Green banks use traditional financing tools like leverage and credit enhancement to advance a mission-driven goal to lower greenhouse gas emissions and accelerate the transition.

This approach is innovative because traditional financing mechanisms are used to create a flexible tool that can address the systematic barriers that prevent us from strategically moving forward with a clean energy transition.

Think about the “underwriter” at a bank, to avoid profit-losses, they will either approve or deny the loan application depending on credit history, income, and any outstanding debts, to determine whether they want to take on that liability in case of default. Since green banks are mission-driven, they will use underwriting as a tool to take on the risk and make lending possible, not determine whether they should. 

For example, Florida’s CDFI non-profit green bank (SELF), developed a targeted financing program called ‘Energize St. Lucie Financing Program’ which makes lending accessible in critically impacted regions. Instead of using an applicant's credit score to determine their ability to pay, they use credit enhancement and utility bills to overcome the upfront costs, high-interest rates, and creditworthiness of implementing energy-saving, renewable energy, and resilience projects.