Climate change and environmental damage due to human activity is now an accepted fact. Thankfully, investors and financial organizations are finally recognizing the importance of changing our ways and investing in sustainable technologies. This type of green financing is allowing them to recognize the environmental and financial benefits of these new technologies.
Today we’ll cover how green financing can be used to encourage sustainable development on the company and individual scale.
What is Green Financing?
Green financing at its most basic is the use of public money, personal loans, and micro-lending to support sustainability. The goal of green financing is to encourage change in favor of environmentally friendly actions.
It can be everything from large scale investment into tools to fight climate change all the way down to small personal online loans next day for consumers. This allows everyone to do their part to help promote sustainability.
Most green loans are tied to specific metrics. They can cover everything from large companies to the type of washing machine you purchase.
How Green Financing Works
Like any financial product there’s a huge range of green financing options. One of the most prominent examples is sustainability-focused venture capital firms.
These VC firms search for early-stage startups with a focus on the environment. They combine their financial goals together with their vision of what the planet should be.
By far the largest subset of their focus is on reducing our dependence on fossil fuels and fighting emissions. On the individual scale there’s lots of focus on lowering your carbon footprint.
Lots of loans are specifically put in place for people to buy green friendly products.
What Qualifies as Sustainable Projects
There are tons of early to middle stage startups with a sustainability focus. These are all key examples of large scale green financing.
Many of the projects are receiving the most funding focus on clean power and the use of renewables. Think electric vehicles, charging stations, battery enhancements, solar and wind energy, etc.
Another major sector is advancements in water purification, desalination, and ocean cleanup. These also include interesting projects like advanced agriculture and reducing the overall reliance on irrigation.
For individuals most green financing is related to their home or vehicle. There are lots of online loans same day available for things like energy efficient appliances or vehicles. These often combine with tax credits as a way to encourage people to reduce their overall energy consumption habits.
One of the biggest uses of green financing by individuals is to buy an electric or hybrid car. This reduces the often high price of these advanced vehicles and makes it more attractive to drive one.
Another big one is to finance green renovations to your home. If you want to improve your home’s insulation or add on a solar power system there’s ample funding available. These often combine with tax breaks and utility buyback programs to make it an even more attractive option.
Turnaround Time for Financing Decisions
With venture capital the around time for high-quality opportunities is often very rapid. If you have a great model for your business and can show a clear return potential they’ll often respond within just a few days.
For green financing other factors come into play. Most green venture capital funds have very specific requirements on what they’re looking for. Do your research before contacting them and make sure you represent what they’re looking for.
How much you should reasonably expect to receive depends on how far along in the process you are. Seed stage companies generally receive less than $1 million. Series A and Series B can receive more but still much less than more mature companies with proven revenue and a customer base.
For personal green loans the turnaround is often much faster. Many companies offer instant or at least same day approval for well qualified borrowers. This gives you the freedom to begin making your plans immediately after receiving funds.
Make Changes Today
The clock is running down on our ability to head off the effects of climate change. Green financing is one of the best ways to make changes in the world and your life. It funds the technology that may save humanity and allows individuals to make changes to their home and car to reduce their own carbon footprint.
Recommended Reading: The Rising Appeal of ESG Investments
2 thoughts on “Green Financing as a Tool for Sustainable Development”