Still low on philanthropic action
Whilst philanthropists and nonprofits are alarmed, there isn't enough action.
Summary: CEP conducted a survey of US-based foundations and nonprofits to understand how the philanthropy sector views climate change and their approach, whether engaged in climate change efforts or not. Whilst the majority felt climate change was an extremely urgent problem and could negatively affect the ability for their foundations to achieve their goals, only a very small proportion had had discussions at board level about that.
Why this is important: Climate change is a macro factor that will likely prevent foundations from achieving their aims regardless of whether those aims are directly aimed at addressing climate change.
The big theme: The use of ESG factors and considerations in the investment process has evolved from a highly specific and niche practice to a multi-billion dollar segment of the asset management industry. However in recent months there has been backlash arguing that ESG and even impact and sustainable investing is at odds with fiduciary duty. However, as Professor Alex Edmans puts it in his paper “The End of ESG” where he discusses the importance of ESG’s ascent into mainstream practice, “...but Finance 101 has always stressed how a company’s worth is the present value of all its cash flows, including those in the very distant future, and must take into account any factor that affects future cash flows.” Climate change is one such factor that will impact future cash flows.
The details
Total philanthropic giving by individuals and foundations focused on climate change mitigation represented less than 2% of total global philanthropic giving in 2019.
CEP conducted a survey of US-based foundations and nonprofits in 1Q2022 (with responses from 188 foundation leaders and 120 nonprofit leaders) to understand how the philanthropy sector views climate change and their approach, whether engaged in climate change efforts or not.
