Enabling Investment in Environmental Sustainability

摘要

This Article proposes an "environmental practices money security interest" (EPMSI) that lawmakers could add to Uniform Commercial Code (UCC) Article 9.1 The EPMSI would grant priority over earlier investors to financers whose extensions of credit enable debtors to invest in improving environmental impact.rnAn extensive conversation about creating incentives for commercial actors to take more responsibility for environmental harm is underway. Very few participants, however, identify commercial finance law as a potential site for developing these types of incentives.rnImagine a company that wants to renovate its manufacturing processes to reduce waste and utilize alternative fuels. Such renovation could require contracting with various experts, service providers, and engineers, as well as acquiring both tangible and intangible property. A company may want to undertake this type of improvement but be unable to do so because it lacks either internal funds or the capacity to issue low-risk debt to pay for the process. The company may lack the capacity to issue low-risk debt because an existing secured creditor has a floating lien on the company's assets and this creditor is unable or unwilling to fund the renovation process. The proposed EPMSI rules would create a collateral-security device that private parties could elect to use in this type of situation.