Heartland's Tom Croft - Presentation to White House Energy Communities, IWG Event
Thank you for this tremendous honor of addressing the Administration, inviting me to sit with so many friends and esteemed leaders from the IWG and from around the country. I wanted to make some comments about our regional work, but also raise macro challenges on the road to net zero.
The Upper Appalachian region is composed of long-closed coal mine and steel mill towns, like the municipal members of my organization, the Steel Valley Authority (SVA), based around Pittsburgh, the Paris of Appalachia. We know too well the history of boom-bust declines, resource depletion, and high levels of poverty, rural and urban. We also know the false promises – like NAFTA, the WTO, and a litany of failed training programs--made to workers who lost their jobs over the decades. We know the tragedy of bankrupted communities, hollowed out communities.
Three years ago, Mayor Bill Peduto, our former mayor, asked me to help with the launch by the Marshall Plan for Middle America (MP4MA), which brought together nine mayors in a four-state region. Working together with Reimagine Appalachia (RA), we then stood up an Appalachian Sustainable Finance Hub to marshal responsible investors, tools, and procurement solutions for a range of clean economy projects in the region.
The manager for the project is the SVA’s Heartland Capital Strategies (HCS) program, a national network of responsible pension consultants, asset managers, unions, and policy leaders advising on or managing $1.5 trillion in assets.
Heartland was established in 1995 by the Steelworkers, SVA, and AFL-CIO to reclaim labor’s capital—our money—and to rebuild America. Through our economically targeted investments (or, ETIs) and our many books on workers’ pensions, Heartland is an aviator in responsible investing. Our investment partners have saved or created 100s of thousands of high-road jobs; built ½ million+ housing units; invested in $4-5 billion in infrastructure; re-tooled and re-shored critical manufacturing.
The Finance Hub proposes three components:
A clean economy purchasing consortia for towns, cities, and universities;
A project knowledge portal, best practices, including good labor standards;
An investment clearinghouse to co-invest workers’ pension funds with federal clean energy programs.
We believe these projects and companies will create a substantial number of union green-collar jobs and apprentices.
Through many convenings of the Hub, MP4MA, RA, we highlighted amazing projects throughout the region that hired workers and put women and minority apprentices to work. A shining example is the Cincinnati Solar Farm built in an Appalachian county, utilizing IBEW labor. We are re-convening the Hub in Cincinnati on June 14 as part of the Milken 10,000 Communities road show, and hope to see many of you there.
We’ve sent along a proposal to partner with the Appalachian Regional Commission on the Hub concept.
On the macro level: Global pensions assets have now almost doubled in the last decade to US $56.6 trillion. US pension assets have grown to $35 trillion, a large share of the capital markets.
Responsible (RI), sustainable, and impact investing is booming in the marketplace. Sustainable investing assets reached $17 trillion at the beginning of 2020.
Labor’s capital stewards, institutional investors, businesses, and government will have to unite to tackle the high cost of transitioning to net zero by 2050. The IEA estimated the amount of capital needed for the transition to be in the order of $130-140 trillion. We are falling short on the scale of capital needed when needed.
David Keto, a Heartland Governing Board officer, is working with Princeton’s Net Zero America program on this problem. He has proposed that governments create something on the order of Fannie Mae or Freddie Mack, which provided loan guarantees that, over decades, helped shape the affordable housing market.
Steve Sleigh, our co-chair, and a former director for the Machinists pension fund, strongly believes that much larger public investments in pre-development capital and grants are also needed to reduce risk and encourage private investments. We’ve obviously heard this line of thinking from many other sources.
And, on the back end, there are not enough off-takers and guarantors for the massive ramp-up in climate technologies. That’s especially true for the more experimental technologies that might take longer to build and cost in the billions of dollars. The Administration could facilitate a broader societal market-making effort to that end.
While responsible or sustainable investment is booming, and ESG has been mainstreamed, ULLICO President Ed Smith points out that there’s a lot of high-priced PR and S-washing, but negligible commitment to issues of greatest concern to workers: collective voice; the right to bargain; good wages; healthcare; safety on the job; human capital issues (the S in ESG).
Thus, we are heartened to see the Administration adopt and defend the DOL ESG Rule. And, as part of the clean energy programs, adopt stronger labor standards, community benefit agreements, and other sticks—as well as carrots-- that are critical to making the carrots work as they should in the stew.
In closing, we hope to work with you to both test the Finance Hub concept for more immediate results but also put in place the grander coalition that is needed for the sustainable industrial policy to save our planet. As former Global Trade Union president Sharon Burrows reminded, there are no jobs on a dead planet.