Innovating for impact: The Russell Family Foundation’s 5 tools for climate-aligned investment

Introduction

The Russell Family Foundation (TRFF) has committed to leveraging our resources for meaningful change, a legacy going back to Russell Investments, which helped pioneer access to investments for individuals through their retirement accounts. Today, we continue to evolve this spirit, channeling it toward addressing one of the most pressing issues of our time: the climate crisis. 

We’re working towards total portfolio activation, meaning that our dedication to this goal spreads across every aspect of our operations and investment portfolio. Through our Catalytic Climate Finance (CCF) Program, we are deploying a comprehensive strategy that mobilizes investments, grantmaking, convenings, communications, and collaboration toward the most impactful results, which we hope will ultimately grow the impact investing field. 

To achieve impact, we use five strategic tools to guide our investments. By balancing these tools, we are able to target and address various aspects of the climate crisis through our organizational activities and investment portfolio. 

1. Net Zero

In October 2022, we publicly announced our commitment to reaching net-zero carbon emissions by 2030. We also joined the UN-convened Net Zero Asset Owner Alliance (NZAOA), which is a member-led initiative of investors committed to reaching net-zero within their portfolios by 2050. To further develop this net-zero goal, we partnered with a carbon accounting firm to assess our direct and indirect carbon emissions and create interim emissions reduction targets. Where we choose to invest drives much of our carbon footprint.

Under this net zero umbrella, we are invested in decarbonization technologies that are addressing solutions for hard to abate industries and nature-based solutions that use the earth’s natural systems to sequester carbon and enhance biodiversity. For example, we invest in Carbon Direct, which innovates and develops carbon management and removal technologies and EFMI, which restores forests, farms, and ranches.

Our commitment to net zero also means we are working to mitigate emissions across our entire investment portfolio – the four other tools we use help guide that process. 

2. Sustainable Investing

For us, sustainable investing is not just a buzzword, but a guiding principle. We use the term “impact investing” to mean negative screening, positive tilts, environmental, social, and governance (ESG) frameworks, and thematic and catalytic investments – to seek out sustainable financial, social, and environmental outcomes in line with our mission to drive equitable climate solutions. 

When we make investments for the purpose of ensuring market diversification within our portfolio, we apply negative screening, which limits our exposure to companies, sectors and strategies that are not aligned with our mission. Similarly, we apply positive tilts to prioritize potential investments that match our values. Because of our emphasis on climate-aligned investments, we also prioritize companies with climate action policies and results aligning with ESG values, as we believe that they are better long-term investments and reduce the climate-related risk often seen in finance.  

3. Thematic and Catalytic Investments

One of the pillars of our work toward positive climate impacts is our thematic and catalytic investments, a substantial and growing part of our investment portfolio. Thematic investing allows us to dedicate portions of our portfolio to decarbonization technologies and nature-based solutions, two thematic areas in alignment with our goals, which include sustainable forestry, agriculture, and clean tech. For example, within the theme of sustainable forestry, we invest in both BTG Pactual, which advances the conversion of forestland to more sustainable practices in a collaborative partnership with The Nature Conservancy, and Lyme Timber, a sustainable forestry and ecosystem service fund for long-term conservation.   

Catalytic investments are those that could generate significant environmental or social impacts. They might be higher risk or lower expected financial returns in the short term but could create long-term impact through their innovative business models. One of our catalytic investments is Organically Grown Company, which advocates for sustainable organic agriculture by supporting farmers, both big and small, and pushing for a fair and just marketplace for organic produce. 

Our thematic and catalytic investments let us take bigger risks within our portfolio for the organizations and businesses that we believe can push the envelope and foster impact. 

4. Transparency and Accountability

As we chart our journey toward a net-zero portfolio, we are committed to transparency and accountability. Transparency is central to our commitment to climate-aligned investing, as it enables us to not only track our progress, but also to inspire and encourage other organizations to start their own journeys. Sharing information about our investments, targets, and reporting processes empowers stakeholders to understand our approach and hold us accountable for our actions. 

As part of this commitment, we openly share this data on our website. This includes databases of our recent grants and investments, a comprehensive Investment Policy Statement, and our targets and reporting. Publicly sharing these decisions allows stakeholders to track our progress over time as we work to meet our commitments. By maintaining transparency in our investments, journey, targets, and reporting, we hope to catalyze a broader shift towards climate-aligned investing across the financial sector. 

5. Active Ownership

Our work does not stop at making investments – we also aim to engage with the companies, funds, and organizations we invest in. We use both active and passive management. With active management, we employ fund managers or investment teams who are engaging on our behalf, such as Generation Investment Management and Wellington. These managers work to influence the companies they invest in based on a set of values and goals.

Owning shares directly through a passively managed separate account structure allows us to directly connect with companies we invest in through proxy voting, co-filing opportunities with third party support, direct engagement, and field building. This allows us to exercise our shareholder rights to push decision-making processes towards a sustainable path and creates opportunities for collaboration with other investors or stakeholders. 

Our investments are currently split between active and passive management, and we are committed to leveraging our investments in ways that align most with our climate-aligned values and goals. 

Through our five strategic tools, we use our investment portfolio to not only generate real-world impact and drive climate solutions, but also to motivate and empower others to join us. We want to learn from others as well as share learnings about our own work. If you are interested in talking to us, please get in touch. 

Together, we can turn the tide on climate change and pave the way towards a greener, more resilient planet for generations to come.

You can read our latest investment policy statement here.