What Is a Green Bank?

Green banks are specialized, mission-driven financial institutions designed to facilitate investment in low-carbon and climate resilient projects that speed up the climate transition. These institutions are generally public, quasi-public or non-profit entities that are established to overcome investment barriers and leverage the impact of available public resources by mobilizing private dollars. 

While green banks differ in name, scope and approach, they generally share the following core characteristics: a mandate focusing mainly on mobilizing private LCR investment using interventions to mitigate risks and enable transactions; innovative transaction structures and market expertise; independent authority and a degree of latitude to design and implement interventions; and a focus on cost-effectiveness and performance. 

Around the world, green banks have been established at the city, state, and national levels with diverse rationales and goals that reflect the needs of their localities. Green Bank Network members operate at all three levels: Clean Energy Finance Corporation operates throughout Australia, Connecticut Green Bank within Connecticut, and DC Green Bank within the District of Columbia.   

The green bank model of using public resources to crowd in public capital can be tailored to local market needs; and lets these institutions advance local priorities such as lowering energy costs, developing green technology markets, and supporting local community development. The adaptability of the green bank model has also allowed for its adoption by other financial institutions that have a mandate to leverage private finance for climate investments, but which may not possess all the core green bank characteristics or may pursue other activities.