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Using investments to curb climate change – 3 cases, 5 practical learnings

According to a new report from Philea, a collaborative of Foundations in Europe, titled Feeling the Heat: How Foundations Can Use Their Investments to Curb Climate Change '…we are noticing slow progress…[on]…integrating climate considerations into investment strategies...'.

Helpfully, beyond this observation, Philea profiles three organizations of varying sizes, and their practical learnings from integrating more climate investing into their programs, with five wonderful lessons.

The three organizations profiled in some detail in the study are:

  1. Fundación Antonio Aranzábal of Spain, size €1.6m, annual operating budget €85k

  2. Barrow Cadbury Trust (Quaker) of the UK, size €90.9m, annual grantmaking budget €2.5m

  3. Nordea-fonden of Denmark, size €2.1b, annual grantmaking budget €120m

While a diverse group, common learnings from their investment approaches emerged:

  • Ground in values, move through pragmatics: 'this was a long-term process that required both a fundamental reflection of the foundation’s core values as well as the development of a pragmatic step-by-step approach'.

  • Address questions as you go: 'As part of the learning process, it is important to address relevant concerns: Will this affect our returns? What approach is best suited to our foundation (divestment, engagement, impact investing, etc.)? How do we know that we are really having an impact?'

  • Good leadership and consensus building: 'Having an internal champion to start the process is vital. As a next step, it is important to find the right allies internally, at board level but also among the foundation staff'.

  • Build trust and transparency with your investment service providers: '…it is important to seek out the right investment advisors who can bring relevant expertise and experience. Our interviewees stressed the importance of creating a relationship based on trust and a shared understanding of the foundation’s values with their advisors'.

  • Make a 'public' commitment: '…[they] also emphasise[d] the importance of communicating their investment policy publicly as a way to increase internal motivation and build their reputation'.

Further, the three foundations noted something we often hear: 'individually we may be smaller players in the financial system, but we can "punch above our weight" by sharing lessons, contributing to the development of this field of investing, and supporting networks that are sharing and strengthening these investment practices'. A refrain you may recognize from our FCI work and recent Faithfull Finance course!


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