Program Related Investments: Alternative Sources of Green Bank Investment Capital in the United States

Green Banks have traditionally used public sector capital to leverage increased private sector investment. The collective capital formation driven by that intersection has been impressive, but the pace of climate change is driving the need to expand the investment capital for Green Banks in the United States. Impact capital represents a natural, “third leg” of the capital stool for driving greater climate investments at Green Banks in the US.

The emergence of impact investing by philanthropic foundations, in particular their use of Program Related Investments (PRI), is proving fertile ground for expanding the pool of capital to a host of socially-oriented endeavors. This paper uncovers evidence that these green shoots of investment are starting to take hold within Green Bank activities. Drawing on conversations with foundations and selected case studies of existing Green Bank PRIs among Green Bank Network (GBN) members and similar entities in the US, this paper aims to highlight potential practices and financial structures that can catalyze greater climate-related investment through Green Banks.

This paper covers examples of Green Banks acting as effective and capable intermediaries of PRI capital. The PRI capital deployed to date, however, represents only the beginning of what could be possible. With continued innovation in and collaboration on financial structures, along with maturation in the overall PRI space, Green Banks are well positioned to scale PRI investments in the future.