Collective Insights from Philanthropies Investing in Climate Solutions

In response to the urgent climate crisis, The Russell Family Foundation (TRFF) is advancing climate solutions across every aspect of its work, including through its investment capital. And through its Catalytic Climate Finance Program, TRFF is committed to working with others and sharing its learnings along the way, so that together, foundations and other asset owners can empower equitable climate action. 

During a convening hosted by TRFF this year, members of this group – including TRFF, Sierra Club Foundation, David Rockefeller Fund and McConnell Foundation – came together to chart a path forward following in the footsteps of other leaders such as McKnight Foundation. Jessie Smith Noyes Foundation is also a member of this group.

Here are some of the key observations from this group of leaders:

Collective strength

Together, foundations serve as greater motivation for others to invest in equitable climate action. 

Lourdes Rodríguez, Chief Executive Officer at David Rockefeller Fund (DRF), speaking about TRFF and DRF, shared, “if two relatively small organizations making decisions guided by investment committees and powered by external investment advisor firms, can take on this journey, then other similar sized and larger organizations can also take this on. Size is not prohibitive.” 

Dan Chu, Executive Director at Sierra Club Foundation, added, “people often think about capital in pure financial terms. But there are many forms of capital. One of the most overlooked, in our view, is network capital. The convening demonstrated to us how powerful network capital can be in addressing multilayered problems and in developing solutions at the systems level – solutions that scale the impact of what any one foundation can do on its own.” And on a financial level, we can shift more capital toward climate solutions as a collective, too. 

Promoting equitable action

There is a critical role for philanthropy to support climate justice and in reaching climate goals at the same time as diversity, equity and inclusion goals. 

Edmund Piro, Chief Investment Officer at McConnell Foundation reflected, “the toughest part of our journey towards net zero is ahead: how to align our investments to ensure real-world emissions reductions and how to incorporate the principles of a Just Transition.” 

But it is possible. Pedro Henriques da Silva, Director for Shifting Trillions at the Sierra Club Foundation shared, “our portfolios – which are largely divested from fossil fuels and lean towards socially-minded climate solutions – have been consistently outperforming various benchmarks over time, across asset classes. We see justice as the core of our approach to climate solutions. It’s not about inclusion to us; it really is fundamental to solving the climate crisis. The progress we’ve made in developing a framework that is rooted in justice and practical to our role as a foundation has been a key success, so far.”

Real impact

Empowering impactful climate action is a driving force, it cannot simply be an additional “nice-to-have” – investments really must make a difference in the real world. 

Edmund Piro shared, “moving the needle in the real economy towards net zero is not only about minimizing financed emissions, but how to work collectively towards real-world emissions reductions.”

Lourdes Rodríguez said, “for philanthropic organizations, investment decisions should be driven by mission rather than simply wealth generation or return on investment. The use of endowments towards climate solutions, especially for smaller organizations with smaller grantmaking budgets, is a great way to bring a lot more power behind our organizational efforts. We are not simply limited by what our grant making dollars can do when we are using our endowment to finance climate solutions.”

Sharing learnings

The philanthropic community must learn together: share the trickier issues; cross-share portfolios; contemplate the balance between grant-making and investments; discuss how to engage asset managers, and much more. 

Dan Chu said, “our core external initiative focuses on shifting trillions – the role of capital in achieving the world we all deserve. For the most part, you don’t shift trillions of dollars with a single endowment. You shift it by taking learnings from that endowment, and bringing in other investors, or taking learnings from others, and bringing it to your endowment. Exporting best practices, and importing the same, and taking action that affects the way the world looks and feels.” 

One learning, shared by Edmund Piro,  is “calculating the baseline for the financed emissions of your portfolio is one concrete first step towards understanding the impact of emissions across your portfolio and the need for climate solutions. Get started, learn along the way, and be flexible.” 

Increasing transparency

Foundations must increase transparency as part of financing climate solutions – to show where and how finance is being directed, and for others to learn.

Lourdes Rodríguez shared, “I have found that the sector seems to be driven by positioning for advantage to obtain better returns on investment. I find it fascinating and unnecessary for philanthropic organizations to operate within this ethos. I ask myself, what if we operated within a culture of transparency, for example, by sharing good finds and leads and by taking different kinds of risks.”

These insights are strengthening the way this group of foundations continues to invest in climate solutions, helped by investment managers such as ALTi Tiedemann Global and networks such as the Intentional Endowments Network, Confluence Philanthropy and Mission Investors Exchange. The stage is set for finance to help repair the health of the Earth for all. The philanthropic sector should join this movement.