Project Finance Impact Investing with Raise Green

By Nadia Douglas, Jackson Enright, Chad Frieder, Daniela Shuman, Matthew Smith

Abstract

Interest in impact investing has grown significantly in recent years, yet individual retail investors have somewhat limited options when seeking investment opportunities with transparent and verifiable impact. Raise Green, a Regulation Crowdfunding startup in the ESG space, stands out as a prospective solution to this problem through providing project finance investment opportunities in climate-focused projects, including solar power and energy efficiency improvements, on their regulation crowdfunding marketplace to sell private securities. In this paper, we look at the recent growth of the regulation crowdfunding industry as a sector and quantify how Raise Green’s impact-verified project finance opportunities differ from industry leaders in the regulation crowdfunding sector, such as Startengine. We also compare Raise Green investment opportunities with that of popular impact investing opportunities on the public market, including ESG and clean energy focused exchange traded funds, noting the differences in volatility in public investments as well as complexity of understanding ESG ratings and tracing impact of individual investments. Lastly, we summarize potential environmental and social benefits of investing in Raise Green projects, including addressing community sentiments for climate action and adding resilience towards the global climate system as well as communities in need.

What is the current state of regulation crowdfunding, and how is it different from donation-based crowdfunding?

Regulation crowdfunding (also known as Reg CF) marks the expansion of private equity markets to all investors as well as the creation of a novel source of capital for companies in those markets. Passed in 2012 as part of the JOBS Act, Reg CF is the first class of fundraising to allow non-accredited investors (i.e. individuals with net worths below $1 million) to invest in early-stage private companies. While previous regulations allowed companies to fundraise from non-accredited investors, these campaigns were restricted to reward-based fundraising. On reward-based fundraising platforms like Kickstarter and GoFundMe, individuals could not invest in a company, but rather donate in exchange for prizes like t-shirts or products. The values of these prizes typically corresponded to the size of the donation made. In contrast to these flat rewards, Reg CF allows investors to have a stake in the success or failure of a company, giving them unprecedented access to the highly lucrative (and risky) upside potential of startups.

Since it went into effect in 2016, the Reg CF market has undergone tremendous growth. In 2020, Reg CF raised $239.4 million (77.6% increase from 2019) from over 150,000 investors (75% increase from 2019). The expansion of the Reg CF market has meant the emergence of many new platforms to connect investors to companies. While at least 62 Reg CF platforms exist on the internet today, three major platforms dominate the Reg CF market: WeFunder, StartEngine, and Republic. Together, these platforms accounted for approximately 82% of the total capital raised via Reg CF in 2020. Due to their significant market share, these companies are largely representative of trends in the crowdfunding landscape.

For investors, WeFunder, StartEngine, and Republic bring some of the ease and trustworthiness of investing in public stocks to private startup markets. In addition to providing a simple, digital interface for investing, all three platforms also boast low acceptance rates on investment offerings. Ranging from 1% to 5%, these acceptance rates stress the high level of due diligence with which the major platforms screen companies seeking to fundraise on their sites. This instills confidence in investors about the legitimacy and reliability of offerings.

For startups seeking to fundraise, WeFunder, StartEngine, and Republic offer unprecedented access to capital, especially for traditionally underfunded groups. Historically, venture capital (VC) firms have been based in major cities. As a result, most of their funding has also gone to these areas, with 77.6% of their investments going to the 10 largest cities. These firms also account for the vast majority of startup funding. In 2020, US VC firms raised a record $69.1 billion, nearly 300 times as much as Reg CF. For these reasons, it has been very difficult for startups outside of technological hubs like San Francisco to raise capital. When Reg CF funding was legalized, many hailed it as the democratization of startup funding. Capital could now come from anyone in the US, potentially making it easier for startups outside of large cities to attract investors. However, many experts argued that this would not be the case. Instead, the “crowd” would follow larger, established investors, leading to even more money going to big cities. Data from Republic seems to suggest that these experts were wrong. Only 50.8% of capital raised in the 85 active or recently active offerings went to companies based within 20 miles of the 10 largest cities (at time of writing this). This marks a significant decrease in cash flow to these major hubs compared to VC firms, showing that Reg CF is increasing access to capital for underfunded areas.

The fee structures implemented by WeFunder, StartEngine, and Republic also benefit underfunded startups. Rather than charge an upfront fixed fee for their services, which many startups can’t afford, the platforms take a percentage of the capital successfully raised (between 6% and 7.5%). They sometimes also take equity in the company (usually around 2%). Raise Gree, the Reg CF startup that is the focus of this paper, take similar raise fees (approximately 5%) and have not taken equity percentages in the handful of raised projects to date in 2021. Raise Green takes the aforementioned efforts one step further by directing capital to a particularly underfunded sector: green energy projects. The severity of this lack of funding is highlighted by the recent infrastructure proposal made by President Joe Biden, which would allocate hundreds of billions of dollars to green energy projects.

While Raise Green comprises a relatively small share of the Reg CF market in 2021, it offers investment opportunities not found on the major platforms. For one, Raise Green has a unique focus on investing in environmentally-related projects. 100% of offerings on the site are environmentally-focused, compared to 11% (17 out of 149) on StartEngine and 12% (10 out of 85) on Republic (at time of writing this). Furthermore, the structure of investments on Raise Green differ from other platforms. On most platforms, companies offer equity in exchange for capital which only yields profits to investors if the company is acquired privately or has an initial public offering (IPO) on a stock exchange. Additionally, returns from these events are highly uncertain since the value of a private company is difficult to assess. In contrast, Raise Green offerings pay back investors with interest over a predetermined payment schedule. Because of this difference in the financial structure of offerings, investments on Raise Green may stand out as far more predictable to investors. Any data which Raise Green can disclose to potential investors to support this image could help solidify a niche role for the platform in the Reg CF.

In addition to providing unique opportunities for investors, Raise Green matches industry-standards in platform performance. For one, companies crowdfunding on Raise Green do not suffer from a decreased ability to raise funds. On average in 2020, companies fundraising with Reg CF collected $308,978 with 63.7% of offerings succeeding. Similarly, current Raise Green offerings have an average raise of $238,900 with 100% successfully meeting their target raise (at time of writing this). Furthermore, campaigns on Raise Green are just as accessible to investors as those found on other sites. Campaigns on StartEngine typically have a minimum required investment of $500 and campaigns on Republic, a platform known for its lower minimums, usually range from $50 to $250. In comparison, Raise Green’s current offerings have an only slightly higher average minimum required investment of $767, with the notable recent addition of a campaign with a minimum investment of $100.

Recent legislation changes have been introduced which affect the future of both Raise Green and the overall Reg CF market. The original Reg CF regulations in the JOBS Act limited companies to raising $1.07 million in a 12-month period. Additionally, both accredited and non-accredited investors were restricted in the amount of money they could invest in Reg CF. As of March 15th, 2021, these limitations have been significantly reduced. Now, companies can raise up to $5 million in a 12-month period, accredited investors have no restrictions on investment, and non-accredited investors enjoy much looser restrictions. Furthermore, companies can now gauge the interest of potential investors prior to launching a campaign, a practice that was previously prohibited. Together, these changes should attract more companies, investors, and capital to the Reg CF market and Raise Green.

What is project finance, and how do projects on Raise Green differ from investments on other crowdfunding platforms?

Project finance is a way for a company to create a project without exposing itself to a possible bankruptcy and protecting its other assets. In this form of finance, lenders loan money for the development of a project based on risk and future cash flows, and lenders to a project have no recourse or only limited recourse to the parent company that sponsors the project. Non-recourse means that the lender can not access the capital or assets of the parent company. In terms of structure, a company who wants to create a project sets up a subsidiary or seed company that will build the project. The parent company will own almost all of the equity in the subsidiary and run day-day operations, however, if the subsidiary goes bankrupt, the parent will not be responsible for repaying any of the debt. This is important in new and emerging markets because it allows companies, the issuer, to create projects without necessarily fearing that if the project fails their entire company will be terminated. All in all, as explained by Benjamin C. Esty of Harvard Business School, project finance permits risk contamination. “Whereas diversification can be costly, specialization — financing assets separately through project companies — limits the amount of collateral damage a failing investment can impose on a sponsoring firm, and prevents sub-optimal investment strategies.” Therefore, project finance, and more specifically specialization, provides an incentive for companies to start new projects.

Project finance has proven to be pivotal for project development in new and emerging markets because participants in project finance rely on agreements to guarantee long term growth of individual projects. Furthermore, project finance offers investors more predictable cash flows as opposed to other forms of financing. The advantages project finance offers the sustainable energy industry are similar to those it provided for the conventional energy industry in the 1980s. That is, new projects do not have established revenue streams and capital abilities. As a result, project finance is uniquely positioned to benefit renewable energy projects because it gives companies the opportunity to make new investments which will eventually lead to a substantial amount of growth for the sustainability industry. According to Leslie Hodge in her article, How to Value a Solar Development Pipeline, Part 1, due to recent market maturity, there are rarely opportunities for double digit margins in the solar industry. As a result, investors are now looking to invest early in the project process in order to increase yields. The project finance structure allows for these early investments. Furthermore, project finance allows smaller projects to be funded that would not have ordinarily received funding from typical renewable energy companies because “participants often [rely] on guarantees, long-term off-take or purchase agreements, or other contractual relationships with the host sovereign or its commercial appendages to ensure the long-term viability of individual projects.” In order to facilitate the development of high risk projects in developing industries, multilateral agencies have provided credit support to allow project financing to be secured which is especially important for investors and allows these small projects to gather funding.

To further understand project finance, it is important to break down the terms of a project finance investment. This can be seen through the BlocPower investment on Raise Green. The first component is that the Company, BlocPower Energy Services 3 (BPES3), was created as a wholly-owned subsidiary of BlocPower LLC, on January 4, 2021. This describes that the company an investor would invest in on Raise Green’s marketplace is a subsidiary of the parent company BlocPower. In this case, the parent company, BlocPower LLC, owns the assets and is not responsible for the liabilities of BlocPower Energy Services 3. Next, the listing describes that $100,000 in cash and two in progress projects were transferred into the seed company from parent BlocPower LLC. This explains what makes up the seed company; BlocPower LLC took $100,000 and cash and two projects from the parent company into the subsidiary company. Investing in the subsidiary may appeal to investors because the investment goes directly to the projects within BlocPower Energy Services 3. After that, it describes that the Company plans to put all the funds it raises to work with project installations within 12 months. Essentially, BlocPower LLC will only raise money at the subsidiary level (BlocPower Energy Services 3), and do installations at the subsidiary level.

As a result of BlocPower LLC directing all investments to BlocPower Energy Services 3, each individual investment will have environmental impact because the investment flows directly into installations. Furthermore, if the project goes under, BlocPower will not be at risk of bankruptcy because the liabilities are contained to the two projects in the subsidiary. Finally, the listing affirms that all of its projects are expected to be revenue producing within the following 12 months and the company expects to sustain itself and meet its debt service obligations whether it raises the target 25K goal or up to 1 million maximum.

In contrast, on StartEngine, another equity crowdfunding platform, most of the investments are equity offerings in the parent company. This is a result of the investments being in single product companies. Although not a sustainable focused company, this can be seen by analyzing Knightscope’s listing on StartEngine. Knightscope builds autonomous security robots and has raised $16,081,140 on StartEngine. On Knightscope’s offering circular dated October 21, 2020, there is a breakdown of the use of proceeds for an investment. Most notable is that approximately $9,000,000 of the proceeds, which represents approximately 36% of net proceeds, will be used for general corporate and business purposes (SG&A), a portion of which may be used to pay employee and executive compensation. Therefore, it is likely that an investor does not invest in the project directly but rather the operations of a company which, when it comes to sustainability, may not be as environmentally impactful. After contrasting the Blocpower and Knightscope offerings it is more clear why project finance, and more specifically Raise Green, is suitable for the sustainable energy industry.

What does it mean to own a stake in a Raise Green project?

A stake in a Raise Green project has a greater impact than a typical investment. Through Raise Green, investors contribute to underfunded projects and a range of communities while diversifying their investment portfolio. This is facilitated by the platform; through uplifting projects with high additionality that are focused on local environmental impact, investments on Raise Green create tangible results and returns.

A company’s additionality rating determines how likely a company would acquire necessary investments on its own. A high level of additionality means a company’s likelihood of achieving this is low for potential investments. This increases the value of each investment received. Due to the decentralized nature of project finance, companies create smaller firms to support and manage projects. This smaller size contributes to the high levels of additionality we see in Raise Green projects; your investment drastically advances their goal. In this case, your investment moves a project closer toward its final product. For example, say there is a solar project listing on Raise Green. Because the projects on Raise Green have high levels of additionality, each investment moves this project closer to its goal of converting communities to solar energy. Investors may want to know how secure this investment is, however.

Raise Green, like similar platforms, cannot guarantee the security of an investment. However, the risk incurred by a project is less than those incurred in a corporate-financed, or traditional, investment. Due to the structure of project finance, the risk of an investment is shared amongst the pool of investors, debtholders and the firm itself, reducing a single actor’s possible distress costs, such as those incurred through the management of the investment by other actors. This means your risk is only as much as your investment. Though the investor may take on more risk due to the relative infancy of the project companies, the financial and environmental impact that can be achieved is far greater. Through an investment, measurable impact is being made.

This impact is trackable and reported on by the companies creating projects on Raise Green. For example, under the Blocpower Energy Services 3 listing in the documents section, Blocpower has provided a memorandum detailing how they measure and track the impact of their projects. This is done through the International Performance Measurement and Verification Protocol (IPMVP) which is used by the company. Through “energy conservation measures” (ECMs), the protocol’s metric of measurement, the company can monitor the efficiency levels of “energy efficiency, water efficiency, and renewable energy projects” (Blocpower Energy Services LLC). This tracking is monitored by the engineering department of Blocpower. This document also describes risks associated with the investment, described by the project’s parent company.. This transparency is central in Raise Green and its listings.

Raise Green is dedicated to providing companies focused on sustainable projects a space to gain investors. Some projects, like the Blocpower listing described above, are focused on sustainable energy and greener infrastructure. To ensure these outcomes, transparency is required between projects, the Raise Green platform and investors. To ensure this transparency, listings in the Raise Green Marketplace have outlined exactly what and where your investment is going. For example, the Blocpower Energy Services 3 listing demonstrates the percentage of the offering going to new projects, environmental upgrades and Blocpower’s operating fees. Only six percent of the maximum offering will go toward company fees, and the rest of the million dollar maximum offering will go directly toward the projects and improvements the company is supporting. Continually, Blocpower will put all funds raised into project installations within 12 months. This use of investment is not guaranteed in other investments, such as exchange-traded funds (ETF); an ETF serves as a middleman between an investor and their investments by investing in a group of publicly traded companies. There is a type of ETF known as energy, social and governance (ESG) ETFs which focus on socially responsible companies; however, they provide limited transparency in terms of how and where an investment is going to be spent. As outlined above, Raise Green listings are explicit in how the investment will be used. The impact and level of additionality in typical ETFs can be difficult to quantify; however, impact is tracked clearly by Raise Green listings. Along with greater impact, project finance has arisen as a key factor in infrastructure development over the last two decades. Why?

According to Benjamin Etsy at Harvard Business School, “Structure matters”; “project finance is […] one of the most important financing vehicles for investments in the natural resources and infrastructure sectors”. Today, with environmental objectives like those outlined in President Biden’s $2.5 trillion infrastructure plan, environmental projects, such as the listings on Raise Green, will rise in popularity and necessity. Raise Green investments also provide diversification for an investor’s portfolio due to its separation from the public market, which is projected to increase in volatility as the private market, particularly project finance investment, rises over the next decade. With the rise of the private market coupled with a societal shift toward environmentalism, Raise Green projects provide an impactful, transparent and timely investment for investors.

What are the current alternative options to invest in environmentally impactful companies or projects?

The growing interest in impactful investing surrounding social and environmental issues is clear, with as many as 84% of individuals interested in investing towards social and environmental change as of 2018. This begs the question: how do these investors evaluate options and measure potential impact in a complicated landscape of impact investing options? Our research shows that investments on Raise Green can stand out as a more direct, simple, and locally impactful investment when compared to particular alternatives, such as energy, social and governance (ESG) focused exchange-traded funds (ETFs) and clean energy ETFs.

Investing in an ESG ETF can be a complex and daunting process, potentially leading a retail investor to question why any individual company qualifies to be included in such an ETF, or what actually determines an ESG rating. To clarify, an ESG ETF is when a mutual fund invests in a number of specific publicly traded companies, in this case, companies with high ESG scores. Then, an investor will invest in a group of publicly traded companies held by the mutual fund for a specific ETF. On the other hand, on Raise Green, investors have the ability to invest directly into sustainable projects and investors know how their investment will be used by a company. As a result, investors are more informed on their direct impact because their investment goes directly to the company and not to a massive list of companies. Let us compare some of the basic numbers and financials for two popular ESG ETFs: iShares MSCI KLD 400 Social ETF (DSI) and Vanguard ESG U.S. Stock ETF (ESGV).

The iShares ESG ETF (DSI) has 1.9 billion in net assets, 38 million in shares outstanding, and 404 holdings. Vanguard’s ESG ETF (ESGV) is even bigger with net assets totaling 3.5 billion and 1,459 holdings. On the DSI ETF, almost all of the companies are massively traded public companies. For example, Alphabet has a fund weight of 3.2 percent. As a result of Alphabet’s scale, even if only 1.53 percent of its revenues come from products or services that help energy consumption, the company still has a relatively high ESG score. Furthemore, ESGV’s top three holdings are Apple, Microsoft, and Amazon. These three companies are three of the four largest companies on the stock market in terms of market capitalization or market cap. Therefore, an individual investor seeking impact outside of the traditional top S&P 500 companies may be being misled, as investing in a fund like ESGV is significantly swayed by the incumbent technology big hitters in the market. Moreover, an investor seeking additive impact from their capital investing (i.e. investments leading to the further potential energy investments and ESG-led benefits) may not achieve the desired result when their investment is spread across anywhere from 400–1500 holdings in a particular fund.

MSCI ESG scores are an industry standard in measuring ESG characteristics of a particular fund’s holding, and therefore, providing insight into whether a fund aligns strongly with an investor’s impact goals. Funds are sorted in categories and ratings of laggard (CCC, B), average (BB, BBB, A), and leader (AA, AAA), with each of these respective categories including a letter rating range. Higher scores are intended to quantify a company’s resilience to ESG risks. The two funds mentioned prior, DSI and ESGV, have ESG ratings of 6.2 (A) and 5.34 (BBB) at time of writing, which places them in the average category. When looking at two popular clean energy ETFs, the Invesco Solar ETF (TAN) and the iShares Global Clean Energy ETF (ICLN), we noticed a significant decrease in the number of holdings with slightly higher ESG ratings. While this helps address the aforementioned issue of increasing additive impact from investment, ESG ratings still pose an arbitrary and confusing system of measuring any particular fund’s actual environmental and social impact. To analyze, TAN has approximately 50 holdings and a 6.38 ESG rating (A), while ICLN has 30 holdings and 6.6 ESG rating (A). Furthermore, these ESG scores are constantly changing. As of June 2020, DSI’s ESG score was 7.5 (AA) which would categorize it as a leader, and is now 6.2 (A).

For a typical impact investor that might want to invest at one point with passive impact, monitoring an ESG rating and funneling between funds depending on changing ratings over time is likely not an insignificant feat. Understanding the calculation of these scores can be a complex process as well. Per MSCI, scores are based on a combination of publicly available data termed as “relevant”, including company-reported ESG information, information from “other sources”, and company characteristics. Once gathered, percentage weights are assigned to each ESG risk per MSCI’s assessment of time scales and impact. Moreover, ESG ratings have been criticized for failing to effectively measure political advocacy. Take the example of a technology company that has a small carbon footprint and is well disposed to deal with the risks of climate change over long time scales. Let us also consider that the CEO of this hypothetical company is a climate change denier that actively spreads climate denialism messaging from their position. Even though the actions of the aforementioned CEO may have a large negative potential impact on the greater scope of the climate crisis, the company itself might still have a superb ESG rating and thereby mislead investors. Likewise, companies that devote significant resources to political advocacy will likely not be recognized for their doing in the context of ESG ratings, while companies that effectively “game the system” and specifically built up metrics that boost their ESG ratings will pass by unscathed.

Inconsistencies with the collection, reporting, and calculation of ESG data present additional problems for investors seeking to make comparisons between investment offerings on the public market. In the case of a random scale of 50 large Fortune 500 companies, data collection on a particular ESG measurement metric (Employee Health and Safety) was inconsistent between companies. Another issue emerges when ESG ratings are made with varying degrees of self reported disclosure in comparison to publicly available information. That is, companies that provide higher levels of ESG disclosure often have higher rates of disagreement with the ESG ratings assigned to them. This can lead to an ineffective push-pull dynamic in which companies are stuck between a rock and a hard place between providing ESG data that communicate the intricate details of their business models and seeking the best possible ESG rating when self reporting data. Both of these issues, data inconsistencies and potential ulterior motivations in data reporting, can have a top down negative impact on investors seeking a clear understanding of the ESG calculation system.

The TAN and ICLN ETFs demonstrate significant share price volatility over recent time scales as of writing in April 2021. TAN had historically fluctuated between $20 to $40 a share until mid-2020, and has since reached as high as $120 a share, until declining almost 20% YTD as of April 2021.ICLN exhibits similar trends in recent years: trending from $8-$12 a share from 2016 until reaching highs upwards of $30 a share in early 2021, until declining roughly 17% YTD at time of writing in April 2021. These trends demonstrate extreme volatility from a surface level analysis, showing that share prices and investment returns in the public market clean energy sector are likely subject to unpredictable trends in popularity and hype. Conversely, Raise Green project-finance based offerings are solely based on predetermined investment terms structured prior to the time of investment, such as fixed interest rate of 5.5% paid annually over a 12 year term seen in the Blocpower Climate Impact note listed on Raise Green’s marketplace in March 2021.

Even though the companies that these ESG ETFs invest in may be committed to sustainable practices (albeit, at significantly varying degrees), their scale makes it challenging for the investor to see their direct impact and their ESG scores constantly change. Additionally, these investments carry significant cross-over with some of the highest market cap technology companies worldwide, thereby, failing to address the potential goals of localized and diversified ESG-minded impact. When attempting to reduce scale and exclusively invest in companies that address the climate crisis and energy transition, as in the case of TAN and ICLN, varying ESG ratings over time, complexity of understanding such ratings, and marked volatility dependent on hype cycles present possible barriers towards direct and demonstrable impact behind investments. These conclusions help reveal that project-financed based investments on Raise Green can provide localized, understandable and predictable ESG-minded impact with financial return.

What are the environmental and social benefits of investing in a Raise Green project?

Investing in environmental projects through Raise Green is beneficial for and desired by many communities across the country. According to a survey conducted by the Pew Research Center in 2019, two-thirds of Americans believe that the government should do more for climate change, and over three-quarters believe that developing alternative energy sources, such as wind and solar, should be the country’s priority in terms of energy initiatives. Even 78% of millennial and younger generation Republicans believe the country needs a greater focus on renewable energy. These sentiments reinforce the idea that people want climate and environmental-focused action soon. Projects and companies focused on green solutions, such as Raise Green, provide a platform to act. Investors can choose from local solar projects to energy-efficient building developments, assisting a local community or a nationwide company. No matter the scale, protecting the environment benefits everyone, including companies. While environmental projects, protections, and regulations have been accused of reducing America’s competitiveness in global markets, research shows this is not true.

High-carbon energy systems affect our air quality, water quality, and resilience to climate change. Community-driven projects funded by Raise Green are dedicated to helping communities take control of their energy systems and implement more sustainable practices to plan for a better future. Several studies demonstrate a “Social Cost of Carbon:” the cost that each metric ton of carbon has on our global system. The EPA has estimated this cost to be $138 by 2025 for high-impact communities. These communities pay through decreased agricultural production, worsened health, property damages, and higher energy costs. Although this is an estimate, it gives us a good idea of how important it is to reduce as much carbon as possible. Raise Green’s projects strive to help with this goal.

Let’s look at an example of a typical project: Elm Lea Renewable Energy LLC funding a solar array for Putney School, a large boarding school in Vermont. With the exception of a 5% Raise Green Service Fee, every dollar put into the project will help fund a 5.5MW solar energy system. If the target amount of $50,000 is achieved, then $47,500 will be used for financing the solar array. This would fund 15kW of energy directly. If the target amount of $250,000 is achieved, then $237,500 will be used to finance the solar array, funding approximately 81kW of clean electricity. This amount of clean energy leads to approximately 100,000kWh per year of power generation in Vermont, which reduces an average of 140,000 pounds of carbon per year! The $50,000 goal would reduce around 30,000 pounds of carbon per year — still no small feat. Furthermore, the solar array can help the community by providing well-paying jobs: 43 cents to every dollar spent on a residential solar array in Vermont goes towards labor costs.

On a local level, the majority of Americans are noticing the impacts of climate change, crediting it for increases in severe weather occurrences such as severe storms and droughts. This impact is particularly noticeable within marginalized communities of Americans, where studies have shown that pollution has disproportionate impacts on these communities. A study conducted in the Bronx, New York “found that people living near […] noxious land uses were up to 66 percent more likely to be hospitalized for asthma, and were 30 percent more likely to be poor and 13 percent more likely to be a minority”.

To combat this toxic pollution, clean energy projects and developments need investment. However, how can investors be sure that their investment is making an impact? On Raise Green, projects demonstrate their impact measurement methods, such as the Blocpower Energy 3 listing, which utilizes “energy conservation measures” (ECMs) as an impact metric. These metrics help companies and investors track the project’s efficiency and impact. Along with documents, listings include a “Use of Proceeds” section, where the project companies break down exactly what your money is going to. Company project listings also articulate the project companies’ passion and focus on the individuals and communities their projects engage with, which is a key component of Raise Green.

In summary, Raise Green presents as a feasible and attractive alternative to popular public investment options in the impact investing sector, primarily due to its simplicity, transparency, and additionality in the scope of environmental and social issues. As millennial-driven impact investing interest continues to rise along with the growth of general Reg CF as a whole, Raise Green is likely to carve out a larger niche of both the impact and crowdfunding investment sectors.

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