New Incentives Boost Corporate Climate Justice Ventures

New incentives, such as tax breaks and targeted startup funding, are spurring the private sector to engage and invest in climate change mitigation initiatives in vulnerable and underrepresented communities in the U.S. and globally.

“What’s extraordinary about the climate change business world right now is how central justice is to so many business value propositions,” said Michel Gelobter, executive director of the Yale Center for Environmental Justice at the Yale School of the Environment. “There’s widespread recognition that innovation has to encompass communities at the frontlines of climate change because of how much they have to teach us, and how big a market they truly represent. We are moving from a position of remediation to a position of transformation.”

Gelobter will be moderating a panel discussion September 25  in partnership with the Yale Center for Business and the Environment (CBEY) on the intersection of business and climate justice  as part of a Climate Week NYC program series hosted by Yale Planetary Solutions.  He and other stakeholders in the field said the key drivers of the new corporate initiatives include the Inflation Reduction Act  and the Department of Energy’s Justice40 Initiative.

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“When government points the compass in a different direction and continues to point it in a different direction, businesses will follow those markets and make investments,” said Stuart DeCew, executive director of CBEY and lecturer at YSE.

Global carbon emissions reached a record high of 37.4 billion tonnes in 2023, with fossil fuels driving a 2.1% increase in energy emissions. Buy-in from businesses to reduce their own carbon emissions and deploy sustainable products and services is a vital component of reaching net-zero carbon emissions by 2050.

“The initial thought was that corporations would have a lot of trouble addressing climate justice because there’s no profit margin. But there are opportunities out there for companies to make a profit by addressing climate justice, and if the financial system recognizes an opportunity, then financial markets and private capital move very, very quickly to address that market opportunity,” Todd Cort, CBEY’s faculty co-director, said.

These ventures — which include clean energy, carbon sequestration technology, and regenerative agriculture — are helping to decarbonize the economy while addressing climate justice issues.

“We are seeing a burgeoning uptake in the market especially on the financial institutions side,” said Marilyn Waite, managing director of the Climate Finance Fund. “There is an understanding that there is innovation in places that are most impacted by climate change.”

Project developers are going to be able to tap into the IRA’s $27 billion Greenhouse Gas Reduction Fund and its National Clean Investment Fund, Clean Communities Investment Accelerator, and Solar for All programs administered by the Environmental Protection Agency.  A key aspect of the programs is the priority of mobilizing private investment in low-income and disadvantaged, rural, and Tribal communities across the country. 

“We can’t have environmentalism, without humanitarianism. So, unlocking investment in these communities will not only increase our ability to reduce greenhouse gas emissions and air pollution locally, regionally, and nationally, but it will also lift up our most vulnerable communities to be a fundamental part of the green economy that we’re trying to build,” Bryan Garcia, president and CEO of the Connecticut Green Bank, said.

Along with federal and local policy incentives, a growing number of climate justice-focused investment firms are providing financing for new initiatives, helping to ease the risk and funding gap.

Dawn Lippert ’07 MEM heads one of the nation’s leading investment organizations focused on climate deployments and climate justice.

While at YSE, Lippert worked on transitioning Hawaii’s grid to clean energy, and learned how important it was to involve communities in the energy initiatives. The experience led her to launch Elemental Excelerator, a nonprofit investor in climate technology that now has a portfolio of 150 companies and has awarded more than $80 million in funding.

Climate is not a sector. It cuts across industries — from chemicals to transportation to building materials to textiles — and low-carbon initiatives are the next industrial revolution, she noted.

“There is definitely increased interest. I think we are seeing a real willingness of CEO’s and businesses to engage on this front, but we are still in early innings,” Lippert said.

One of the challenges in this arena is that advances in climate technology are outpacing policy and financing.

“Policy is designed to move in a judicious way that deeply incorporates stakeholder input, but technology is moving really fast right now, and so how do you align those timelines?” she said.

Faculty

Gerald Torres Dolores Huerta and Wilma Mankiller Professor of Environmental Justice

Another obstacle is getting the word out about government and private investment  opportunities. One in four Americans have not heard about IRA, according to a poll by the Yale Program on Climate Change and George Mason University. 

“I think the biggest challenge for local and state governments is letting the businesses, organizations, and families know that these incentives and financing exist,” said Garcia of the Connecticut Green Bank.

Revenue opportunities, however, are not the only reasons corporations are interested in climate justice work.

“When you look at the full stakeholder picture, business climate justice actions respond to the demands of various constituencies,” said Waite of the Climate Finance Fund.

Companies are seeking to attract and retain workers who are increasingly voicing concerns about sustainability issues, Waite said.  Other factors fueling the ventures  include companies' desire to remain competitive in emerging fields such as climate mitigation and to adhere to corporate climate pledges.

Gerald Torres, professor of environmental justice at YSE, said climate justice is intersecting with a growing demand to engage the private sector in work that rectifies past harm and protects from future harm.

“It’s a way of thinking about how remediation of past environmental injustices can actually respond to the challenges that are emerging,” he said.