Let's Get Joe the Investor Invested in the Green Economy

One of the great things about the green jobs movement is that it brings to the fore the importance of getting a diverse group of constituents benefiting from and arguing for a green economy. As a result, more and more people are feeling invested in this new economy, because they see how it will be good for them, their family and their community. After all, it's a lot easier to push through legislation that will support renewable energy, for instance, if unions, solar installers, utilities, community organizations and non-profits are all in favor.

Green Collar Jobs Are Great--Now How About Green Collar Investments?
Despite this promising trend, there remains a significant obstacle to getting a broader range of people invested in all things green: a lack of green investment opportunities that 1) have a reasonable, secure return on investment and 2) provide tangible environmental and/or social benefits. Sure, venture capitalists are investing in clean tech like crazy, green mutual funds are springing up, and myriad publicly traded companies are working on environmentally friendly technologies. But for Joe or Jane the investor--that is, a person with some money she would like to invest, but who can't afford a high-profile money manager and doesn't know a whole lot about investing--these opportunities are either difficult to understand or hard to find out about.

That's what is so exciting about several new financing models that invest in renewable energy and energy efficiency projects, such as the ones being implemented in Berkeley and Cambridge. These models create investment opportunities that result in a return on investment that is both secure and tangible (since it's tied to energy savings that are guaranteed) as well as socially and environmentally responsible. What's more, their simplicity and transparency lend themselves to enabling the average investor to understand and trust the opportunity they present.

Imagine if it were as easy for an investor to put money into a fund that invests directly in residential energy efficiency as it is for an individual to open a CD at her local bank. In fact, imagine if banks offered "green CDs"--where the depositor knew how the money was being invested, and could feel good about it. What's more, imagine if that same investor's money could be put to work on projects in her community. There is reason to believe that 21st century investors--who are accustomed to being hyperlinked through social networking sites, smart phones, etc--are beginning to ask more from their investments than a mere solid financial return, particularly given the recent spate of Ponzi schemes, Pyramid schemes, mortgage-backed securities gone bust, and the like. I believe investors are going to start asking for more transparency from, involvement in, and information about how their money is spent.

Kiva--A Powerful Model
Take the example of Kiva.org, a site where the average person interested in donating as little as $25 can select a low-income entrepreneur in a developing country, and directly loan him or her money through the site. The entrepreneur might be asking for $1,000, and that might come from 10 individuals investing $100 each, or even 40 investors at $25 each. Investors can see photos of the entrepreneur, read about them and find out what they will do with the loan. Once the amount requested is raised, the money is disbursed to the entrepreneur via a local microfinance institution, and as repayments are made, the investors are paid back their principal (they don't get paid any interest, however). Kiva has been a wild success, in part because people love the idea of knowing exactly who will be the recipient of their money, and they love that unlike a donation, they get repaid--a clear sign that there has been a social impact as a result.

There is no reason why investors seeking solid returns can't have the same experience as donors on Kiva. In fact, I think investing in the green economy should look a lot like Kiva. The investor should be able to see how her money is spent (not just in the form of a standard prospectus, but actually seeing the wind turbine, or reading about the neighborhood that became more energy-efficient); she should be guaranteed a reasonable and secure financial return; and she should be guaranteed a social and environmental return as well. That there are few, if any, such opportunities at present strikes me as problematic.

To be sure, once the economy starts picking up there will be no shortage of investment banks, wealthy investors, venture capitalists and the like willing to put their money into promising companies working on environmental sustainability. However, that model cuts out the vast majority of people--the very people who are going to design, construct, and support a green economy. Much as President Obama was elected thanks to millions of small donations that, in aggregate, both raised a lot of money and engaged a lot of people, ensuring that millions of Americans can invest in green is the only way to usher in an era of prosperity, social equality and sustainability. Otherwise, we'll still have a paradigm in which the wealthy few (who probably made some of their wealth thanks to the "gray" economy) now get to enrich themselves even further on the green economy, while the vast majority of the populace is left out of the equation--financially as well as politically.

More on Green Jobs
Green Jobs Can Bail Out the Environment, Rebuild Communities
Seven Green Jobs That Will Make You Rich
New York Times on Green Collar Jobs
Green Jobs--The Future is Now
Green Jobs Advocate to Head Labor Department

More on Green Investing
Bjork Gets Her Own Sustainable Investment Fund
Clean Tech Investors Say To Industry There is No Bubble
China Launches $3 Billion Fund For Clean Projects
Using a Venture Capital Model to Fund "Conservation Entrepreneurs"

Comments

[sheila]

Let's start by putting $100 billion dollars into AB 811 loans for ratepayers who want to install rooftop solar and microwind (or increase efficiency) on their property, which loans are guaranteed for repayment because they are an assessment on property taxes.

i am so sick of hearing about how this Big Energy creep or that Big Energy mercenary wants to slaughter our desert ecosystems for remote "clean" (ha!) energy generation, which, not coincidentally, will re-entrench monopolies and destabilize the grid at the exact moment we could be generating 100% of the US' electricity needs on existing rooftops (see DOE if you don't believe me).

AB 811 loans, coupled with feed in tariffs will: boost property values (as opposed to destroying them); create guaranteed income streams for bondholders, property owners who conserve energy, manufacturers, installers, and all the admin people in this business. they will not destroy millions of acres of wilderness, increase GHG emissions, force families from their homes, and cause pricing and supply manipulations like Big Solar, Big Wind, Big Transmission and friends.

do we want to win or lose? if we want to win, local, point of use solutions are the only economically and ecologically sane path.