Funders must step up fight against climate change

Posted on 17 Nov 2021

By Matthew Schulz, journalist, Our Community

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With COP26 prompting governments to escalate their climate policy settings, grantmakers are also increasing their own commitment to funding environmental action.

Yet it appears that growing involvement comes from a low base.

SmartyGrants statistics indicate the extent of the climate response in Australia, revealing a fourfold increase in the proportion of grants targeting climate action in the past year, rising from 0.9% to 3.4% of total grant spending.

In comparison, a recent McKinsey Sustainability Insights article showed that just 0.05% of US$64 billion in grant spending in 2020 by United States philanthropists directly targeted climate change.

Its analysis suggested funders should target three areas:

  • foster policy environments and civil societies driven to fight climate change
  • invest in climate solutions that lack market support
  • protect people from climate risks and support environmental justice.

The authors of the report say funders must dig deeper and do better, arguing: “Now is the time for philanthropies to mobilize funding and maximize the impact of every dollar by using their unique capabilities in ways that complement what private- and public-sector organizations are also doing.”

Back home, SmartyGrants has produced a dossier about grantmaking that aims to help grantmakers tackle climate change in a way that draws on equity principles, while our sibling organisations, including the Institute of Community Directors Australia (ICDA), are creating new resources and training to help community organisations tackle climate issues.

Those approaches are in step with those of organisations such as the Center for Disaster Philanthropy (CDP), a US-based organisation that seeks to respond to climate change (and the subsequent increased threat of natural disasters) in a way that builds community resilience, addresses climate change mitigation and increases preparedness.

Speakers at a CDP climate justice webinar last month argued that funders should focus on “safeguarding the rights of the most vulnerable and sharing the burdens and benefits of climate change and its resolution equitably and fairly”.

The CDP’s director of international funds, Alex Gray, said climate now accounted for 90% of natural disasters and had “changed the disaster landscape”. He and other speakers urged a close focus on local adaption, because “those most affected by climate change are a key resource and greater part of the solution”.

The webinar highlighted case studies that showed unrestricted funding, responsive funding, capacity building and advocacy support were effective in tackling both climate change and inequity in Africa.

For grantmakers, the webinar’s key messages were these:

  • Fund locally, work locally
  • Embed a climate equity lens in grantmaking
  • Fund preparedness and mitigation
  • Support communities of colour.

SmartyGrants will continue to share climate action resources – including software tools – with grantmakers as they become available.

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