Climate change report reveals emerging green investment ‘divide’ among funders

Funders are increasingly committed to tackling climate change but some are still struggling to ensure their investments are supporting environmental causes, a report has revealed.

The findings have emerged in a progress report into funders who have signed the Association of Charitable Funders' (ACF) commitment on climate change.

This shows that 60 funders have now signed the set of pledges and making progress in a raft of areas of their organisation and funding, to take action on climate change.

Stewarding investments and decarbonising operations

Among commitments made by signatories is to “recognise climate change as a high-level risk to our investments, and therefore to our mission”.

This commitment adds that funders will “proactively address the risks and opportunities of a transition to a post carbon economy in our investment strategy and its implementation, recognising that our decisions can contribute to this transition being achieved”.

But the ACF says that there is a “divide” among funders in stewarding their investments to tackle climate change, with seven funders yet to start and 11 and an advanced stage. Meanwhile, 26 had made some progress or are getting started.

It cites risks around investing in the "underperformance and falls in value" of fossil fuels as a concern for funders.

“It is basic good stewardship to recognise and address this risk, and there are also many opportunities for foundations to take a more active leadership stance in this area,” said the ACF’s report.

Eight signatories are at an advanced stage in decarbonising and tackling the carbon footprint of their operations, while 30 have made some progress or just getting started, and six have not taken any action in this area, the report also found.

Another commitment by funders who have signed up is to use their resources to tackle climate change. In this area 11 are at an advanced stage, while 31 have made some progress or just getting started. Only two have taken no action to commit resources.

Other commitments made by signatories are to make opportunities for trustees, staff and stakeholders to learn more about tackling climate change. Six are at an advanced stage, while 36 are making progress or getting started. Similarly, two have yet to take any action in this area.

Another is to integrate climate change into existing processes and programmes. Eight are at an advanced stage in meeting this commitment, while 31 are getting started or making some progress and five have not taken any action.

The report contains a number of case studies of good practice by funders in tackling climate change. Sharing good practice was among key areas of support respondents are calling for, says the report.

Among examples cited is work by Esmee Fairbain Foundation last year to adopt a net zero carbon target in its investment portfolio. Another is work by Barrow Cadbury Trust to carry out a “full eco audit” of its operations, which is to step up once its offices are reopened post Covid-19 pandemic.

Joanna Pienkowska, ACF lead on funder commitment and co-author of the report said: “The case studies in this report demonstrate that all foundations – whatever their charitable mission – can play a part in responding to the climate threat by acting in their space. We hope this resource will inspire other foundations to join this collective climate work and sign on to the Commitment.”

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