Muni Impact | May 14, 2024

Liberty Notes let retail investors invest in Connecticut’s green transition

Liana Lan

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Guest Author

Liana Lan

Editor’s note: ImpactAlpha has partnered with HIP Investor to highlight upcoming bond issues with social and/or environmental significance. Disclaimer: Nothing in this post or on shall constitute an offer to sell or solicitation of an offer to buy bonds.

  • Issuer: CGB Green Liberty Notes, LLC
  • Obligor: Connecticut Green Bank
  • Impact entity rated by HIP: State of Connecticut (Green Bond or Green Note)
  • Muni sector: States
  • Closing date: May 16, 2024 
  • Minimum investment: $100
  • Annual interest rate: 5.25%; recurring investors earn 5.5%
  • Target offer amount: $50,000
  • HIP impact rating: 77 of 100, connoting “net-positive impact” 
  • Opportunity Zones located in the issuing entity: 6,052 Opportunity Zones in Connecticut, covering 24.2 million residents 
  • Climate threat resilience rating: 72 of 100, connoting “higher climate resilience”

Since its establishment as the nation’s first state-level green bank in 2011, the Connecticut Green Bank has facilitated over $2.4 billion of investments for Connecticut’s clean energy economy. The fully-owned subsidiary, CGB Green Liberty Notes LLC, launched its 10th one-year green notes offering, which is investable in $100 units (up to $26,000) by everyday citizens. 

Proceeds from the notes will support Connecticut’s small businesses accessing no-interest financing for energy efficiency upgrades.

The oversubscribed offering is open on the Raise Green platform until Thursday, May 16, 2024

This fixed-income short-term note is available in increments of $100, similar to a one-year CD. This note offers a competitive interest rate at 5.25% annually; existing investors who reinvest can obtain a 5.50% annual interest rate in this round. Individual investors can purchase online through the Raise Green without a broker. The Liberty Notes were designed to be accessible to everyday investors, allowing them to help strengthen communities with climate-focused solutions while earning interest. 

Previous crowd-funding of Green Notes have been issued multiple times since 2022.

Efficient small businesses

This Green Liberty investment contributes to the Small Business Energy Advantage program, enabling small businesses in Connecticut to lower their energy expenses through efficiency enhancements and interest-free loans. This program offers complimentary energy assessments of small businesses’ facilities by energy auditors and engineers. Assessments cover lighting, heating/ventilation/air-conditioning, and refrigeration systems, providing tailored recommendations for energy-saving improvements.

For pursued upgrades, utility-authorized contractors manage the entire installation process, with SBEA program incentives offsetting a portion of the costs. Low-interest-rate, on-bill payment plans are available to help offset other costs.

Potential beneficiaries include small businesses such as restaurants, car washes, long-term health-care facilities, and retail stores. Successful examples have demonstrated substantial savings for businesses on electricity and natural gas bills through energy-efficient upgrades. For instance, Modern Woodcrafts, which received assistance from the SBEA Program, achieved significant annual savings of approximately $35,555 and 182,706 kilowatt-hours after energy-efficient upgrades. This was facilitated by a Energize Connecticut incentive of $52,459, resulting in a payback of less than three years.

 HIP impact assessment

The Green Liberty Note receives a HIP Impact Rating of 77 on a 100 point scale, based on HIP’s rating for green bonds and notes issued by the state of Connecticut. 

The State of Connecticut’s rating is driven by several material metrics, such as poverty rates, wealth equality by gender, and per capital CO2 emissions. In the US, 11.5% of the population lives below the poverty line, compared to 9.4% in Connecticut. 

Small business represents 47.1% of the state’s total employent, compared to 45.1% in the US. Providing efficient energy savings for small businesses cuts operating costs and provides opportunity for business owners to reinvest savings into improvements for the business, such as hiring on additional employees, which helps reduce poverty rates.

The state of Connecticut is a also top performer on gender-based wealth equality, with a HIP rating of 63 out of 100. Women in the state of Connecticut have a median income of $64,000, which is 16 percentage points above the national average.

Climate resilience

On the climate and environment side, Connecticut’s annual CO2 emissions were 10.1 metric tons per person, almost 30% less than the nationwide average of 14.3 metric tons per US person. Funding from this note ould help further reduce CO2 emissions per capita in the state.

HIP’s climate threat resilience rating gauges possible future risks and region-specific capacity to withstand climate challenges. HIP’s climate ratings integrate factors such as the vulnerability of residents to natural hazard events, the preparedness of governments addressing climate risk, and the resilience of the built environment. Connecticut rates as more climate resilient for its strong state preparedness. In 2019, Governor Lamont issued Executive Order No.3, revitalizing the Governor’s Council on Climate Change and broadening its scope and duties to encompass both carbon emissions mitigation and climate change adaptation and resilience efforts.

Investments in initiatives like the Green Liberty note offering not only help reduce the carbon footprint of the state but also allow for improvements to income equality, employee pay, the ability to hire more employees or invest in additional business improvements. The notes are an innovative model for enhancing community resilience towards a more sustainable future.

DISCLOSURES: HIP Investor Inc. is a state-registered investment adviser in several jurisdictions, and HIP Investor Ratings LLC is an impact-ratings firm evaluating impact and ESG on 400,000 investment ratings, including 126,000 municipal entities, 267,000 muni-bond issuances, and 14,000 corporates for equities and bonds. HIP Impact Ratings are for your information and education – and are not intended to be investment recommendations. Past performance is not indicative of future results. All investments are risky and could lose value. Please consult your investment professionals to evaluate if any investment is appropriate for you, your goals, and your risk-return-impact profile.  This is not an offering of securities.

Liana Lan is an ESG impact investing analyst at HIP Investor Ratings.