As financial institutions gain a greater understanding of the carbon impact of their borrowers, they can serve as catalysts for a transition away from fossil fuels and other carbon-intensive sectors. As a community development financial institution (CDFI) with a focus on making investments to under-resourced and rural businesses, Coastal Enterprises, Inc. (CEI) recognized this opportunity more than a decade ago when we started making solar loans to small businesses considered "unbankable" at the time in Maine’s traditional financial system.

Since those first deals, we’ve financed over 40 solar deals across Maine and New England, resulting in over 30 megawatts of developed projects. Over the last decade, our direct investment of $25 million into the solar industry has built a portfolio that generates 38 million kilowatt-hours of power each year — the equivalent of almost 27,000 metric tons of avoided CO2e. These projects have benefited small businesses, municipalities, schools and nonprofits, including businesses such as organic farms, auto mechanic shops, art galleries and hockey rinks.

"Organic and ethical practices guide our land and livestock management. It is an honor to care for the animals we work with, the land we steward, and the community we serve. Installing solar was an extension of those values," said Caitlin Frame and Andy Green, co-owners of The Milkhouse, a dairy farm and creamery. "Our installation offsets most of our power bill and generates around 70,000 kWhs annually, which replaces 80 percent of the energy needs of our growing business. Our panels are not only a sound financial investment, they also serve as a symbol to the community of our values."

CDFIs, such as CEI, are mission-driven lenders that invest in specific geographies across the United States federally designated as economically disadvantaged. CDFIs often operate on a smaller and more local scale than our traditional bank counterparts and have more flexibility to tailor investments to each borrower’s needs. As more CDFIs become familiar with the principles of carbon accounting and deepen their understanding of their portfolios, we can become better advisors to the businesses that we finance. As the old impact investing adage goes, know what you own and know why you own it!

Read the full article about CDFIs and clean energy by Linnea Patterson at GreenBiz.