Earlier this month, Canada’s largest urban innovation centre MaRS Discovery District hosted its first-ever Climate Impact conference, bringing together entrepreneurs, investors, business and finance leaders, academics, and policymakers to discuss their ventures, experiences and learnings from the frontlines of climate action across the world. 

The hot topic across the board was ‘net-zero targets’, barriers to the same and how to achieve them nonetheless.  

Simply put, ‘net-zero’ is the state in which the amount of greenhouse gases emitted into the atmosphere is balanced or cancelled out, by the amount of greenhouse gases taken away from the atmosphere.

So over three days, MaRS hosted a number of conversations between innovators working towards the transition to a ‘net-zero world’. 

Much of Climate Impact Week was also focused on how to fund climate action and adaptation — so we rounded up six insights for funders wanting to meaningfully contribute to this space:

Always think intersectionally 

“Climate change is more than an environmental issue,” said Narinder Dhami, executive lead for New Power Labs, who explained that racialized and marginalized communities are more at risk of being negatively impacted by climate change. 

She said for instance, subsidized housing is often found in floodplain areas –– such housing is usually occupied by marginalized and racialized communities in Canada today, and climate change isn’t making it any easier to live in such locations.

“Diversity and inclusion in the cleantech space is missing,” said Dhami, who noted that the lack of the same has resulted in a proportionate lack of adequate climate solutions for these disproportionately affected communities. 

She questioned: “How do we ensure that our processes, our solutions, and funding recognize the different social, economic, public health and other adverse effects on various populations and communities?”

Look at climate change through a gender lens

As the UN Environment Programme’s executive director Inger Andersen explained in a June 2020 press release, “Unequal access to land tenure, financial resources, and decision-making power can create economic stress for entire households in times of crisis, leaving women disproportionately exposed to climate-related security risk. The climate crisis stretches well beyond just climate, and tackling it effectively requires responses that address the links between gender, climate and security.” 

According to Nneka Kibuule, vice president of Aligned Climate Capital, the gender lens allows one to view diversity as a value proposition. As in the case of women as a community disproportionately affected by climate change but also leading the effort to combat the same, Kibuule said, “when you have people who are closer to the problem, they’re more likely to fix it.”

Centre equity 

John Balbach, director of impact investments at the MacArthur Foundation, advocated for other organizations to follow suit: in “explicitly focussing on the idea of centring equity in conjunction with [our] efforts on decarbonization.”  

He explained, “That means, including support for the active participation of communities most affected by the climate crisis.” 

Balbach said that, for example, in the United States, the equity-focused approach to climate action means, “supporting community power building among BIPOC-led organizations, and individuals representing rural communities that have been disproportionately affected by the transition to a clean energy economy.” 

Impact investors, the time to step up is now

“Impact investments are needed now more than ever,” according to Jean Lebel, president of International Development Research Centre (IDRC). Impact investing, simply put, is the practice of investing capital in an organization, project or other effort with the intention to achieve specific social or environmental impact–– whilst still making financial returns. 

And while this year’s Canada Forum for Impact Investing and Development (CAFIID) report on the state of the sector found that “assets under management (AUM) are up by 70 [percent] since 2019,” according to CAFIID director Lindsay Wallace, Lebel explains that the COVID-19 pandemic exacerbated financial challenges for many social impact organizations advancing climate action.

Impact investments are therefore critical to transitioning and supporting business models of social purpose organizations working to take meaningful climate action. Additionally, according to Melanie Adams, vice president and head of corporate governance and responsible investment at RBC Global Asset Management, climate-focused “activism coming from investor demand, in particular within the pension funds and insurance companies, is really meaningful [because] we realize we all have to accept that there has to be legislative change, and that the governments need to act here.”

Check ESGs for ‘greenwashing’ 

Environmental, social and governance factors (ESGs) are a set of criteria against which organizations’ ethics around the environment, their social impact, and the governance of their operations is measured. 

While ESGs and ESG investments have been hailed as a solution towards climate action since they offer a somewhat concrete way to set standards and measure progress, former sustainability officer at the DWS group Desiree Fixler cautioned to be watchful for the phenomenon known as ‘greenwashing’. Greenwashing occurs when a product or organization claims to be ‘eco-friendly’ or environmentally conscious when this is not the case. 

ESG investments, too, can be greenwashed with smart PR and advertising strategies to make it look like the money being invested isn’t going to actively harm the environment. “I think, for the most part, the intentions behind using ESGs are good. We’ve successfully mobilized trillions of dollars into ESG strategies, with most intentions being the right intentions,” Fixler said. “But has it made an impact [on climate action]? Not really, no.”

Fixler explained that ESG investing skyrocketed during COVID-19, meaning that “if you have an ESG label on a product, that’s a quick win” –– leaving extra money in the hands of fraudulently green companies. Fixler said, “We need to mobilize [investment and philanthropic] money into strategies that actually produce clean, green technology that actually have an effect on social justice. [With ESG investments], we haven’t done much at this point.” 

Philanthropy has an important and unique role to play, too 

Philanthropy can do things that the private sector and government can’t, according to Laura Butler, managing director of the Trottier Family Foundation. 

Butler said the monetary value of philanthropic dollars is “tiny” in comparison to the monetary resources the government and the private sector have, but “the scale and the urgency of the climate crisis means that we need all hands on deck, and philanthropic dollars.” “We have to be really strategic,” she said.

Still, Butler said there are a few specific characteristics of philanthropic dollars that “represent real assets to build on.” 

She said philanthropic organizations are relatively independent: Philanthropic funders are answerable to the Canada Revenue Agency, our boards are constituents, but we are not beholden to shareholders or voters. And so we can therefore take risks that others can’t, and we can fail without having really debilitating consequences.”

Further, Butler said philanthropic dollars can be flexible. “We [philanthropic organizations] can provide our partners with that margin of maneuver that can be really critical when developing new and ambitious initiatives,” she said. “We can also be patient. Similarly to risk, we face different time horizons with philanthropic dollars. We don’t have to think about awful shareholder reporting or elections so we can be patient, whether it’s granting or investment, we can and should take on initiatives that require patient capital to see that return on investment.”

Finally, Butler explained that the edge philanthropy has over private and government institutions comes in the form of non-financial assets of influence and voice. “You know, people are really nice to you when you’re a funder, and it means that you can say things that other people can’t,” she explains, “And you can really use that privileged position to elevate the voices of more marginalized groups.”

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