A new investment fund set to begin Friday hopes to cash in on the billions of dollars set aside by the government for environmentally friendly “green” projects.
The Energy Efficiency Opportunity Fund, which is expected to announce its launch today at the Clinton Global Initiative conference in New York, is a social investment fund that will finance projects like retrofitting buildings to achieve greater energy efficiency.
It also plans to invest in low-income areas, creating “green collar” jobs in the process.
The fund is sponsored by Living Cities, a consortium of foundations and financial institutions that invests capital to strengthen low-income communities, and Green for All, an advocacy group founded by Van Jones, formerly the White House’s environmental jobs “czar,” that advocates for equality and opportunity in the new green economy.
“This fund is an extension of Green For All’s commitment to build a clean-energy economy that is ripe with broad opportunity and shared prosperity for every neighborhood,” said Phaedra Ellis-Lamkins, chief executive of Green for All. “Economic recovery and economic opportunity can converge through smart investments in people, place and planet.”
The fund isn’t a charity: It plans to pay investors an annual return of 2 percent to 3 percent on their principal investment.
While that may not sound like a thrilling return, it is welcome news to banks and other investors that are required under the Community Reinvestment Act to invest in programs to help low-income areas, said Melissa Bradley-Burns, who leads Green for All’s Capital Access Program and is helping to run the fund.
For years, big banks have failed to achieve the standards set out by the act, in part because there weren’t many places for them to invest, Ms. Bradley-Burns said. This new initiative helps to fill that void, she said, adding that they have already raised $20 million for the fund from various foundations and financial institutions.
The demand for the green retrofitting comes in part from government tax credits and stimulus dollars to help make buildings more energy efficient. “Stimulus dollars have created the scale” to make the fund viable, Ms. Bradley-Burns told Dealbook.
Some of the potential first investments of the fund include a $10 million initiative to retrofit up to 5,000 low-income rental apartments and a $6 million to $10 million program that will recruit, train and place up to 1,400 low-income people in jobs related to environmental efficiency — so-called green-collar jobs.
“If you don’t build in the systems and capital structures to include low-income people, then it won’t happen,” said Ben Hecht, the chief executive of Living Cities. “We have a short window to take advantage of a huge green opportunity, and the fund provides a productive way for investors to participate and for people to benefit.”
The fund is expected to run for 10 years and is hoping to grow to as large as $100 million.