Temperatures skyrocketed in June setting new records. The worsening climate change crisis, combined with the effects of El Niño, have raised concerns that it could push Earth towards destabilising climate thresholds. This significant increase in the frequency and intensity of heatwaves are a clear and alarming indication of a climate emergency. As the cost of inaction has becoming glaringly evident, it is imperative that we leverage all the available tools to combat the deadly consequences of the climate crisis. Among these crucial aspects is climate philanthropy, playing a vital role in addressing the pressing challenges we face.
Encouragingly, philanthropic giving for climate change has experienced a significant surge in recent years. According to a report by ClimateWorks, funding from philanthropic foundations dedicated to climate change mitigation has more than tripled between 2015 and 2021, soaring from $900 million to $3 billion. In parallel, the number of grantees receiving funding for climate change mitigation nearly doubled during the same period, from 1,400 to 2,775. This is evident as major philanthropists are increasingly pledging large sums to address this global challenge. From Michael Bloomberg's decision to transfer his $12 billion company to Bloomberg Philanthropies, which will focus on environmental aspects among other areas, Patagonia founders' donation of his $3 billion company to fight climate change, to Jeff Bezos's $10 billion pledge to combat the climate crisis, among others, many foundations today are stepping up to join the fight against climate change.
The Significance of Climate Philanthropy and the Need for Expansion
However, despite the recent positive trend in climate philanthropy, it still needs to match the scale and urgency of the climate crisis. Funding for climate action has struggled to break through the 2 per cent barrier and is far from meeting the actual requirements. For instance, in India, climate action represents a mere 0.5 per cent of overall domestic philanthropic funding, meeting only about 10 per cent of the country's climate financing requirements.
The scale of the climate crisis demands a massive amount of dedicated capital. Scientists have constantly emphasized the critical need to limit global warming to 1.5°C in order to minimize the most dangerous impacts of climate change. Achieving this target, however, requires substantial reductions in greenhouse gas (GHG) emissions by 2030 and achieving net-zero emissions by 2050, necessitating trillions of dollars in additional capital spending.
According to a World Economic Forum article achieving a fair climate- and nature-positive future for the planet by 2050 will necessitate a total funding of over $100 trillion in the coming three decades.
Moreover, significant investments are required to enhance resilience against the physical climate hazards that are already inevitable.
To tackle this monumental challenge, a collective effort is essential, including philanthropy which has the potential to make a significant impact. While philanthropy alone cannot raise the trillions of dollars needed, foundations, philanthropic LLCs, and family offices can play a transformative role in climate action as philanthropic dollars can help achieve transformative, long-term impacts.
Speaking of the importance of expanding philanthropic capital for climate action, ClimateWorks CEO Helen Mountford says, "Philanthropy needs to break through the 2 per cent funding barrier if it is to do its part to keep the world aiming for a 1.5° C future." While she thinks a 25 per cent annual increase in giving is encouraging, "philanthropy needs to accelerate its efforts even more and move funds faster to the places that need them the most to give people and the planet a fighting chance."
Philanthropic organizations often have a higher risk tolerance compared to profit-oriented investors. This allows them to provide crucial early-stage funding to emerging climate solutions, helping these innovations scale up.
Philanthropic organizations and foundations can respond quickly to emerging climate challenges and opportunities. They are often more flexible in their funding decisions and can support innovative and high-impact projects that may not fit traditional funding criteria. They can also swiftly deploy unrestricted funds to address urgent climate-related problems, providing timely support where it is most needed.
Philanthropists possess the unique ability to deploy flexible and patient capital. This enables them to directly support high-value interventions and leverage additional funding from various sources to amplify their impact. This allows them to be strategic in their funding decisions, leading to more effective and sustainable outcomes in the long run.
Philanthropic investments can attract additional public and private sector funding by demonstrating the viability and potential success of climate initiatives. For instance, Varad Pande and Shloka Nath point out how in India “philanthropically funded work by the World Resources Institute (WRI) has helped galvanise industry around future carbon-markets”.
Philanthropic funding can support advocacy efforts to drive policy change and promote sustainable practices at local, national, and global levels. This can lead to more robust climate policies and regulatory frameworks.
In addition they have the capacity to convene stakeholders, foster collaboration and drive research. These factors contribute to the large-scale implementation of climate solutions by bringing together diverse perspectives and resources.
Further, Eléonore Delanoë, Arthur Gautier and Anne-Claire Pache in their article in Alliance highlight the key strategies through which philanthropists can make a positive impact in the climate action space. They write:
“We have found that there are four main strategies that philanthropists can use to positively influence the climate evolution. They have the ability to shape the political debate on climate. They can act as boundary spanners between different players through field-building actions. They are able to influence market dynamics through well-targeted investments. Finally, they can contribute to build strong civil society movements through grassroots organising”.
Additionally, philanthropists bring valuable expertise, resources, and techniques to the table, accelerating decarbonisation and adaptation efforts through their knowledge and support. These factors collectively demonstrate the instrumental role that philanthropic capital plays in combating climate change. Thus by including a climate lens in their philanthropic strategies, these entities can contribute in reshaping our societies to be climate resilient.
Scaling Philanthropic Action with Climate Data
The William and Flora Hewlett Foundation commissioned a study to the Centre for Effective Philanthropy. Titled "Much Alarm, Less Action: Foundations & Climate Change," this insightful study surveyed 188 foundation leaders and 120 nonprofit leaders. A noteworthy finding from the study is how foundation and nonprofit leaders share a strong consensus regarding the urgency of climate change as a pressing issue that will adversely affect the communities they serve, particularly historically marginalized groups. A question that naturally arises thus is, despite the growing concern over the climate crisis, why is the flow of philanthropic funding so slow to come?
Climate philanthropy has historically faced several challenges that have contributed to its relatively low levels of funding. Reasons for this range from limited awareness and understanding, competition for resources, and political and policy challenges, among others. One of the major stumbling blocks however which has withheld philanthropists from exploring the climate space are challenges with measuring the impact of the efforts undertaken.
Philanthropists often seek measurable and tangible outcomes from their investments. However, measuring the impact of climate-related initiatives can be complex and requires long-term monitoring and evaluation. It often requires tracking various indicators, such as greenhouse gas emissions reduction, renewable energy adoption, ecosystem restoration, or climate resilience measures. Gauging the impact has been a problem due to challenges and gaps in data availability, quality, and accessibility. The difficulty in quantifying and determining impact can deter philanthropists from engaging in the climate space.
Read our blog “What is Climate Intelligence & How Can Satellite Data Help?” to learn more.
A lot of these challenges have to do with the limitations in the traditional MRV (Measurement, Reporting, and Verification) methods which have been widely used in philanthropic projects. Not only are they costly and resource-intensive, requiring significant financial investment, they also have limited spatial and temporal coverage and often have to rely on manual data collection and analysis processes. This can be time-consuming and prone to human error. Further, they struggle to capture and measure the full range of impacts and outcomes associated with philanthropic climate projects.
Digital MRV as a Solution
However with the rapid development of technology, measuring impact of initiatives has been possible. Digital MRV in this regard has been a game-changer. Digital MRV (Measurement, Reporting, and Verification) refers to the use of digital technologies and data-driven approaches to measure, report, and verify climate-related information. It involves the collection, analysis, and management of data using digital tools and platforms to monitor and assess the impact of climate-related activities or projects. It encompasses various technologies and methods, including satellite remote sensing, artificial intelligence (AI), geographic information systems (GIS), internet of things (IoT) devices, blockchain etc.
Satellite technology in conjunction with Artificial Intelligence specifically has made it possible to capture a complete view of climate risk’s around the world and monitor and measure the impact of projects and emission reduction measures which help in the fight against climate change. Today it is possible to monitor changes in surface areas of water bodies, measure carbon sequestration, monitor renewable infrastructure etc all in real-time and in high-resolution, making it possible to calculate the impact climate mitigation activities have.
To learn more about how satellite data can help read our blog here.
Some of the benefits brought to philanthropic organizations by digital MRV, include:
Impact Measurement and Evaluation: Digital MRV facilitates robust measurement and evaluation of the impact of climate projects or initiatives supported by philanthropic capital. It enables the tracking of key performance indicators, assessing the effectiveness of interventions, and identifying areas for improvement. This evidence-based approach helps philanthropists understand the outcomes and optimize their capital.
Real-time Monitoring and Feedback: Digital MRV technologies provide real-time monitoring capabilities, allowing philanthropic organizations to receive timely updates on the progress and performance of climate projects. This facilitates rapid feedback loops, enabling adjustments, and course corrections to maximize the impact of philanthropic capital.
Enhanced Transparency and Trust: By employing digital MRV systems, philanthropic organizations can enhance transparency and build trust among stakeholders. The availability of verifiable and standardized data promotes credibility and fosters collaborations with other funders, governments, and stakeholders.
Data-driven Decision Making: Digital MRV provides access to comprehensive and accurate climate data, enabling data-driven decision making. Philanthropic organizations can leverage this data to identify high-impact projects, target resources effectively, and align their investments with climate priorities.
Demonstrating Scalability and Replicability: Digital MRV helps showcase the scalability and replicability of successful climate projects. By providing robust data on the outcomes and impact, they can attract additional funding, partnerships, and collaborations to expand proven interventions and drive broader change.
Verification and Accountability: Independent verification services offered through digital MRV solutions enhance credibility and assurance in philanthropic initiatives. Verification ensures the desired impact is achieved, maintaining accountability and transparency.
“Perhaps the most promising data point uncovered in CEP’s report is that 45 percent of foundation and nonprofit leaders have not closed the door on the possibility of funding climate change,” Shawn Reifsteck, Vice President of strategy, collaboration, and brand, ClimateWorks Foundation wrote in his blog post. “This reinforces that there is a large number of folks within philanthropy that are open to joining the climate fight but may not know where to start.”
Credible climate data in this regard may play a crucial role on encouraging more philanthropist organisations to engage in the climate space. By helping them identify effective projects, manage risks, and demonstrate the impact of their efforts, digital MRV can encourage more philanthropic leaders to join the climate fight.
Given that our collective future will be determined by the actions we take in the coming decades, it is imperative that we leverage all the available solutions to expand climate action. Access to credible data can spur foundation leaders and boards to ramp up climate action and encourage a global momentum toward climate action, fostering the transition to a sustainable future.