What key metrics should CDFIs use to measure the impact of decarbonization and mitigation efforts before and after construction?

To track key metrics in their portfolio pre- and post-construction, CDFIs should follow these three steps: 

First, set portfolio-level qualitative metric standards: CDFIs must establish their own qualitative metrics that define portfolio standards and goals. This includes setting specific targets, such as: 

• A certain percentage of loans each year meeting high building performance standards 
• Establishing minimum energy efficiency requirements for different project types (percentage of energy reduction) 
• Establishing minimum greenhouse gas emissions reduction or metric tons of carbon reduced in the loan portfolio annually 

Second, establish quantitative metrics: Define metrics to collect pre- and post-construction on a project-by-project basis to aggregate and demonstrate progress toward decarbonization goals. 

• Pre-Construction: 
  • Third-party certifications (LEED, Passive House, Enterprise Green Communities) as proxies for high performance; track green building certifications that reflect the project’s sustainability credentials 
  • Project categorization into performance tiers, from basic efficiency improvements to complete electrification with renewable integration (full or partial electrification status) 
  • Baseline Energy Use Intensity (EUI) before renovation and projected post-construction EUI 
• Post-Construction: 
  • Annual energy savings (usage reduction) by calculating the reduction in energy consumption achieved through retrofits or new construction
  • Annual cost savings/or operating savings ($) by calculating the reduction in energy and water bills resulting from efficiency improvements
  • Measuring actual Energy Use Intensity (EUI) to measure the energy consumption per square foot before and after improvements
  • Greenhouse gas emissions reductions (metric tons of carbon reduction) by measuring total carbon emissions produced by the building pre- and post-construction using standardized calculations (e.g., emissions per occupant or per square foot)
  • Water use reduction: Track the reduction in water usage, particularly through water-saving fixtures and irrigation systems 

Third, implement tracking systems: Evaluate existing capabilities and establish new tracking processes. 

• Current Assessment: 
  • Review existing CDFI loan performance tracking systems, Capacity Remuneration Mechanism (CRM) tools, and Impact Measurement Framework metrics 
  • Determine what your CDFI currently collects through this process (cost data, energy/consumption from utility bills, other qualitative social impact metrics, etc.) 
• Implementation:
  • Identify the most efficient way to incorporate green impact metrics into established processes and tools and how to augment or add to current data collection processes
  • Determine energy metrics the CDFI will start to track for each loan to enable portfolio-wide assessment
  • Start to identify programs for tracking energy, water, and greenhouse gas reduction data (such as EPA Portfolio Manager, Energy Scorecards, and other industry-standard energy and carbon tracking platforms) Aggregate individual loan metrics to evaluate overall portfolio performance against qualitative standards 

In conclusion, it is imperative to set up a comprehensive framework to enable effective measurement of decarbonization across the portfolio while maintaining efficient data collection and reporting processes.