There’s a new opportunity to solve climate change, and it’s in our wallets. Americans from across the country are working together to save the planet while saving money using green bonds. This ”local finance revolution” channels investment in clean energy, job creation, and community enhancement in a holistic effort to address climate change. Exciting new investment strategies green our wallets for a greener world.

So what is a bond? And what makes one green?

Bonds offer individuals the opportunity to engage in collective efforts to support urgent projects or programs. Individual investors lend small amounts of money to the government (at local, state, and federal levels) by purchasing bonds, which the government uses to finance priority projects. 

Bonds were used to finance World War II as well as infrastructure projects during the 2009 financial crisis. Bearing flashy, patriotic names such as Victory Bonds or Build America Bonds, grassroots financing has demonstrated the ability to generate billions (or trillions in 2021 dollars, in the case of World War II bonds) of dollars in capital. 

This is important, because right now we need an unprecedented level of investment to scale up clean energy and fight climate change. 

Individuals can purchase green bonds, the proceeds of which are used to stimulate investment in green innovation and resilience projects. Green bonds are designed to fill gaps in private sector investment, allowing the government to step in and direct funding to the projects that need it most. Green bonds are the fruit of public-private sector partnerships, and are issued by green banks created by the government to amplify the impact of public funds by attracting private investment. 

What is a green bank and how does one work?

It’s not your typical bank with an ATM, custom pens, and lollipops. ​​Established by legislation, green banks are non-profit financial institutions that issue bonds to individual investors. Returns from green bonds are not as high as other, riskier, investments, but the bonds offer modest monetary returns with even greater social returns. 

Green banks put investors’ money to good use. Since 2011, 21 green banks have popped up across the US, generating $7 billion for clean energy projects with the support of ordinary Americans.

Connecticut is home to the US’ first green bank. Since its creation in 2011, the Connecticut Green Bank has invested nearly $300 million of public revenues to generate $1.65 billion in private investment, attracting $6.60 of private investment for every $1 invested by the Green Bank. This means that every $1 of public funding goes 6.6 times farther—opening up more funding for critical efforts. The Bank issues bonds through its website once a year, and the bonds generally sell out within a few days. Individuals purchase bonds, bond proceeds finance green projects, and investors receive returns of 2.42% in 2021.

Enough with the technical details! What do these green bonds actually do?

Proceeds from green bonds go directly to fund projects that are key to fighting climate change. These impacts look like affordable and accessible renewable energy, electric vehicle charging stations, and efficiency retrofits in buildings. Green banks work directly with local communities to ensure that funding goes to priority projects, channeling investment directly from investors to their own communities. 

The Connecticut Green Bank is a good example of what green banks can achieve. Here are some highlights:

• 46,000 low- and moderate-income homeowners have solar panels on their roofs.
• 8.9 million tons of CO2 emissions were avoided due to investment in clean energy—the equivalent of planting 134 million 10-year-old tree saplings.

I’m a college student…can I afford a green bond?

Green bonds are intended to be accessible to ordinary people, yet they are still out of reach of many at around $1000 each. Still, they represent a grassroots financing effort that is accessible not just to pension fund managers, but to a broader audience of Americans. Going forward, bonds should be made available in even smaller amounts to engage even more individuals in climate action.

How can I make my money fight climate change?

Green bonds offer us the opportunity to solve the global problem by putting our money to work, providing a decent and reliable return on investment along with a plethora of direct community benefits. 

Together, our spending decisions have the collective power to drive the clean energy revolution, boost climate resilience, and support our communities. Green wallets are one of the most promising keys to a greener future.