But much can be done to optimize the flow of financial capital to projects that take a balanced approach to enhancing our natural, human and produced capital. Governments can provide partial loan guarantees to “green” infrastructure projects or create public procurement programs that double as demonstration projects for clean technologies, both aimed at lowering private-sector risks.
The creation of government-backed green or “climate” bonds that are dedicated to building sustainable infrastructure is another promising option that can direct more financial capital to the kinds of projects that will enhance the well-being of citizens for generations to come.
One promising tool is the Property Assessed Clean Energy, or PACE, bond, which helps fund energy-efficiency retrofits and small-scale installation of renewables for homes and businesses. A municipality issues bonds and uses the money to extend low-interest loans to property owners, who can pay back the loan through their property taxes with the energy savings.
All a jurisdiction needs to do is amend legislation to empower municipalities to develop PACE programs, which ease the upfront cost burden on property owners looking to lower their environmental footprint. Several U.S. states and Canadian provinces have already made such changes, paving the way for the rest of the continent to follow.
Through a combination of improved information, carefully designed incentives, long-term infrastructure planning and investment optimization, Corporate Knights firmly believes that market failures can be corrected and the clean capitalism economy realized.
Overcoming these barriers will make us more resilient to the uncertain future that lies ahead, while at the same time securing our prosperity over the long term.
This article was originally published on Corporate Knights
Written by: Toby Heaps, co-founder and president of Corporate Knights Inc. and Tyler Hamilton, Editor-in-Chief of Corporate Knights Magazine