Environmental Finance–What Counts?

By Stephanie Rico
June 10th, 2013

2012 Wells Fargo Environmental Finance Report

Environmental Forum Readers – We’re proud to announce that our 2012 Environmental Finance report was released today. It details our progress toward our goal of providing $30 billion in environmental finance by 2020. The goal was established as part of our broader environmental commitment to be environmentally minded in all we do.

This post focuses on what counts as “environmental finance” at Wells Fargo. Defining environmental finance is tricky as there’s no widely agreed upon definition. Instead, there are a variety of certifications, standards and attributes that can be used to help identify “greener” businesses. But even those identifying markers do not necessarily guarantee a business is “green.” In fact, most businesses these days tend to have some degree of environmental attributes, but that doesn’t necessarily mean we are going to count them.

To determine what counts toward our $30 billion environmental finance goal, we held discussions with our business leaders and sought input from external stakeholders. These discussions led to the categories as they are defined today. Please review them below and let us know what you think. Your input can contribute to the refinement of the categories as they evolve over time.

Environmental finance categories

“Greener” Buildings:

  1. LEED®, or Leadership in Energy and Environmental Design, is an internationally recognized building certification program developed by the U.S. Green Building Council consisting of nine rating systems for the design, construction, and operation of buildings, homes, and neighborhoods. The certification relies on documentation, as opposed to on-site testing, and lasts for the duration of a building’s life. We include in this category buildings financed by Wells Fargo that have received any level of LEED certification.
  2. ENERGY STAR is a joint U.S. Environmental Protection Agency (EPA) and U.S. Department of Energy program focused on energy efficiency standards for products, structures and practices. Commercial buildings and manufacturing plants with energy performance in the top 25 percent of their peer group with professional verification by a professional engineer or architect are eligible for ENERGY STAR rating. This certification lasts one year, and not all building types are eligible. We include ENERGY STAR certified in the year of capital contribution by Wells Fargo.
  3. The EPA Brownfields Program is a U.S. EPA program for the assessment, safe cleanup, and sustainable reuse of brownfield sites, which are real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. The EPA Brownfields Program collaborates with other EPA programs, other federal partners, and state agencies to identify and make available resources and grants that can be used for brownfield site reuse. Wells Fargo includes all commitments to projects located on sites certified by this program.
  4. Other Green Building encompasses buildings which may qualify as “green” or environmentally beneficial but are not certified by LEED, ENERGY STAR, or the EPA Brownfields Program. These buildings exhibit environmental features sufficient to earn official certification from one or more other green building programs, including but not limited to Greenguard, GreenGlobes, Green Communities and CalGreen.

Cleaner Energy:

  1. Renewable Energy includes solar, wind, geothermal, biomass (plant, wood or wood waste, landfill gas, biogas, and biofuels used for electricity generation), small hydropower, wave and tidal power generation. It excludes large-scale hydropower, natural gas and nuclear power, as well as alternative fuels for transportation (which are included in the Sustainable Transportation category). This definition conforms to the definition utilized by the U.S. EPA (with the exception that Wells Fargo’s definition excludes large hydropower). This category includes projects, companies and organizations dedicated to research, development, production, sales, servicing, or adoption of renewable energy, including power infrastructure or energy storage technologies that serve the renewable energy industry.
  2. Sustainable Transportation includes projects, companies and organizations focused on research, development, production, sales, servicing or adoption of vehicles, motors (including more efficient engines), auto batteries, alternative fuels (including biodiesel, ethanol, algal fuels, and other synthetic renewable source fuels except those used for electricity generation), public transportation systems, and other transportation infrastructure that reduce reliance on petroleum-based fuels (gasoline or diesel) and reduce greenhouse gas emissions. This includes hydrogen, compressed natural gas, liquefied natural gas, and hybrid electric vehicles.
  3. Energy Efficiency includes projects, companies and organizations whose primary focus is research, development, production, sales, servicing or adoption of energy efficiency measures or technologies, or reducing the amount of energy required for the operation of a product or facility. This category includes, but is not limited to, retrofits of buildings and infrastructure intended to reduce energy use, manufacturing or marketing of energy-efficient technologies and services, smart grid applications, and energy automation software.

“Greener” Business:

  1. Sustainable Water Management includes projects, companies and organizations related to water treatment, purification, cleanup, efficiency or conservation. This includes, but is not limited to, wastewater treatment, produced water cleanup or recycling, water infrastructure efficiency, water-saving irrigation technologies and techniques, and products certified as water efficient by the U.S. government, including but not limited to the U.S. Environmental Protection Agency’s WaterSense Partnership Program. This category does not include hydroelectric power.
  2. USDA Organic is a certification issued by the USDA’s National Organic Program, indicating that a product is certified to be organic and contains 95 percent or more organic content. Organic is a labeling term that indicates that a food or other agricultural product has been produced through approved methods that integrate cultural, biological, and mechanical practices that foster cycling of resources, promote ecological balance, and conserve biodiversity. Synthetic fertilizers, sewage sludge, irradiation, and genetic engineering may not be used for a product to be certified USDA Organic. This category includes farms, dairies, ranches and gardens and companies involved in the exclusive production, distribution or sale of 100% organic foods.
  3. Sustainable Food and Resources includes farms, dairies, ranches, gardens, forestry projects, companies and products that are certified as environmentally responsible by an agricultural, forestry or land use program recognized by the U.S. federal government (but which do not meet the standards of the USDA Organic category). This includes, but is not limited to, companies and organizations involved in the advocacy, production, distribution or sale of partially organic products, as well as companies or organizations that are certified by Forest Stewardship Council (FSC) or the Sustainable Forestry Initiative (SFI).
  4. Environmental Conservation includes projects, companies and organizations dedicated to protection, conservation, restoration or rehabilitation of natural lands, ecosystems, habitats, and species. This includes climate change and environmental activist organizations, environmental education or research, wildlife refuges, and relevant government agencies.
  5. Closed Loop Resource Management and Environmental Remediation includes projects, companies and organizations dedicated to industrial, commercial, or household recycling and composting, as well as hazardous waste or spill cleanup and environmental remediation. The category includes garbage collection and storage companies to the extent that they provide the abovementioned services, but does not include wastewater treatment or produced water recycling, both of which are included in “Sustainable Water Management.”
  6. Pollution Prevention includes projects, products, and companies or organizations dedicated to reducing harmful byproducts or emissions (including greenhouse gases and particulates) from existing fuels and technologies. This does not include coal, oil, natural gas, large hydroelectric power, or nuclear companies or projects unless the capital is used specifically to alleviate the environmental impacts of these energy sources (i.e. carbon sequestration).
  7. Environmentally Responsible Products includes projects, companies and organizations exclusively dedicated to greener consumer products, biodegradable or non-hazardous substitutes for harmful industrial or chemical products, or greener supply chain management. This category includes, but is not limited to, companies whose products have been certified by the USDA’s Biopreferred program or the EPA’s Design for the Environment program.
  8. Other Green Business encompasses projects, products, and companies/organizations primarily focused on environmental features or that are recipients of another third-party certified green business program, such as the San Francisco Green Business Program.

Do you agree with our categories? What changes or modifications would you suggest? What type of transactions do you think should count as “environmental finance?” Please use the comment section to let us know what you think. As always, your feedback is appreciated.

Tags:   customer   energy   Environmental FInance   financing   food   grant   innovation   LEED   recycling   solar   transportation   water   
Stephanie Rico

Stephanie Rico

Stephanie focuses on helping Wells Fargo achieve its goal of accelerating a transition to a “greener” economy via finance and support of our customers who are looking to take advantage of the benefits of renewable energy and clean technology. Stephanie has a BA in Social Science, Interdisciplinary Studies from San Francisco State University and an MBA from DePaul University’s Kellstadt Graduate School of Business.

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Dimitri Temnikovon September 18, 2013 at 5:47 pm:

Hello Stephanie,
Wells Fargo commitment to finance projects that contribute to a low emission society is commendable. It is good to see the bank diversify in a range of green sectors as well.
Could you please provide me with someone in the environmental finance division? I am a recent Master’s graduate of Energy Systems and would love to talk with someone about possible internships.
Thank you Stephanie!

Stephanie Ricoon September 25, 2013 at 9:14 pm:

Hi Dimitri – Thank you for the kind words. The best way to reach our Environmental Finance team is by writing to environmental.finance@wellsfargo.com. Also, you may want to check out our career center – https://www.wellsfargo.com/careers/. While not all jobs at Wells Fargo are 100% directly related to clean energy finance, all contribute to our environmental commitments in one way or another. Wells Fargo is a great place to work :). Stephanie

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