On 22nd April, 47 years ago, Earth Day was first celebrated to mark the start of the modern day green movement. Environmental protection was elevated to the status of national agenda in America and has since gained global importance. While governments across the world attempt to make eco-friendly policies, they are not enough to save the planet from looming disaster. Scientists have repeatedly said that widespread habitat-related problems are just around the corner, but not everyone, especially those in power, chooses to believe these reports.

Grassroot level green living projects

Fortunately, Individuals also have the power to make a difference at a micro level. Plenty of grassroot efforts by individuals and social businesses have impacted economies and the environment, one family at a time:

  • A single mother that uses sustainable farming to grow carrots in her backyard to sell at the local market,
  • A rural family that uses solar lamps for electricity, where regular electricity is either too expensive or absent,
  • A destitute father who burns clean green fuels to keep his family warm and safe from carbon monoxide poisoning.
  • A communal water well or bore-hole that improves access to safe drinking water,
  • Using clean-burning cook stoves in rural areas where wood or coal would normally be used, often leading to poisonous build-up of carbon monoxide within the home,

All these projects help cut the amount of greenhouse gas emissions that contribute to climate change and save money for the families involved in the long run.

Green finance – removing the financial obstacle towards progress

These eco-friendly efforts need a small amount of upfront capital which impoverished families do not possess. They also do not have access to this kind of money because banks prefer not to deal with such high risk consumers. Loan sharks do lend money to people at the bottom of the pyramid but that is a rather perilous option.

The alternative is a network of micro lending, micro finance or micro grant institutions that specialize in lending or granting money to lower income groups in order to help them escape the poverty cycle. In the background are philanthropists, NGOs and crowd funding platforms that provide money that can be use to alleviate poverty. This is called green finance.

Green finance is the use of financial tools like loans, savings accounts, grants, leases and insurance to encourage the sustainable use of resources by the poor. Its purpose is to reduce their vulnerability, create a sustainable environment, improve adaptation, and mitigate the risks of climate change by reducing greenhouse gas emissions.

One may argue that climate change is hardly a concern for the poor when economic and social troubles plague their lives. However, there is more logic behind the concept of green finance than meets the eye. Here are several reasons that support the concept:

1. Dependence on the ecosystem

The poor are highly dependent on their ecosystems for survival, and as the same time, they are least equipped to deal with disasters caused by climate change (floods, hurricanes, landslides, water shortage, and droughts). The poorest of people in developing countries are most affected by rising sea levels and other disasters that can wipe out hundreds of homes in the blink of an eye. Here’s an article by BBC talking about how climate change affects the poor in India.

2. Unsustainable agriculture practices

In an attempt to secure short term gain on their loans, the poor often ignore sustainable agricultural practices that deteriorate the conditions of their environment. For instance, their soil management may be faulty, burn down wild vegetation to clear land for farming, engage in over-fishing, and excessively cut down trees to sell or burn for fuel. All this causes long term harm to these very communities. Read more about unsustainable farming here.

3. Non-renewable energy use

Poor households currently rely on non-renewable sources of energy, which are highly inefficient and sometimes expensive as well. Examples include, coal, kerosene, manure and wood and burning these indoors, where the level of ventilation is low, can be fatal as the build up of carbon monoxide can cause serious damage if inhaled, especially for long periods of time.

4. Dealing with energy poverty

Renewable energy sources are vital in remote areas suffering from energy poverty, i.e. areas without access to the electric power grid. Electricity can increase working hours beyond sunset and make lives of the poor more comfortable:

  1. Cooling fans can be operated in hot, arid areas,
  2. Radios and TVs can be used to stay updated on the latest news and weather forecasts, which is especially useful for farmers, and
  3. Mobile phones that are an important financial-access tool via mobile banking, can be easily charged.

5. Using cost effective energy sources

Alternative energy sources not only reduce carbon emissions, but are also cost-effective. Examples include biomass stoves, biogas stoves, solar cookers, solar energy panels, and efficient cooking stoves (made of cow dung, in this case), which can reduce the purchase of fuel by up to 50%.

6. Benefiting the job market

The ubiquity of green finance will create employment opportunities for the poor to support these finance programs. Hundreds of people will need to be trained to setup and maintain alternate energy systems (solar power systems, solar cookers, etc.), manufacture small accessories and spare parts, and promote them among various markets, including upper and middle class owners of alternate energy systems.

It goes without saying, green finance can only work if the options promoted are less expensive than traditional sources of energy. While items like solar cookers, and biogas stoves are relatively cheap, electrical solar power systems can be quite expensive, and can only enter the low-income market if:

  • Development and public institutions offer financial and technical support for these activities,
  • There is a robust amount of investment in carbon trading markets,
  • Technology advancements improve cost structure of alternative energy.

One may be tempted to point out that rich countries ought to tackle climate change on their own since they caused it. Furthermore, commercial industries are in a better position to ‘make a difference’ considering their size. However, our planet is already facing this crisis and we are at the point where everyone must do their part or face the consequences.