There is a new urgency across the United States to address structural and systemic racial inequities in criminal justice, wealth and housing, employment, health care and education. These disparities are also pervasive in energy. One common measure of this is “energy burden,” or the share of take-home income spent on energy bills.

Communities of color have been shown to have a 24–27 percent higher energy burden than White Americans when controlling across income levels, and low-income residents experience an energy burden up to three times higher than high-income residents.

Rooftop solar has the potential to reduce energy burden in communities of color, but it has not yet lived up to its potential due to systemic barriers: lack of solar education and outreach; financial challenges such as lower income and access to credit; and issues related to home ownership, such as lower ownership rates or roof condition.

Rooftop solar has the potential to reduce energy burden in communities of color, but it has not yet lived up to its potential due to systemic barriers.

Local governments can play a pivotal role in expanding access to solar for these communities by developing programs that address these systemic barriers and helping to bring the benefits of clean energy to the communities that need them the most. One useful program that local governments can consider is a “Solarize,” or community bulk-purchasing, campaign, which has been shown to reduce solar costs and address marketing and outreach barriers to solar.

Cities can take these programs to a new level by partnering with community groups to focus outreach in communities of color and collaborating with financial institutions to develop solutions for low-and moderate-income (LMI) residents.

Solar can help relieve energy burden, but has not yet reached communities of color

With a simple payback of less than the 25-year life of solar photovoltaics in all 50 states and less than half that time in most states, rooftop solar has reduced energy costs for residents throughout the country. However, these cost savings have mostly benefited White residents.

A 2019 report indicated that in census tracks with the same median household income, Black- and Hispanic-majority neighborhoods have 69 percent and 30 percent less rooftop solar installed, respectively, than neighborhoods without a racial majority (versus 21 percent more solar in majority White communities). This is not just because of differences in homeownership. When controlling for ownership, majority Black and Hispanic communities still had 61 percent less and 45 percent less solar installed, respectively, than neighborhoods with no racial majority (versus 37 percent more in majority White neighborhoods).

As a result, nearly half of Black majority communities in the United States do not have a single solar system installed.

One thing is fairly certain: It is not because communities of color don’t care about reducing their environmental footprint. Recent polls have indicated that Black and Hispanic Americans are more likely, at 57 percent and 69 percent, respectively, to be concerned or alarmed about climate change than White Americans, at 49 percent.

This shouldn’t come as a surprise. These frontline communities are disproportionately exposed to higher rates of pollution and climate change impacts from a long history of systemic inequities.

Marketing and education through ‘Solarize’ campaigns

Solar marketing and education provide essential exposure to the many benefits of solar and are necessary for increased and persistent solar adoption in any community. Unfortunately, this outreach and local solar education have not reached all communities equally.

Marketing may not be reaching communities of color as effectively due to the solar industry’s focus on profitable and affluent areas, as well as its lack of diversity at the decision-making level. With nearly 70 percent of small-scale solar concentrated in just five of the most profitable states, most of which offer solar incentives and are highly affluent, large swaths of the country and communities of color have been left out of the solar industry’s marketing.

Marketing may not be reaching communities of color as effectively due to the solar industry’s focus on profitable and affluent areas, as well as its lack of diversity at the decision-making level.

Furthermore, the lack of persons of color represented in solar companies — almost 90 percent of solar senior executives are White and only 2 percent Black and 6 percent Hispanic — likely affects which communities are predominantly targeted through marketing campaigns and the effectiveness of those campaigns.

The significant lack of solar in communities of color also has resulted in a lack of general knowledge of how to access and benefit from solar. These communities have not fully benefited from the “solar contagion effect,” in which residents who see solar being installed in their neighborhood are more likely to install their own solar systems.

This is no surprise considering residents are significantly more trusting of their neighbor’s opinions of solar than information communicated by the solar industry. In fact, SolarCity released a report indicating one-third of solar customers were referred by a neighbor and another study suggests that the presence of two to three solar installations in a neighborhood results in one additional installation. Notably, this contagion effect has been shown to be highest in communities of color but has not yet realized its full potential.

Community purchasing campaigns can help fill this void if they focus outreach to specific underserved communities. Long the target of scams and predatory lending, communities of color may be more skeptical of solar product offerings that sound too good to be true.

Community purchasing campaigns can help fill this void if they focus outreach to specific underserved communities.

However, partnering with a trusted local community organization that understands the community dynamics can build trust and enable solar education to come through community leaders, newsletters and events. These sources have shown to be most effective for increasing solar uptake in low-income and communities of color. For communities with minimal solar exposure (again, nearly 50 percent of Black communities have zero solar), these campaigns provide the essential education to drive community-wide solar adoption.

Bringing down solar costs and — in some cases — reducing credit barriers

The top barrier to installing residential solar is typically financial, regardless of income or race. Solarize campaigns have shown to help lessen these financial barriers by reducing solar costs by about 20 percent. These cost savings result from removing solar company costs for customer marketing and using economies of scale. The cost and time savings with this simplified process can be even more prevalent in jurisdictions that streamline solar permitting given the high volume of installations that come with Solarize campaigns.

While this discount has been shown to be a leading factor to participate in Solarize campaigns at every income level, these savings alone do not solve the compounding issues of overall cost and creditworthiness facing communities of color.

First, Black and Hispanic families have significantly lower median household incomes, 41 percent and 27 percent lower than White families, and therefore additional incentives beyond Solarize may be necessary to enable participation.

Second, they are more likely to have lower credit scores that can result in challenges in obtaining a loan to pay the upfront cost ($16,500 for the typical 5 kW system) or meeting the credit requirements for a solar power purchase agreement or lease. This situation can lead to higher interest rates and make solar less economic or uneconomic for these community members.

To make Solarize campaigns work for LMI residents, cities can develop partnerships with local green lending institutions (a Green Bank, community development financial institution or local credit union) to address cost and credit barriers. Connecticut’s version of Solarize, the Solar for All Campaign, offers a great example of using a financial partnership to expand the reach of a typical Solarize campaign to LMI residents.

To make Solarize campaigns work for LMI residents, cities can develop partnerships with local green lending institutions to address cost and credit barriers.

After realizing that business as usual wasn’t spurring solar uptake in low-income communities, the Connecticut Green Bank created new incentives specifically for LMI residents, paired solar with energy efficiency upgrades, instituted “no money down, no credit required” Solarize offerings and recruited contractors with experience reaching underserved markets.

In three years, this multifaceted approach increased solar penetration in Connecticut’s low-income communities by 188 percent, and helped over 900 low-income households go solar.

Pairing Solarize with community solar to bring solar to renters

Lack of home ownership is a major barrier to solar in communities of color due to a long history of discriminatory housing policies. Black and Hispanic households are less likely to own their homes, at 43 percent and 46 percent, respectively, versus 72 percent of White households. With a higher percentage of renters, it is much more difficult for communities of color to access residential solar due to a split incentive between the landlord, who typically decides whether to pursue capital improvements, and the renter, who pay the utility bills.

Further, for people of color that do own their home, many live in older homes that need significant roof or structural repairs to support a solar system.

One successful way that cities are expanding solar access to renters is through community solar projects, which enable participants to subscribe to a local clean energy project and receive the associated credits on their electricity bill. Combining marketing and outreach on parallel Solarize campaigns and community solar projects can leverage limited local government resources and more effectively reach both renters and homeowners. This has been an effective strategy for NY-Sun’s community solar Solarize option and Denver’s parallel Solarize and community solar campaigns.

Take action today to implement a Solarize campaign

The American Cities Climate Challenge Renewables Accelerator, co-led by Rocky Mountain Institute and World Resources Institute, is launching a residential solar cohort this summer to help local governments implement Solarize campaigns and accelerate residential solar adoption in their community, with a particular focus on historically marginalized communities.

If your local government is interested in learning how a community purchasing campaign can help expand solar access in your community, please reach out to Ryan Shea at [email protected] to learn more.

The key to long-term success in the fashion industry is to start trends and continually push the envelope — a philosophy that also applies to its ESG priorities.

The $2.5 trillion industry accounts for about 8 percent of the world’s carbon emissions when considering the entire value chain — higher than the entire iron and steel manufacturing industry combined, for comparison. Without any intervention, that figure is projected to increase more than 60 percent by 2030. However, there is a growing and collective awareness of environmental impact across the industry. Companies are discovering sustainability is not just a fad, but a new standard that is here to stay. 

A proliferation of greening initiatives from industry players has emerged with public announcements of policies to tackle this issue, measures to address their supply chain footprints, promotion of circular economy practices and encouragement for sustainable brands growing increasingly popular. However, despite these various green initiatives from several early trendsetters in the fashion industry, formidable challenges lay ahead on the path to scaling up sustainability — especially when it comes to supply chain strategies.

The lack of environmental impact information and outdated technology are two ubiquitous issues plaguing industrial supply chains in general, but they are especially significant in the context of the fashion industry. 

Due to highly price-competitive environments, upstream supply chain participants have little motivation to invest in improvements. Downstream supply chain participants that rarely have a personal stake, such as powerful brands and retailers, hardly encourage prioritization of sustainability upstream. These dynamics have led to the development of stagnant supply chains largely unable to respond to the urgency of the fashion industry’s significant carbon footprint. 

Given that most emissions are produced along the supply chain, companies’ inability to monitor and track this data means that there is not a starting point to begin improving their environmental footprints.

In particular, inadequate data collection infrastructure along the supply chain has resulted in a shortage of environmental data and information transparency. According to the 2020 Fashion Transparency Index survey, while 78 percent of brands have policies on energy and carbon emissions, only 16 percent publish data on the annual carbon footprints of their supply chain. Given that most emissions are produced along the supply chain, companies’ inability to monitor and track this data means that there is not a starting point to begin improving their environmental footprints. 

The reluctance to upgrade to new technology can be partly attributed to thin operating margins of fashion supply chains leading to inefficiencies along the entire chain. One of the most candid illustrations of inefficiencies caused by antiquated technology is in the manufacturing process, where conventional practices still take 2,700 liters — or three years’ worth of drinking water — to make a typical cotton T-shirt. 

Traditional manufacturers abide by the “if it ain’t broke, don’t fix it” adage, while the ultimate retailer of the shirt has no direct ties to the manufacturer. Thus even if the manufacturer had a sustainability policy, it would be difficult to enforce. When both upstream and downstream participants of the supply chain are at odds with modernization, it prevents the changes needed to respond to the climate impact of the industry. 

But it is not all doom and gloom. This is where green finance and technology come in. Their dual adoption can begin to address the environmental data gaps and also boost efficiency for production processes in the supply chain that would usher along a much-needed evolution of the fashion industry towards greater sustainability. 

Digital technology will play a pivotal role in addressing information transparency and environmental reporting in the fashion industry by facilitating data collection along the supply chain. Using blockchain and cloud-based technology, a number of startups are already laying the groundwork. 

For example, blockchain platform Provenance helps trace and certify supply chains to enable ethical procurement decisions. Another startup, Galaxius, offers a cloud-based system that tracks supply chain activity from fabric orders to garment delivery.

Beyond startups, fashion luxury giant Kering Group launched an app called My EP&L that tracks carbon emissions, water consumption and air and water pollution along its supply chain to educate designers and students on sustainable design principles. Recently, Stella McCartney and Google Cloud announced a partnership to determine the environmental impact of various types of raw materials. All of these efforts contribute to advancing data collection at different points along the supply chain and have the potential to provide unprecedented levels of transparency for the industry.

Dated technology in the production phase of the supply chain creates significant challenges in two ways. The first is in more eco-friendly product material innovation. New textiles, alternative raw materials and sustainable dyeing methods are made possible through scientific and technological ingenuity. 

For example, Tencel, a super-absorbent fiber made from wood pulp, offers a great alternative to synthetic activewear. Lenzing Group, producer of Tencel, also uses a closed-loop production process and sustainable dyeing technology in which solvents needed to make the fiber are recycled over and over again to produce new fibers. But the higher costs associated with upgrading machinery to produce more eco-friendly materials typically associated with such innovations hinders their wider acceptance. 

The second challenge relates to upgrades and updates to the supply chain that boost efficiency, promote better resource allocation, identify potential cost savings, predict demand and provide other benefits that mitigate the industry’s environmental impact. 

Startups such as Optoro and ShareCloth use artificial intelligence, machine learning and other emerging technologies to digitize processes to lower excess inventory and reduce textile waste. However, similar to the cost barriers that impede wider adoption of eco-friendly materials, these new technologies depend on customized machinery or entirely new production facilities, which may be more capital-intensive and require considerable new capital expenditures when compared to traditional manufacturing processes. 

Just digital technology for supply chain improvements will not be enough. Fashion will need green finance to drive large-scale transformation. The Boston Consulting Group estimates that commercializing and scaling these innovations will require $20 billion to $30 billion of financing per year. 

The Boston Consulting Group estimates that commercializing and scaling these innovations will require $20 billion to $30 billion of financing per year.

Promising green finance developments in the fashion industry already are underway. Traditional lenders have begun to ink green bonds and sustainability-linked loans. In November, Prada became the first fashion company to sign a $59 million sustainability-linked loan with Crédit Agricole. 

Under the terms of the loan, Prada can pay a reduced interest rate if it achieves targets related to the number of LEED Gold or Platinum-certified stores, the number of training hours employees receive, and the use of Prada Re-Nylon (regenerated nylon) in the production of goods. In February, VF Corporation closed its $591 million green bond, marking the first green bond issued in the industry. 

Private equity investors are also paying attention to startup fashion brands. Just last year, The Carlyle Group made its first foray into the industry by acquiring a stake in Jeanologia, and Permira acquired a majority stake in the ethical fashion brand Reformation. In September 2019, the $30 million Good Fashion Fund launched, representing the first investment fund focused solely on driving the implementation of innovative solutions in the fashion industry. 

Brands also have started to form corporate venture capital arms to create opportunities for green finance. Examples include Patagonia’s Tin Shed Ventures, launched as a $20 million fund in 2013, and H&M’s CO:LAB, which has made investments ranging from $1 million to $20 million in sustainable fashion. 

Prada, by scaling and incentivizing its regenerated nylon technology through its green finance partnership with Credit Agricole, serves as a pioneer for the industry. However, the solutions offered by advancements in technology and green finance admittedly will need more buy-in from companies across the fashion world. 

Some ideas that can move fashion in a greener direction include establishing long-term business strategies that incorporate plans for sustainable solutions, employing creative approaches to applying sustainability across supply chains and developing best practices for environmental data monitoring and reporting. 

A recent press release from Google and WWF Sweden announcing plans to create an environmental data platform, the latest green financing deal by Moncler for up to $472 million that is tied to its environmental impact reduction targets and a similar arrangement by Salvatore Ferragamo for up to $295 million are welcome steps in the right direction, even in the midst of a global pandemic. 

The future is indeed hopeful as sustainability continues to be championed across the industry and its supply chain. Green finance and digital technology will be increasingly critical drivers for the development of greener and more sustainable supply chains. The fashion industry always has been creative, innovative and bold in its designs; now is the time to channel these qualities to secure a fashionable future that is green and sustainable.

This article was adapted from the Paulson Institute’s three-part series on sustainability in the fashion industry.