The commitment of Justice40 has the potential to improve the air and water quality in low-income communities, address the disproportionate adverse impacts of pollution and reduce energy cost burden for those who have shouldered more than their fair share. Green lending to meet these goals includes loans to finance projects that lower utility bills; increase energy resiliency in the face of disasters like hurricanes, wildfires and floods; reduce air pollution; lower greenhouse gas emissions; and reduce energy or water usage. It can include offering auto loans for new or used electric vehicles, small loans to help people purchase energy efficient appliances and take advantage of the IRA's tax credits, or loans to fund the installation of efficient heating and cooling systems, like heat pumps.

Helping members buy a car to get to work or school, financing appliance or other home system purchases for homeowners who can't afford to pay cash up front, or making a home improvement loan are familiar to all credit unions. Applying a green lens to all credit union lending can help attract new members, as typically 80-90% of credit union green loan borrowers are new credit union members, and diversify loan portfolios with high performing loans. Green lending can also improve credit unions' reputations in their communities as many people appreciate their financial institutions supporting sustainability and helping small businesses, like contractors that provide energy efficiency retrofits, grow.

More and more credit unions are developing green lending programs. Inclusiv's Center for Resiliency and Clean Energy, in partnership with the University of New Hampshire Carsey School of Public Policy Center for Impact Finance, has trained 170 community-based financial institutions in green lending in the last two years and is expanding its training programs to keep up with growing demand. And our research has found that there are already 338 credit unions that offer or are building dedicated green lending products. These credit unions serve more than 20 million members, and a sample of just 30 credit unions reported investing a cumulative $1 billion in green projects over the last three years, a number that is poised to grow exponentially with the implantation of the Fund.

The Greenhouse Gas Reduction Fund's investments in green lending and the IRA's tax credits have the potential to benefit credit union members living in all areas, from rural to urban, and those at all income levels. However, not all households are starting on equal footing. Decades of disinvestment and redlining have resulted in many communities of color facing persistent economic inequality, higher summer temperatures, heat risk and increased climate risk. At the same time, people of color face significant barriers when trying to access safe and affordable financial services – from bank branch redlining to wealth-stripping predatory lending. These inequitable patterns hold true for energy costs as well: Black households spend 43% more of their income on energy costs than white households, while Hispanic households spend 20% more, according to the American Council for an Energy-Efficient Economy.

Credit unions are well situated to help the Greenhouse Gas Reduction Fund meet its Justice40 goals. All credit unions are member owned and governed, and exist to meet the savings and credit needs of the communities they serve; community development credit unions expand on this work to create economic opportunity and support their members who are often low-income, immigrants and/or people of color in building assets. Indeed, low-income credit union members themselves are collectively the largest social impact investor, as billions of dollars in member deposits in community development credit unions are leveraged into loans that spur development in their communities. The Greenhouse Gas Reduction Fund and the IRA's tax credits can support credit unions in fulfilling their mission of financial inclusion while also creating broader community benefits by reducing pollution, catalyzing the development of green jobs, and helping people update their homes to save money on utility bills and increase energy resiliency in the face of future disasters.

Given the clear alignment between the goals of the Greenhouse Gas Reduction Fund and the credit union movement's long history of serving communities that have been excluded from the mainstream financial system, the Environmental Protection Agency should ensure that the Fund program rules and guidelines prioritize lenders, like credit unions, that are inclusive, diverse and accountable to the communities most negatively impacted by pollution and climate change.

Neda Arabshahi

Neda Arabshahi Vice President, Inclusiv Center for Resiliency and Clean Energy New York, N.Y.