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special feature clim ate phil anthropy af ter paris p49

Philanthropy’s role in Foundations have been essential to the process,

representing a quarter of the total divestment com-

mobilizing green finance mitments.2 Undoubtedly, actors in the philanthropic

sector are ideally placed to leverage their financial
clout and strong networks to achieve meaningful
Mark Campanale and Iancu Daramus change. In Europe, for example, the Ashden and Mark
Leonard Trusts have galvanized over 30 foundations
worth over $8 billion to divest. Moreover, the argu-
While a diplomatic triumph, the Paris Agreement must overcome ment that divestment is ineffective because there
major challenges in its implementation. With the International will always be buyers for the divested stock is quickly
Energy Agency estimating $15 trillion of investments required losing ground – the Bank of England has admitted
to meet the targets agreed, the philanthropic sector can play investors shunning fossil fuels could be one of the
a crucial role in mobilizing finance for success, divesting its drivers of the oil price slump. 3
own assets from fossil fuels and investing in new and existing
sustainable energy sources, while promoting robust capital But divestment alone is not enough. It must be ac-
markets which can deliver an economy geared to preventing companied by a steady stream of investment into
dangerous climate change. low-carbon technology. Not just into R&D for an ‘en-
ergy miracle’, but also into the deployment of currently
Philanthropic organizations can encourage the rebal- available technologies and best practices. As we speak,
ancing of capital markets to take account of climate developing countries are making key choices that
risk. The arguments are clear: to limit the disastrous could lock in high-carbon infrastructure for decades.
effects of global warming, two-thirds of listed fossil Low- or zero-interest loans can leverage finance by a
fuel resources are effectively ‘unburnable’ and must factor of 50,4 and there is no shortage of innovative
stay in the ground. Much-needed climate policies and scalable products to invest in. The Global Innovation
Mark Campanale technological advances will leave these resources Lab for Climate Finance offers examples, from water
is founder and
executive director of
‘stranded’, meaning the world’s stock markets and financing to hedging against currency risks for
the Carbon Tracker pension funds are effectively sitting on what the inde- climate projects.
Initiative. Email
pendent financial think-tank Carbon Tracker coined Clearly, there is growing interest in the conversion
org ‘a carbon bubble’.1 Simply put, fossil fuels represent of national commitments – Intended Nationally
risky investments. Determined Contributions (INDCs), agreed in Paris
Philanthropy made a crucial intervention in climate – into targeted investment. The Call to Action on
research by enabling Carbon Tracker to link the con- Climate Finance, another philanthropically funded
cept of a ‘carbon budget’ to capital markets, funding group of global climate finance and responsible in-
research the mainstream was unwilling to engage vesting organizations, has put forward a three-point
in. Turning an abstract scientific concept into pre- framework of measures to encourage long-term capi-
Iancu Daramus is cise numbers for financial analysts to evaluate had tal allocation from financial markets alongside public
and engagement
the effect of bringing investors and shareholders into finance.5
associate of the the climate challenge. Within four years of Carbon Post Paris, there is growing momentum for green
Carbon Tracker
Initiative. Email
Tracker’s first report, Mark Carney, governor of the finance. The philanthropic sector has been at the
idaramus@ Bank of England, was warning of the financial risks forefront in aligning values and investing, and must
of climate change. Meanwhile, the G20’s Financial continue to lead the way.
Stability Board has begun to draw up guidelines on
1 4
how companies and asset holders should ‘stress test’ bubble-pdf climate/2016/02/23/3752421/
their investments against different climate scenarios 2
and publicly disclose their risks. commitments
5 http://calltoactiononclimate
As well as engaging investors and regulators, the phil- fossilfuels
anthropically funded research also helped to trigger
a powerful social movement in favour of divestment
(see p50). In the same four years, over $3.4 trillion has
been pledged to fossil fuel divestment, by groups as
diverse as the Norwegian Sovereign Wealth Fund, AXA
and Storebrand.

return to contents Alliance Volume 21 Number 2 June 2016