Corporate climate action: our climate change fund

(For the German version, see here)

Pressure on companies to develop ambitious climate change strategies – and above all to implement them effectively – is growing. These expectations are now coming from many quarters – employees, investors, customers, civil society, other companies, governments, etc. At the same time, to avoid „greenwashing,“ climate strategies are increasingly being scrutinized for their credibility and compliance with strict standards, most recently by a group of UN experts. As a result, more and more companies are looking for solutions that go beyond conventional approaches to achieve and demonstrate real climate impact. Our Climate Change Fund offers an effective approach.

Traditional approaches to a climate strategy often fall short

The traditional approach to developing a climate strategy generally involves a company taking stock of its own direct and indirect emissions („Scope 1“ and „Scope 2“ emissions) and emissions along the value chain („Scope 3“ emissions) and then committing to reduction measures, increasingly linked to the goal of achieving „net zero“ in the medium term. 

As these reduction measures are usually not sufficient, many companies take the next step and commit to purchase voluntary carbon credits. By offsetting their remaining emissions, they are able to declare individual products or activities „climate neutral“. However, the compensation measures or „carbon offsets“ offered and implemented for this purpose are regularly criticized, most recently in an extensive joint investigation by the newspapers DIE ZEIT and The Guardian. (We at Effektiv Spenden also take a somewhat critical view of carbon offsets). The main criticism is twofold: first, that offsetting reduces the pressure to take action to reduce one’s own emissions; second, that the quality or real impact of the certificates is often questionable, so that it is uncertain whether CO₂ savings are actually achieved.

In a joint 2020 report, the Boston Consulting Group and the WWF called on companies to support a broad range of climate protection measures to address their remaining CO₂ emissions. Similarly, the Science Based Target Initiative (SBTi), which offers some of the most rigorous standards for net-zero targets, states that „companies should go further and invest in mitigation outside their value chains now to contribute towards reaching societal net-zero“. Giving Green, an organization providing guidance for individuals and businesses to make more effective climate giving decisions, encourages companies „to move away from immediate net-zero goals and instead develop a meaningful business climate strategy that truly maximizes climate impact. Instead of offsetting the past, companies should focus on decarbonizing the future.“

“Climate Action Funds” as a complementary approach

Some companies have already begun to address broader aspects of climate mitigation with new approaches. These include, in particular, climate action funds, which provide funding for a range of climate protection initiatives. For example, we are already working with a financial services provider on effective donations.

The Climate Action Fund approach builds on and sustains best practice. It requires companies to measure and disclose their emissions according to internationally recognized standards. Companies should then reduce emissions in line with the Paris Agreement targets, covering both their own emissions and those within their value chain.  

However, instead of relying on compensatory measures and carbon offsets, the remaining emissions will be subject to an internal CO₂ price. The resulting funds are then used to support climate change initiatives that support social and economic transformation. This includes initiatives that may not generate quantifiable emissions reductions or credits in the short term, but which could have a transformative effect that goes well beyond the impact of individual carbon credits.

Our Climate Change Fund is designed to do just that. It contains a portfolio of highly effective giving opportunities. We decide how to allocate funds on a quarterly basis to be flexible and responsive to the needs of the organizations we support. We dynamically update the portfolio based on the latest insights and funding needs of the most effective climate change organizations.

If you would like to find out more about our fund, or if you would like support in embedding a climate action fund into your organization’s climate strategy, please contact us.

Über den Autoren

Sebastian Schienle

Founder & Head of Research

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