Politics: Glaring omission in climate policy: Community financial institutions

Heating up: World leaders take center stage at climate talks

  Heating up: World leaders take center stage at climate talks GLASGOW, Scotland (AP) — It’s time for more than 130 world leaders to feel the heat. Over 130 heads of state will traipse to the podium Monday and Tuesday at crucial international climate talks in Scotland and talk about what their country is going to do about the threat of global warming. From U.S. President Joe Biden to Seychelles President Wavel John Charles Ramkalawan, they are expected to say how their nation will do its utmost, challenge colleagues to do more and generally turn up the rhetoric. © Provided by Associated Press People walk past a wall with a message on climate eduction at the COP26 U.N. Climate Summit in Glasgow, Scotland, Sunday, Oct. 31, 2021.

coronavirus medical journals editors letter climate change public health threat government action hot temperatures © Kevin Frayer/Getty Images coronavirus medical journals editors letter climate change public health threat government action hot temperatures

UN climate conference COP26 is in week two, and already some glaring omissions are becoming clear. Climate change policymakers and climate finance initiatives continue to overlook the very lenders that are needed for the global transition to a low-carbon economy that works for all.

In the past three decades, only one president used his presidential speech to Congress to call on a social and environmental focus for banking. President Bill Clinton told a joint session of Congress in 1993, "with a new network of community development banks and $1 billion to make the dream of enterprise zones real, we propose to bring new hope and new jobs to storefronts and factories from south Boston to south Texas to south central Los Angeles."

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More than 25 years later, we are still having the same conversations and banks continue to fail the climate and communities.

Despite large U.S. banks being tiny compared to other global banks, such as those headquartered in China, they disproportionately bankroll fossil fuels. It was these same banks that gave preferential treatment to their wealthiest clients and large businesses through the Paycheck Protection Program that emerged to help businesses sustain the economy.

It wasn't until credit unions, community banks and online lenders were added to the Small Business Administration's roster of financial institutions that the loans flowed to those in most need. The importance of the community-focused lenders such as community development financial institutions (CDFIs) became so apparent that when the PPP portal reopened at the beginning of 2021, CDFIs were granted an exclusive access period. As of June 2021, these institutions have deployed close to $15 billion in PPP loans.

Biden heads into international climate negotiations with a weak hand

  Biden heads into international climate negotiations with a weak hand American politics are undermining the global fight against climate change — again.It’s almost exactly a year since the Trump administration officially, though temporarily, withdrew the US from the 2015 Paris climate agreement. Since Biden’s inauguration, the new administration has had nine months to piece together a plan for the climate negotiations in Glasgow that shows the US is making concrete progress on its domestic pollution.

The real economy banks and credit unions that serve communities have been the saving grace of the COVID-19 pandemic, a crisis that can be considered a fire drill for what is to come if climate change is left unabated. With nearly 10,000 community banks and credit unions, these institutions are leading. For example, over 300 community development credit unions have $101 billion in loans outstanding to 7 million low-income workers and small businesses in communities of color across the country.

Since November 2020, the Inclusiv Center for Resiliency and Clean Energy has offered a Solar Lending Professional Training and Certificate Program that trains loan officers in consumer and commercial solar lending. They have trained 125 staff members from over 55 community-based financial institutions and their research shows that 292 credit unions across the U.S. and Puerto Rico are offering or developing green loan products, having combined current assets of over $283 billion and serving over 17.3 million members.

The next front in Facebook's misinformation battle: climate change

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Despite their proven impact, the latest version of U.S. Build Back Better bill not only overlooks community-focused banks and credit unions - it disqualifies them. In the proposed Greenhouse Gas Reduction Fund, depository institutions are not eligible to receive support. Yet, it is especially because they take deposits and have connections to real people in real places through banking services offered, that these lenders are in the best position to deliver on green loans for farms, community solar, heat pumps, electric vehicles and more.

Is it surprising that policymakers would overlook the existing network of people-centered lenders? No. Only one U.S. senator holds a bank account with a CDFI and only one senator holds a bank account with an MDI, according to Senate Financial Disclosures. On the other side, over 60 percent of senators hold at least one bank account with a prominent financier of fossil fuels.

To be sure, real economy banks have traditionally suffered from drawbacks associated with a lack of economies of scale. These cons have included a limited ability to conduct transactions in foreign currencies, clunky websites and app portals and a lack of 24/7 customer service.

Developing countries make their case at COP26

  Developing countries make their case at COP26 Talking about compensation for damages from climate change has been taboo at climate talks. That’s starting to change.Pastoralists and their livestock at one of the few functioning boreholes in Marsabit County, Kenya. Community leaders organize when people and their animals can drink from the borehole, Nov. 3, 2021.

Yet, a lot has changed in the past few years, enabled by credit union-focused tech accelerators, disruptive fintech companies providing efficiency, user-friendliness and a "know your customer" offering unmatched by trillion-dollar banks, and IPOs of sustainable B-Corp certified banks.

Community-focused depository institutions provide personal attention to customers, SME know-how, local decision making and real economy growth that supports communities. Coalitions like BankForGood.org, the Global Alliance for Banking on Values, and B-Corp certification, provide tools, transparency and accountability to ensure that these lenders are achieving real net-zero emissions, without offsets, in a way that works for people and planet.

It's past time that climate leaders, policymakers and climate financiers provide the scale of support needed for community-driven, real economy-focused, wealth-building climate finance through the depository institutions that are best positioned to deliver: community-focused banks and credit unions.

Marilyn Waite is the managing director of the Climate Finance Fund, an independent platform supported by the William and Flora Hewlett Foundation and hosted by the European Climate Foundation.

Can America prevent a global warming cold war? .
There is a glaring geopolitical disparity in climate action between democracies and dictatorships.Yet, the climate crisis doesn't permit the luxury of time. Leading science finds that to limit devastating near-term climate impacts, and reduce risks of runaway warming, China especially must cut its emissions as soon as possible this decade, not just in the long-term. So far, however, despite the new declaration, and climate discussions this week between President Joe Biden and Chinese President Xi Jinping, Beijing has made no such commitment. In fact, Chinese coal use just reached an all-time high.

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