In much the same way that The Russell Family Foundation helped forge a clearer path for the divest/invest movement, we look to show that Net Zero commitments are both possible and profitable. As such, we have signed on to the Net Zero Asset Owners Alliance with a commitment to be Net Zero by 2030. This commitment is not only in service of TRFF’s core values but is also representative of a larger theme in the foundation, working with communities to create a stronger collective future. We know that climate change will impact everyone, but more acutely those who are historically disadvantaged and in frontline communities. The commitment to Net Zero is the next step to ensure we are moving towards total values alignment from grantmaking, to operations, to investments. However, we cannot do this work in isolation.
Confluence Philanthropy, with the support of The Russell Family Foundation, held a two-day Net Zero Intensive in early February at Amalgamated Bank in New York City, NY. The goal was to convene asset managers and owners committed to Net Zero investment strategies to collaborate and amplify collective impact for a low-carbon, more just future.
Key takeaways from event sessions are:
Where do we even start?
With a predicted $2.5T needing to be spent to accomplish the Paris Goals by 2050, asset managers and owners are left asking how. How are firms deploying capital to maintain alignment with mission, vision, and values? Two large asset managers spoke to their strategies which broadly rely on the following: evaluate the current portfolio to understand where you are, engage with the worst emitters and give credit to those willing to change, and replace those who are not able to align.
We interacted with a demonstration of the En-ROADS climate simulator which visualizes the impact of approximately thirty different policy levers ranging from the efficiency of energy to deforestation. The simulator has provided value in visualizing which mechanisms have the highest predicted impact on the 1.5℃ goal for college students, money managers, and political figures.
We’re committed to Net Zero, but which framework?
We heard from two advisors who utilized different frameworks than the framework TRFF has committed, the Net Zero Asset Owners Alliance (NZAOA), on the path to Net Zero. While there isn’t yet the consistency of which frameworks to align, the collective nonetheless affirmed the need for frameworks as a guide for maintaining integrity in a climate transition plan. Further, perhaps the most essential feature that any of these frameworks require: transparency. Simply put, we need additional climate-focused disclosures in order to successfully make the Net Zero transition.
A cautionary tale: no framework is perfect, especially this early on, so pay continuous attention to where Net Zero metrics become misaligned with the mission. But! Don’t be paralyzed, opt for a framework that best suits your current and future goals, get connected to the community, and get started.
Taking active ownership of your investments
This session brought to light another useful tool on the path to Net Zero: corporate shareholder engagement. We learned from active ownership partners who work with asset owners to amplify the voices of shareholders. By working through coalitions, shareholders are able to amplify their impact through direct engagement, voting proxies and filing shareholder resolutions. Shareholder engagement is an important tool on the path to Net Zero by directing action to demand climate transition plans, and transparency in disclosing Scope 3 emissions which will provide the necessary data to accurately measure the transition.
What are carbon offsets and how can we utilize them on the path to Net Zero?
Carbon offsets fall generally into two categories: nature-based and science-based; and they are sold on both a regulated and voluntary market. In much the same way the broader Net Zero frameworks are currently emerging, so too is the availability of carbon offsets in the market. With increasing availability of offsets, we learned four key considerations for evaluating quality: does the offset provide a solution to the problem, are there any externalities, is the solution durable, and does the project provide additional goods that would not be done in the normal course of business.
Worth a note: The order in which you decarbonize a portfolio matters. Starting by reducing or removing the largest emitters and refraining from using offsets until absolutely necessary will create a more sustainable transition away from carbon.
We know that the effects of climate change will disproportionately impact front line communities. And, to adequately combat the impending crisis, members of these impacted communities need to have their voices heard and amplified. We heard from community advocates who encouraged us to bring more community voices onto the board and other decision-making roles.
Long story short: The path to Net Zero is going to be long and occasionally painful, but full of learning opportunities. By keeping our values at the core of our transition, engaging with investment and front-line communities, and tackling the biggest emitters first, we can transition our portfolio to Net Zero in line with our mission, vision, and values.
I left the intensive simultaneously excited for the path ahead and the partnerships we will develop along the way and concerned about the job left to be done. My hope is the foundation’s path to Net Zero will be filled with deep learning, exciting new partnerships, and growing engagement from larger stakeholders.