A Creative and Effective Way to Accelerate Climate Solutions and Democratize Wealth
By Janna West-Heiss
There are several ways an individual can make a positive social or environmental impact. They can take personal actions, be more mindful of their consumption habits by “voting” with their dollar and supporting certain companies, advocate for supportive policies and politicians, among many other options.
These are all very important and suitable ways to align action with values. Another relatively new way that can have a far-reaching impact and amplify systems of change for good is the concept of crowdinvesting for climate solutions.
Similar to crowdfunding for new products, campaigns, or to support people, crowdinvesting allows any individual to participate in climate solutions with the sum total of funds providing needed capital to make them a reality. A big and exciting difference is the ability to make a return on that investment. By opening up opportunities to invest in boots-on-the-ground climate projects like renewable energy, carbon sink agriculture, energy efficiency, etc. this form of impact investing democratizes the financial benefits, rerouting from traditional finance entities such as banks and dispersing that wealth to individuals wanting to make a difference with their money. This powerful new approach to financing has the capability to change the structure of our system. At the same time, it also allows people to align their desire for participating in the transition to a more sustainable future and their need for financial security and growth.
The wealth gap in the United States has been widening over the past 30 years. This has not only reduced the middle class but pushed the majority of financial wealth towards just a select few, often referred to as the one percent. A good indicator of this is the Gini coefficient, a globally accepted measure that represents income inequality. It has steadily gone up since the 1990s in the United States, making gaining and obtaining wealth to improve quality of life more difficult than it once was. Crowdinvesting combats this gravitation of wealth by putting the financial gains of projects back into the hands of people instead of large corporations and their CEOs.
As another added benefit to society, crowdinvesting bypasses the interests and blockades of financial institutions and politics to create real-world change that the people want to see. For example, renewable energy pricing has dropped dramatically over the past several years, while quality has increased making not just an environmental, but good business case for organizations interested in reducing their operational fixed costs, climate impact, or both. Yet, opting into these solutions and getting capital can be difficult for financial institution leaders tied to business-as-usual approaches and politicians with underlying fossil fuel interests. Unfortunately, this is often counter to what the majority of employees and residents want and has ultimately held back mass application of needed solutions for climate mitigation. Crowdinvesting has the ability to change this in a major way. Individuals can now hold the power of the purse and provide the upfront capital to build renewable energy projects and get returns as the cash flow from the electricity generation begins without waiting for banks and political leaders stuck in their ways to finally see the (renewable) light.
Like a bank, but made up of thousands of individuals wanting to do good, crowdinvesting can also take a renewable energy asset and leverage it to take on debt that then is reinvested in additional renewable energy projects. This leads to a positive and continuous cycle of transitioning to clean energy with financial returns for all. A good example of this is the Elm Lea Renewable Energy asset at the Putney School in Vermont, which is currently open for a crowdinvesting raise. This project provides 28 buildings across the high school campus with renewable electricity to help it accomplish the goal of becoming completely carbon neutral. Individuals can help accelerate a sustainable, equitable, and renewable energy future by investing wisely and thoughtfully with other value-aligned people across the nation.
