The federal government has launched various efforts across the last decade to advocate for better diversity and more minority-owned businesses in the energy industry. In 2013, the US Department of Energy introduced the Minorities in Energy Initiative to promote an energy industry workforce that better reflects the nation’s diversity. Five years later, the program was followed by the Equity in Energy Initiative, which similarly sought to encourage involvement from minority-owned businesses, minority-serving institutions, women, and veterans.
To date, results have been mixed. However, rising attention on environmental justice offers opportunities for ESG investors to make an impact not only on climate change but also issues of racial and gender equity.
By the Numbers
The 2020 US Energy and Employment Report recorded that 8% of the wind electric power generation industry workforce was Black and 20% was Hispanic or Latino. In the solar power generation industry, Black workers accounted for 7%–8% of the workforce and Latinx accounted for 20%–21%. Those figures compare against national averages of 18% for Latinx workers and 12% for Black workers. Disparities exist at various levels of the industry; an industry diversity study from the Interstate Renewable Energy Council report concluded that 88% of solar industry executives in 2019 were white and 80% were men.
Efforts within the industry itself have been similarly uninspiring. For example, the Solar Energy Industries Association’s Diverse Suppliers Database has included fewer than 500 firms since its launch in June—less than 5% of the more than 10,000 companies in the industry. In the face of such inertia, the private sector has stepped up to take the lead and drive higher involvement in the renewable energy industry for minorities and minority-owned businesses.
Engaged Market Forces
In July, a joint agreement from Microsoft and Volt Energy created one potential catalyst for expanding renewable power. Microsoft contracted with the national, minority-owned solar energy development company for 250 megawatts of solar-generated electricity. Volt Energy also counts Wake Forest University, Howard University, and the Cheesecake Factory among its clients.
The company is a charter member of Renewables Forward, an organization urging the clean energy industry to:
- Assess diversity and inclusion
- Develop and share corporate practices and policies
- Create a more diverse and inclusive pipeline
- Invest in underresourced and minority communities
The organization prioritizes investments in initiatives such as rooftop solar installations, which are dramatically skewed between Black- and Latinx-majority neighborhoods and white-majority neighborhoods even when accounting for differences in income and homeownership.
“Our diversity issue is not simply a hiring problem but also an issue of education, access, political voice, environmental impact, community protection and sustainability,” wrote the Renewables Forward founders. “We cannot commit to building a more sustainable, better future without committing to addressing the inequities of the past and proactively building a solution that elevates opportunity for all Americans.”
Growing Environmental Justice Initiatives
Renewable energy disparities are also a reflection of broader environmental justice issues, which encompass the disproportionate impacts of climate change on underrepresented communities. Research from Building Equity and Alignment for Impact found that only 1.3% of the $1.34 billion worth of environmental grants in the Midwest and Gulf Coast in 2016–17 went to environmental justice organizations. Although once overlooked, environmental justice causes have gained new prominence: in its recently proposed budget for the US Environmental Protection Agency, the Biden administration included a $936 million environmental justice initiative. Separately, the Bezos Earth Fund announced plans to extend $150 million to climate justice groups this year.
ESG investments that spotlight intersecting elements of social and environmental concerns offer a more nuanced view of the effects of pressing climate change issues. Awareness of diversity and inclusion issues among renewable energy and climate change leaders appears to be gaining; how that attention manifests itself as improvements will likely be a function of funding, commitments, and accountability among industry, government, and philanthropic entities alike.