Banking structures are integral to our economic system, and they must be part of the transformation if we are to transition to a more regenerative economy. Unlocking and directing capital to create the world we want — and not support extractive industries and inequitable systems — is among the most powerful levers necessary to develop and scale innovations to address the world’s shared challenges.
When it comes to transforming extractive and inequitable systems, the mainstream banking system has work to do. For example, 11 of the largest U.S.-based banks lend around 19% on average and as high as 30% of their portfolios to carbon-intensive industries, according to Project Drawdown. And, although they make up just 32% of the U.S. population, Black and Latinx households represent 64% of the country’s unbanked and 47% of its underbanked households, according to Boston Consulting Group.
However, innovative purpose-driven banks are actively working to remodel these systems, showing us the power of intentional change. As a content marketing agency dedicated to impact-driven businesses, Bark Media has a behind-the-scenes perspective on efforts toward systems change across sectors, including the critical work toward building a regenerative economy.
As part of an ongoing series highlighting Certified B Corporations leading the way, Bark Media sat down for a conversation with Ken LaRoe, the CEO of Climate First Bank, an FDIC-insured digital community bank founded to combat the climate crisis. The Florida-based bank is a member of the Global Alliance for Banking on Values (GABV) and a B Corp. The bank has customers in all 50 states thanks to its robust digital banking platform.
Climate First Bank was founded on the recognition that finance is a powerful tool for driving economic outcomes that promote sustainability, equity, and justice. By providing fair and accessible loan options for consumers and businesses to invest in solar or other renewable energy, Climate First Bank is paving a path toward a more sustainable future. “That’s the foundational rock of how we are combating the big-picture climate crisis,” LaRoe says. In this conversation, he discusses the role banks play in advancing a just and equitable economy, and how Climate First Bank is helping consumers and businesses invest in a brighter future.
What is a climate-focused bank and how is Climate First Bank working to reverse the climate crisis?
Ken LaRoe: The foundational principle for our bank is financing solar or renewable energy, and there are currently very limited direct-to-consumer options. If people want to install solar or renewable energy on their homes, most of them need to finance it, and they need a fair, safe way to do so. We offer a fully digitized solar consumer loan product, so you can go to our website and fill out an application in three minutes, in 30 seconds you’ve got a decision, and the next day you have the documents. This allows consumers to avoid a predatory structure developed by the FinTech industry that involves high dealer fees, as much as 52%, that are passed onto the consumer without disclosure — a practice several state attorneys general are beginning to go after.
At Climate First Bank, we don’t charge a dealer fee and we offer competitive rates and terms, meaning we can offer the lowest payment on the market. It’s part of our mission to provide honest solar financing to the nation.
We launched our consumer product nationwide in June of 2024. Before that, we were available in several states. Since we first rolled out the service in May of 2022, we’ve booked about $110 million in solar loans. That’s the foundational rock of how we are combating the big-picture climate crisis. We’re also developing a fully digitized small commercial solar product. We’ve got about $40 million in commercial solar, including some large-scale, utility-grade projects.
What role do banks have to play in helping advance a just and equitable economy?
LaRoe: It’s huge. We had a tagline: changing finance to finance change. Finance changes everything, and finance controls everything, especially in a capitalist democracy.
That means everything needs to be addressed, whether it’s getting rid of predatory lending practices or taking a deep dive into financial inclusion or racial equity. It all takes work, but it’s really not that hard.
What is the pathway for getting there? What changes could be made to make it easier for banks to advance a just and equitable economy or stop funding extractive/divisive industries?
LaRoe: I think the best way to supercharge it is through public-private partnerships or government intervention. We need to consider all of the various types of financial institutions and what their value proposition is, then give advantages to the ones that are clearly values-based.
A number of changes could help facilitate this. For example, right now all credit unions are tax-free, but I think they should only get tax incentive status if they have an absolute values-based business model. If they’re going to be tax-free, they need to be doing good with citizens’ money. Another example would be for regulators to give an advantage to values-based banks. Changes could be made to make the values-based space more profitable, which would appeal to investors and insurance. Changes could also be made with existing designations, such as the Community Development Financial Institution (CDFI) designation. Currently, it’s narrowly focused on poverty alleviation in low- to moderate-income lending, but they could add an environmental component. Or they could easily tweak the Greenhouse Gas Reduction Fund (GGRF) — which currently only lets those funds be deployed through nonprofits, CDFIs, and credit unions — so that for-profit banks can also participate. That could get a lot more money out there.
What do you say to people who don’t believe impact-driven for-profit banks are part of the solution — that they won’t be financially successful or that we need to rely on nonprofit models?
LaRoe: If you use us as an example, then yes, we are part of the solution. We’re for-profit but we are all about doing the right thing. And we’re also super financially successful. As far as I can tell by the data I can find, we’re the fastest-growing new bank in the United States since 2009. We’ve crossed $850 million in assets, and we’re just three years old. We’ve been profitable the last three quarters, and we’re going to be profitable this quarter. Is that because of our mission or in spite of it? I think it’s because of the mission. Other banks are completely missing the boat by not embracing what at least a good chunk of the population wants. The Millennials and Zoomers [Gen-Z] vote with their pocketbooks a lot more than my generation did. That really matters.