Highlights From Heartland's Sustainable Finance Hub's Deep Dive

March 25, 2021

Highlights from Heartland's Sustainable Finance Hub's Deep Dive

Kristen Estell, Heartland Capital Strategies

The mission of this virtual meeting (held March 5th) was to mobilize a new wave of sustainable finance opportunities in the four-state (Western Pennsylvania, Southern Ohio, West Virginia, and Kentucky) Industrial/Appalachian region in alignment with the ReImagine Appalachia’s policy blueprint and the Marshall Plan for Middle America. Building on Heartland’s 2019 Steel Cities Capital Roundtable, we assembled sustainable investment and responsible contractor policies, models, and practices for this region, long impacted by boom-bust deindustrialization, resource depletion, and high levels of poverty, both rural and urban.

The Heartland Network originally proposed the Sustainable Investment Hub to foster workers’ capital partnerships among cities, pension funds, and the private sector to reinvest in communities left behind. “Sustainable investment” generally refers to the process of taking due account of environmental, social, and governance (ESG) considerations in investment decision-making, leading to increased investments in longer-term and sustainable investments. Locally-targeted ESG investments are sometimes called economically-targeted investments (ETIs).

To emphasize a circular economy systems approach, we have worked to build a five-legged table with the drivers of economic and sustainable development, including cities and regional institutions; developers, contractors; manufacturers and suppliers; unions and worker-directed transition groups; and sustainable finance entities (pensions, responsible fund managers, etc.). (See figure above)

The Hub concept aims to facilitate the exchange of best practices, encourage self-organized investment standards, and foster city, state, and national ESG and ETI policy implementation models. The most practical outcome is to establish a clearinghouse for clean economy manufacturing, energy, transportation, and affordable housing projects. Heartland’s Partners will engage with pension funds, the labor movement, state treasurers, environmental and other stakeholders to implement these components.

See this week’s Expresso for some highlights from the event and where we plan to go from here.

Retirement Plans Can Help Save the World

-But Not on Their Own

David Keto, Managing Principal SRI Group

A mobilization of public and private capital on a scale not seen in the United States since the 1930s and 1940s is necessary to meet the challenge of the climate crisis.

There is a transcendent social good to be achieved – avoiding the worst catastrophes of global warming. Moreover, overall energy costs as a share of GDP may actually go down with a more efficient, decarbonized economy. But as in the Roosevelt era, private capital will not play the decisive role it must in the time available unless part of the risk of the necessary long-term investment is shared by the federal government and, essentially, borne by the entire society.

In particular, the US retirement system has the necessary scale to play a leading role in transitioning the economy to a decarbonized future and, further, has the need for stable, secure, long-term returns. But a federal risk-sharing role will be required to enable the retirement system to play this role and to help avert climate disaster. [READ MORE]

Cincinnati : A Case Study

Image: Creekwood Energy (Click HERE for Creekwood's Case Study)

What happens when cities aim to improve the environment and the economy?

We’ve reported on the great collaboration between government, unions, and private developers in Cincinnati before, but to review:

The City of Cincinnati executed a 100-megawatt power purchase agreement to build a solar array about 40 miles outside of the City that will be completed in December
This solar array will provide 35 megawatts to power city government
Also will provide 65 megawatts to serve their community choice aggregation program
130 New jobs created
There's also an energy efficiency component to this project that will touch a large majority of their city buildings
It will enable a 100% conversion to LED lights
And retrofit over 150 HVAC units moving them away from an outdated and polluting greenhouse gas coolant [READ MORE]

Why and How Do We Create a Sustainable Finance Hub?

Click HERE for more about GCM Grosvenor's conversion of The Long Ridge Energy Terminal (in Hannibal, Ohio) into a hydrogen facility.

Kristen Estell, Heartland Capital Strategies

Tom Croft, Managing Director of Heartland Capital Strategies, asked Joe Enright, Executive Director at GCM Grosvenor, to address the question of how do we actually build the architecture for sustainable finance hub? And could this vehicle could be both the medium and the message in terms of regional capital matching up to projects’ needs and renewing investment in the Ohio Valley?

Enright’s response was affirmative: “In my view, the sustainable [investment] hub, can be the preeminent sourcing channel for private capital.” He went on to describe GCM Grosvenor’s approach and history of making sustainable investments, “We believe a collaboration with union labor and key government stakeholders can unlock investment opportunities and drive quality risk adjusted returns.”

However, unlocking those opportunities is not always easy, Enright said. He has worked both in private capital and in government and observed he has seen difficulty in trying to find and source opportunities that matched investors objectives of having a positive environmental or labor impact, and governments trying to attract investors to these types of projects: “It’s disjointed. You have governments that have certain ideas, but [are] not exactly sure how to package them for institutional investors. You have institutional investors who aren’t entirely sure how to crack the nut to some of these municipalities to understand what’s possible.” [READ MORE]

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Heartland Capital Strategies fosters a "Community of Practice" for responsible economic impact investments. Heartland promotes strategic responsible investments to rebuild the rebuilt environment, renew the industrial commons, grow the clean economy, and make the boss more accountable. Inspired by the United Nations Principles for Responsible Investment (PRI), Heartland Capital Strategies (HCS) promotes investments and projects essential for revitalizing our productive economy and community prosperity.