Climate Change and Impact Investments

For many, the first thing that comes to mind when thinking about investing to combat climate change is divestment from fossil fuels and investment in climate solutions. Clean Yield strives to take a holistic approach by investing in companies and funds with a variety of climate mitigation and adaptation strategies. Clean Yield’s climate change-related impact investments are grouped into the areas of Renewable Energy, Soil Restoration & Carbon Sinks, and Climate Adaptation. Across these areas, we take a particular focus on opportunities that support farmers adapting to the changing climate and investing in the health of their soil and those that provide equitable access to underserved communities in support of a just transition.

Renewable Energy +
In 2012 Clean Yield invested in SunCommon, a Vermont-based solar company that developed a successful Community Solar Array (CSA) model now widely used across the United States. CSAs give access to homeowners whose property might not be suitable for solar and provides easy entry and exit for those who might not be in a position for a long-term commitment. Today SunCommon has expanded beyond residential and community solar to commercial and small businesses as well as solar canopies, home energy storage, and solar-powered heating and cooling.

Boston-based Sunwealth is a clean-energy investment firm specializing in commercial-scale solar projects that deliver renewable clean energy to underserved communities. The firm’s goal through its Solar Impact Fund is to democratize solar by accelerating the flow of capital into an “inclusive solar market.” Projects include Dorchester, MA-based Resonant Energy’s Solar Access Program, which allows any building – regardless of the owner’s income or credit score – to host solar panels in exchange for clean power.

The New Hampshire Community Loan Fund (NHCLF) – whose Resident-Owned Community (ROC) investments have garnered national recognition – provided the financing for Mascoma Meadows, the first Resident-Owned Community in NH to go solar. The array reduced lot rents by an average of $22/month or 5%. NHCLF is currently working on its third (Stratton) and fourth (Conway) ROC solar projects.

Maine-based Coastal Enterprises Inc. (CEI) is working to expand municipal solar in Maine by taking the lead in organizing, negotiating, and documenting solar financing projects alongside interested community banks.

Self-Help Credit Union (SHCU) provides both home solar and energy efficiency loans to its members as well as commercial environmental loans to businesses for renewable energy, sustainable agriculture, ecotourism, fuel efficiency, land conservation, green building, and more. Self-Help was one of the first financial institutions to pledge to benchmark its loan portfolio to The Global Carbon Accounting Standards for the financial industry.

The Flexible Capital Fund includes a variety of investments in the renewable energy/energy efficiency space. Encore Renewable Energy recently installed the country’s first long-duration liquid-air battery and is also considering installing solar arrays at coal ash ponds in Appalachia. Vermont-based Northern Reliability develops and manufactures large and small energy storage systems across the globe. Other portfolio companies include Ceres Greens, a vertical indoor farming facility in Barre, VT, that grows greens in a sustainable way for local markets, and Grow Compost, which diverts food scraps from landfills and converts them into fertilizer.

The Vermont Community Loan Fund (VCLF) was an early investor in Northern Reliability and has a variety of initiatives to address the impact of climate change on the marginalized and lower-income communities it serves.

Wisconsin-based farmer’s cooperative Organic Valley’s community-based solar project not only helped the cooperative go 100% renewable in 2019, but increased overall solar energy use in Wisconsin by 15%. Several Organic Valley farms are also in partnership with Iroquois Valley Farmland REIT working to improve local ecosystems and benefit soil health.

Soil Restoration & Carbon Sinks
Improving soil health and increasing soil organic matter not only draw down carbon levels and help farms become net carbon sinks, these practices also help farmers adapt and provide greater resilience to weather extremes. Soils on organic farms can average 19% higher total soil organic carbon, a central component of soil organic matter, which is critical in the fight against climate change. Iroquois Valley Farmland REIT (IQVF) encourages its farmers to go beyond the USDA organic standard and manage soil as a living system applying a range of soil health approaches. With its Soil Restoration Note, IQVF not only pays investors, it also pays 0.5% into the Soil Restoration Pool. These dollars are in turn paid out directly to farmers who use the funds for soil-building projects, such as soil amending, agronomist consulting, cover crop seed, and fencing assistance.

According to The Nature Conservancy, forests in the U.S. sequester 15% of all U.S. fossil fuel emissions. The Lyme Timber Company invests in and sustainably manages lands with unique conservation values. It uses a variety of tools, including carbon sinks, to support its conservation objectives. Out of the over 1,500,000 acres in Lyme’s current and historical portfolio, 96% are (or are expected to be) permanently conserved. Lyme’s investments often fill holes in larger conserved landscapes, and their protection helps deliver vital ecosystem services, including carbon sequestration, flood control, maintenance of air quality, and soil regeneration. Lyme’s investment activities also strengthen rural economies by creating safer, better-paying, and sustainable jobs in forestry and logging.

Both CEI and Fresh Source Capital have invested in Atlantic Sea Farms, a Maine-based, woman-run company that works with local lobster fishermen and fisherwomen to grow and harvest kelp during their offseason. Kelp farming has many environmental benefits, including removing carbon from the water column, absorbing solar energy, and providing habitat for other marine species. Kelp farming also helps fishermen and fisherwomen diversify their income sources as climate change causes the Gulf of Maine to heat up, pushing lobster populations farther north.

Climate Refugees and Climate Change Adaptation
Extreme weather events, combined with drought, water scarcity, or flooding, have forced many smallholder farmers to flee their countries in search of a livelihood to support their families. Many of these migrants from Latin America are headed to the U.S. border, contributing to the border crisis.

Both Equal Exchange and Root Capital are working with farmers in Latin America and Africa on climate resiliency strategies. Ninety-five percent of Root Capital’s clients work in environmental hotspots – regions facing severe climate risk and/or experiencing significant biodiversity loss, soil degradation, or water scarcity. Root Capital initiatives include technical assistance on climate-smart agricultural practices to female cooperative members through its Women in Agriculture Initiative. You can learn more from Root Capital’s recent webinar on its Climate Resiliency Roadmap. Equal Exchange helps cacao farmers adapt to the effects of climate change and mitigate its effects both locally and globally through reforestation projects and soil restoration techniques.

One of Calvert Impact Capital’s recent investments was the Forest Resilience Bond (FRB), a public-private partnership to fund the upfront costs of forest restoration in a key California watershed. By investing in restoration projects that protect forest health, the FRB seeks to mitigate the risk of catastrophic wildfires like those we are seeing right now in California, while also protecting water resources, avoiding carbon emissions, and creating rural jobs.

For these strategies to become part of the climate solution requires significant investment of flexible and patient capital. Investment also needs to be made in technical assistance, financial incentives, policy, and research. To date, most investment dollars have gone to large-scale projects benefiting corporations and wealthy communities. Now is the time to focus on underserved communities, as the fight for environmental justice is embedded in the fight for social and racial justice.