A deceptively simple way to reduce green companies’ cost of capital

Green deposit accounts would dramatically boost available funds for sustainable firms.

This column is for Callaway Climate Insights subscribers only, but it’s OK to share once in a while. Was it shared with you? Please subscribe.

AI-generated piggy bank.

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — Sitting right beneath our noses is a way to more or less immediately and significantly reduce green companies’ cost of capital.

All that needs to happen is for financial institutions to create so-called “safe asset” deposit accounts (checking and savings accounts, along with money market funds) that pay a modestly-below-market interest rate and whose deposits are then loaned only to green companies.

With this otherwise modest change, a new study argues, “green investments in the economy would ... quadruple in the medium,” and green companies would have a plentiful source of cheaper capital.