A CRA To Meet the Challenge of Climate Change
Advancing the Fight Against Environmental Racism Getty/Thomas B. Shea/AFP
A car gets towed while men walk in floodwaters on a road in Houston, August 2017, in the wake of Hurricane Harvey.
Julia Cusick
Introduction and summary
A federal law passed more than 40 years ago to address the discriminatory practice of redlining in low-income neighborhoods and communities of color can and should be modernized to address other systemic racism-fueled inequities. These inequities, including the disproportionate exposure to environmental hazards and climate-related challenges, have been exacerbated by the coronavirus pandemic.
The Community Reinvestment Act (CRA) was enacted in 1977 to combat redlining the practice of systematically denying mortgages and other financial services to communities based on their racial makeup and other forms of racial discrimination in lending. The CRA should be updated to spur lending, investment, and other se
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INANCIAL FIRMS produce very few greenhouse-gas emissions directly, aside from those associated with keeping the lights on and the computers whirring. But the picture changes dramatically when you add “financed emissions”, those associated with a firm’s lending and investing activities. Figures from the few banks and asset managers that disclose them suggest that financed emissions are 100 to 1,000 times bigger than operational ones.
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Financed emissions are now coming under more scrutiny from climate-conscious clients and campaigners, and lenders are hoping to manage the associated reputational and regulatory risks. Green regulation, for instance, could damage the viability of an investment. On November 30th Barclays, a British bank, published plans for its net-zero target. Its goal will be to cut emissions from deals it arranges in the capital markets as well as on its loans.