The U.S. Solar Jobs Census reveals stark disparities: women comprise only 31% and Black Americans just 9% of the solar workforce. The statistics for the makeup of leadership and ownership of solar companies are even more bleak.

In response to these challenges, Sunwealth launched the Solar Justice Fund in 2023 to champion equity in solar development and foster a more inclusive clean energy ecosystem.

A key initiative of the Solar Justice Fund involves partnering with diverse developers, providing crucial capital for pre-construction activities to accelerate their project development. Our inaugural developer partner, Sol Source Power, a women-led community solar developer focusing on low-income projects in New York and Illinois, exemplifies the fund’s impact.

“Without Sunwealth’s support, our growth would hinge solely upon our ability to sell projects upon development completion. By advancing capital and grasping development milestones and challenges, Sunwealth has significantly accelerated our growth.” said Lindsey McEntire, the Co-Founder and Chief Development Officer of Sol Source Power.

By empowering diverse leaders and owners, Sunwealth aims to cultivate a more inclusive solar workforce. We believe that diverse solar developers are better positioned to attract and retain a diverse workforce, which is not only a moral imperative but also a strategic advantage essential for meeting the industry’s expanding demands.

The Solar Justice Fund not only enhances wealth-building opportunities for diverse individuals in the solar sector but also collaborates with developers who are committed to creating meaningful projects. For example, Sol Source focuses on delivering low-income community solar projects within their home state, thereby addressing local energy needs and promoting equitable access to solar benefits.

Join the Movement

The opportunity to forge a more inclusive and sustainable economy is more promising than ever due to initiatives like the Inflation Reduction Act, which is on track to catalyze hundreds of billions of dollars in clean energy investment nationwide. With solar energy projects and manufacturing jobs expanding rapidly from Appalachia to California, it’s clear that solar is here to stay. But it’s up to us to ensure that the benefits of solar energy reach those who need it most.

Sunwealth is dedicated to democratizing the benefits of solar through purposeful development and strategic partnerships. Beyond the initiatives highlighted here, we are working to enhance community resilience with solar battery storage in areas vulnerable to extreme weather, revitalizing economies impacted by declining fossil fuel industries and scaling our efforts to include even more high-impact, small-scale projects.

Now is the perfect moment to join Sunwealth and harness this opportunity to create a green economy that benefits all. Together, we can build a better energy future, ensuring it delivers lasting, positive change for every community.

Article by Jonathan Abe and Martha Buckley, Sunwealth

Jonathan Abe, is the Chief Executive Officer of Sunwealth, is a renewable project developer, financier, and asset manager with deep commercial solar transaction experience. Previously, Jon was a Senior Vice President at Nexamp. While with Nexamp, Jon was the head of business development, asset management, and policy. There, Jon supported the development and financing of over 40 MW of commercial-scale solar projects. He was also General Manager of Nexamp Capital, which controlled a diverse portfolio of solar assets. Additionally, Jon worked for the Massachusetts Renewable Energy Trust where he developed and managed the $68 million Commonwealth Solar program. Jon received his BA from Cornell University.

Martha Buckley is a Senior Manager of Investor Development at Sunwealth, where she is responsible for helping mission-driven investors align their investments for environmental, social, and economic impact. She brings 12 years of diverse social impact sector and fundraising experience, including having led corporate philanthropy grantmaking at Staples, Inc, and most recently leading development efforts on the frontlines of the housing crisis at Heading Home, which is one the Commonwealth of Massachusetts’ largest provider of shelter, housing & supportive services for families and adults experiencing homelessness. Martha holds a BA in Organizational Communication from Miami University (Ohio) and an MBA from Babson College, where she also currently serves as a member of the Board of Trustees.

Footnotes:

¹ U.S. Bureau of Labor Statistics. (2024). Consumer Price Index Summary. https://www.bls.gov/news.release/cpi.nr0.htm

² American Council for an Energy-Efficient Economy. (2020). Energy Burden Report. https://www.aceee.org/energy-burden

³ U.S. Energy Information Administration. (2018). Residential Energy Consumption Survey. https://www.eia.gov/todayinenergy/detail.php?id=37072

⁴ Solar Energy Industries Association. Impact of the Inflation Reduction Act. https://www.seia.org/research-resources/impact-inflation-reduction-act#:~:text=The%20IRA%20%26%20U.S.%20Jobs,with%20a%20no%2DIRA%20scenario

Energy & Climate, Featured Articles, Impact Investing

Tag: Featured Articles

The challenges I’ve faced have also strengthened my resolve to inspire other women to trust their instincts, pursue their passions and stand up for what they believe is right.

Every step in my journey reinforces my belief that we can create systems that serve everyone. I encourage folks to reflect on how their choices — financial and otherwise — can contribute to positive change.

For impact investors, the question is not why gender equality matters — it’s how to effectively allocate capital in ways that empower women and catalyze meaningful progress far more quickly.

Expanding Economic Opportunities for Women

Improving Lives and Outcomes Through Better Services and Products

Elevating Women’s Voices in Leadership

Investing in Women Catalyzes Deep, Transformative Impact

Above – Jenn Pryce (middle) with Calvert Impact Chief Investment Officer Catherine Godschalk (left) and Chief Risk Officer Lauri Michel (right)

Trailblazing women mentioned in Amy’s article – (L to R, top row: Katherine Graham Peden, Patricia Harris, Sr. Corinne Florek; bottom row: Nancy Andrews, Julie Eades, Kirsten Moy)

My personal interest in CDFIs began with the tale of a woman.

The Early Seeds of CDFIs were Planted and Nurtured by Trailblazing Women

Women in the Movement

The Federal Program Begins

Above Infographic excerpt, shown below – HIP Climate Threat Resilience Ratings of US Counties

What are Green, Social and Sustainable Bonds Funding?

Climate Risks Persist, Possibly Offset with Resilience

Credit Ratings Seem to Ignore Higher Climate Risk

Are Green, Social and Sustainability Bonds also Climate Resilient?

How to Optimize Risk and Return in Your Bond Portfolios

An Interview with Benjamin Bailey of Praxis and Cliff Feigenbaum, GreenMoney

Above: HopeWorks Station in Everett, WA, a housing and jobs training development project. Enterprise provided a suite of support including a loan, LIHTC, NMTC, grant funding and technical assistance.

Integrated Investment Solutions: Using Green, Social, Sustainability, and Sustainability-Linked Bonds

Looking Ahead: Climate and Community First-Approaches to Capital Allocation

In this Q&A, Ross Pamphilon and Mark Duffy of Impax Asset Management explore the nuances of the asset class of Impact Bonds and how rigor and expertise can help investors navigate an expanding opportunity set.

1. How are Impact Bonds Defined?

2. Why Should Investors Look ‘Off Label’?

3. Is Impact Bond Issuance on the Rise?

4. Do Impact Bonds Involve Higher Credit Risk?

5. What Role Can Impact Bonds Play in a Portfolio?

A Growing and Impactful Opportunity Set

The Bold Mission of Clean Energy Credit Union

“We are proud to say that we have never charged an overdraft fee. We care about our members and are focused on helping more people be a part of this movement without deterring them with fees or high rates.”

Transformative Impact and Unmatched Benefits

Clean Energy Credit Union Overview

Wide Array of Clean Energy Loan Options

Our Clean Energy Expertise

Clean Energy for All: Expanding Access and Equity in Renewable Energy Financing

Your Money, Your Impact: Investing in a Greener Planet

Alleviating Energy Burden for Renters

Fostering Economic Growth for Underrepresented Developers

Join the Movement

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