Practitioners’ Guide to Community Lending for a Just and Equitable Energy Transition

Climate change is the challenge of our time, the effects of which disproportionately impact disadvantaged and historically marginalized communities. These “frontline communities” have the least efficient homes and businesses, inadequate energy infrastructure, the oldest cars, and lowest deployment of renewable energy.

Climate change mitigation, adaptation, resilience, and environmental justice should be at the core of every lender’s mission and the backbone of every lender’s business strategy. Every lender has unique abilities, strengths, and community relationships to bring to the table, critical to a just and equitable energy transition. Community-focused lenders are particularly well-positioned to deliver equitable greenhouse gas (GHG) reduction in and for low-income and disadvantaged communities (LI/DACs), and to push beyond GHG reduction to deliver full mitigation, adaptation, resilience, and environmental justice, resulting in “co-benefits” such as an economic development, quality jobs, affordable housing, sustainable food systems, and more.

To be successful at financing these types of projects and initiatives, lenders need market knowledge, a lending track record, capital, community knowledge and relationships, a pipeline in key market segments such as small business, community service, housing to individuals, housing to organizations, consumer. While some lenders may have all these strengths “in house,” we believe that the most sustainable and impactful investment strategies incorporate coordination, cooperation, and collaboration with other organizations across the project delivery and financing ecosystem. Such collaboration is particularly valuable for emerging lenders as they develop capacity. Through collaborations, lenders can ensure that all necessary conditions are in place and overcome the challenges and barriers facing them.