United States environmental organizations are working with British-based Green Finance Institute to try and establish green banks in all major markets. The two American based NGO’s involved are the Rocky Mountain Institute and the Natural Resources Defense Council.
Green banks would help raise private investments interested in climate solutions. Green banks are financial institutions that help scale investments within that sector and do not usually operate like a traditional American bank. The uptick for this type of structure has been slow, but is beginning to gain strength as green economy solutions are becoming mainstream in Europe, even as the United States is slower to buy in.
In a press release, the Managing Director of Rocky Mountain Institute stated, "Green banks have a track record of accelerating low-carbon, climate-resilient development, and are especially well-positioned to drive green recovery programs. It is no surprise that so many countries are actively pursuing the model, which is why we are exploring a forum that would connect them with the expertise, best practices, and capital sources to succeed."
The three entities are working to design what they are calling a Green Bank Design Platform looking to give governments and financial institutions guidance in how to set up green banks that are experts in financing projects that transition to a low carbon economy. A Biden administration would be more likely to back initiatives such as this that combine the public and private sector to provide investment initiatives. The initiative plans to analyze the impact of green banks in more than thirty countries worldwide in order to see what is needed.
One of the objectives of the initiative is to help mature economies identify investment opportunities in developing countries. The funding will initially come from the Climate Works Foundation. While investment flows in ESG and socially responsible investing has been slower in the United States than in Europe and Asia, some analysts believe that will change over the next one to two years. Financial institutions in the United States have been more skeptical in believing that investments in these types of initiatives will yield strong returns.
However, given the rise in ETFs and other investment vehicles, and a new administration, the year 2021 could see a rise in Green Banks in North America.