Credit Unions and CDFIs Are Best Suited to Deliver $27 Billion Greenhouse Gas Reduction Fund to LMI and BIPOC Communities

Through the Inclusiv-University of New Hampshire Solar Lending Training and Certificate program, we have trained and built a network of 170 mission-driven community-based financial institutions that have launched green loan products or are developing green loan products. These lenders, based in 47 states, Washington DC, and Puerto Rico, have gained deep insights into how best to drive climate-friendly financing solutions in low- and moderate-income communities and communities of color. Harnessing their collective expertise, we engaged our 170-member network of green lenders in a series of focus groups and brainstorming sessions to develop detailed recommendations for the Environmental Protection Agency (EPA) on leading with equity and environmental justice in the design and implementation of the $27 billion Greenhouse Gas Reduction Fund (GHGRF) that is part of the Inflation Reduction Act. In addition to a series of oral comments and letters submitted to EPA Public Listening Sessions, on December 5, 2022, Inclusiv represented our network of green letters in an in-depth written response to the EPA’s RFI (request for information) on the design and implementation of the GHGRF. In our RFI response, we urged the EPA to:

• Prioritize resources toward high-impact green lending in low-income and historically redlined communities.
• Channel capital from the GHGRF to lender intermediaries that are inclusive, diverse, and accountable to the communities most negatively impacted by pollution and climate change.
• Develop program rules and guidelines that support Tribal communities, U.S. territories (including Puerto Rico), and CDCUs (including MDIs).
• For definitions of low-income and disadvantaged, draw upon definitions already used by government agencies like Treasury CDFI Fund in the identification of investment areas and low-income populations, and the regulators in defining minority-lending institutions.
• Take guidance from Inclusiv’s lessons learned in implementation of previous government programs (PPP, ECIP, CDCI) and encourage the EPA to develop a streamlined and short application process and minimal reporting requirements.
• Regarding leveraging the GHGRF, remember that the largest source of social impact investments come from low-income people themselves in the form of deposits in community development credit unions and banks.
• Invest in market building opportunities as well as financing activities, including financial coaching, entrepreneurial assistance, down payment assistance, loan loss reserves, infrastructure development.
• Invest in lender intermediaries that are eligible fund recipients with a proven record of accomplishment of reaching low-income and disadvantaged communities as designed to serve.
• Read our RFI response here: https://inclusiv.org/wp-content/uploads/2022/12/Inclusiv-12052022.GHGRF-RFI-for-EPA.Docket-ID-No.-EPA-HQ-OA-2022-0859.pdf