Two Futures for Finance: Can Banking Become Regenerative?
How Beneficial State Bank is rewriting capital flows—and where the frontier lies
Putting economy back into ecology.
Every dollar moving through the financial system makes a choice: extract or regenerate; fund monoculture or biodiversity; finance fossil fuel infrastructure or living soil.
Most banks don't see these as choices at all. They're structured for one thing: maximizing returns for shareholders, with "sustainability" as optional branding. The result is a financial system that accelerates ecosystem collapse while claiming it’s concerned about climate risk.
But another story is possible, and one West Coast bank is starting to write it.
When Capital Structure Determines Impact
Beneficial State Bank (BSB) was designed differently from day one. Founded in 2007 by Kat Taylor and Tom Steyer with about $1.9 billion in assets today, BSB's capital is majority-owned by the Beneficial State Foundation, a nonprofit. Profits get reinvested in mission rather than extracted by private shareholders.
Their stated mission: "an economy that restores our planet and extends prosperity to all."
That ownership structure matters. It means BSB can ask questions conventional banks skip:
· Will this loan displace vulnerable communities?
· Does it lock in fossil fuel infrastructure?
· Will it advance racial equity?
But here's the question they're not yet asking consistently:
Will this project regenerate the watershed it sits in?
That gap reveals where regenerative finance stands today, and the critical evolution it needs from here.
A Tale of Two Financial Futures
Like coffee and clothing, finance faces a turning point:
Future A (Business-as-Usual Finance): Capital flows to extraction. Banks finance fossil infrastructure, industrial agriculture, habitat-destroying development. "Sustainability" means risk management and greenwashing. Profits flow upward while ecosystems and communities are depleted.
Future B (Regenerative Finance): Capital becomes a regenerative flow system. Lending criteria embed soil health, biodiversity, water cycles. Communities and ecosystems gain voice in financing decisions. Money nourishes rather than extracts.
BSB is walking toward Future B. But they're not there yet. Let's map where they stand.. and where the pathways lead.
Mapping BSB Through the Regenerative Innovation Canvas
Habitat & Living Systems
Current State: BSB finances substantial affordable housing and community infrastructure while maintaining zero fossil fuel lending commitments. They actively avoid projects that degrade habitats.
The Gap: Housing loans don't require regenerative design standards. A BSB-financed affordable housing project might achieve equity goals while contributing to urban heat islands, habitat fragmentation, or watershed degradation. The buildings provide shelter but don't restore living systems.
Pathway Forward: Establish baseline regenerative design requirements—biodiverse landscaping with native species, on-site water infiltration, habitat corridors integrated into development. Make buildings that actively restore local ecosystems part of standard underwriting, not optional add-ons. Partner with organizations like Biomimicry Institute or Living Building Challenge to build assessment capacity.
Food, Water & Nutrient Cycles
Current State: This could be BSB's largest blindspot. While they occasionally finance water utilities or community food enterprises, food and water systems aren't embedded in their lending model. There's no dedicated capital for regenerative agriculture, no underwriting expertise for operations that close nutrient loops.
The Gap: For a bank committed to planetary restoration, this absence is striking. Agriculture drives both ecosystem collapse and regeneration potential, yet BSB has no systematic approach.
Pathway Forward: Develop dedicated loan products for regenerative agriculture with underwriting criteria that value soil carbon and water retention. This means learning to assess operations using frameworks like Ecological Outcome Verification or Land to Market. Create financing for water recycling infrastructure and circular food enterprises. Partner with organizations like Fibershed, Savory Institute, or Kiss the Ground to build expertise in regenerative land assessment.
Climate & Energy Balance
Current State: BSB's strength. Fossil-free lending isn't marketing for them, it's operational reality. They finance solar installations, energy efficiency, climate-resilient infrastructure. They advocate publicly for climate-friendly financial regulation.
The Gap: Climate action remains largely carbon-focused rather than systems-integrated. A BSB-financed solar farm might sit on degraded land that could restore habitat and water cycles alongside energy generation.
Pathway Forward: Connect energy financing to broader ecosystem restoration. Require solar installations above certain scale to include biodiversity enhancement plans. Link energy efficiency retrofits to water system upgrades and green infrastructure. Move from carbon accounting to whole-systems climate action that regenerates ecosystems while reducing emissions.
Biodiversity, Health & Resilience
Current State: Strong commitment to human health and resilience through equity-focused lending, racial justice initiatives, and community-stabilizing affordable housing.
The Gap: Ecological health and biodiversity remain implicit rather than explicit. No stated biodiversity strategy, no measurement of ecosystem impacts, no consideration of how capital flows affect species and habitats.
Pathway Forward: Integrate biodiversity assessment into loan evaluation using emerging frameworks like TNFD (Taskforce on Nature-related Financial Disclosures). Require commercial projects above threshold amounts to demonstrate net biodiversity benefit. Create financial instruments for ecosystem restoration (conservation lending, biodiversity credits, urban ecological infrastructure) making it economically viable for landowners to restore habitat rather than develop it. Or to implement regenerative approaches to agriculture.
Knowledge, Innovation & Evolution
Current State: BSB excels here. Detailed annual impact reports, public advocacy work, Global Alliance for Banking on Values membership. They share learning openly and push industry conversations forward.
The Gap: Innovation sharing remains general rather than technical. Other banks can't easily replicate BSB's approaches because specific methodologies, underwriting criteria, and risk frameworks aren't detailed.
Pathway Forward: Open-source regenerative lending criteria with implementation details. Publish case studies showing how to assess soil health risk or biodiversity value in loan decisions. Create practitioner networks where mission-aligned banks learn together. Host convenings on regenerative finance infrastructure. Become the prototype others can study, adapt, and scale, and not just an exceptional outlier.
Kinship & Culture (Human & More-than-Human)
Current State: BSB's ownership and governance models embody expanded kinship - stakeholder capitalism, community benefit, financial inclusion. They've reimagined who a bank serves beyond shareholders.
The Gap: This kinship remains human-centered. Watersheds, soil communities, ecosystems don't have voice or representation in lending decisions. The more-than-human world that makes all economic activity possible is absent from governance.
Pathway Forward: Experiment with governance models including ecological representation. This could mean: partnering with watershed councils in lending decisions affecting waterways; collaborating with indigenous communities practicing land stewardship; piloting "ecosystem stakeholder audits" alongside financial audits. Ask not just "Is this loan fair to people?" but "Is it fair to the river? The soil? The species affected?"
Where BSB Sits Today
Taken together, BSB operates in the Circular → Restorative transition zone. They've moved well beyond "do no harm" into actively financing solutions. But they haven't yet embedded regeneration of living systems into every portfolio decision.
This assessment isn't critique. It's recognition of where the frontier lies.
Why This Matters for Every Regenerative Business
Like what we saw in our posts about Heirloom in coffee and Woolly in apparel, BSB is changing the story of a foundational infrastructure. But finance is different: it's not just another product category. It's the system that enables or constrains everything else.
Companies like Heirloom can prove regenerative agriculture creates ecological health and premium products. Woolly can show natural fibers beat synthetics. But they need capital partners who understand that ecosystem value isn't just environmental sentiment. It's fundamental to long-term business resilience and systemic stability.
Every regenerative brand needs regenerative capital to scale. Every circular business model needs lenders who can underwrite based on living systems thinking, not just conventional financial metrics.
Without regenerative finance infrastructure, regenerative businesses remain exceptions swimming upstream. BSB shows this infrastructure can exist and that it has the opportunity to evolve even further.
The Concurrent Opportunity
This isn't "fix finance later, after we fix food and fashion." The future demands we transform all three systems at once.
BSB has proven a bank can be designed for people and planet while remaining financially viable. The next evolution could be embedding all six planetary dimensions into their lending practice. This would create the financial foundation the regenerative economy needs.
An Invitation
If your organization depends on capital, whether you're seeking financing or deploying it, the six dimensions of the Regenerative Innovation Canvas reveal where you're creating regenerative impact and where untapped pathways lie.
If you're building a regenerative company: Does your bank understand what you're actually doing? Can they underwrite based on soil health, ecosystem value, and long-term resilience? Or are you translating regenerative innovation into conventional financial language that misses the point?
If you're in finance: What would it take to make regeneration, not just sustainability, core to your lending criteria? What expertise would you need to build? What partnerships would help you assess living systems value?
BSB isn't fully there yet. No bank is. But they're charting a pathway worth following by showing us that when capital structure itself changes, a different financial future becomes possible.
Download the Regenerative Innovation Canvas and map your capital flows. Start with one dimension that reveals the clearest gap. Like Heirloom and Woolly discovered, the path to regeneration often starts with questioning what everyone else accepts as just how finance is done.
Which future will your capital help create?