Millions to Move Trillions? New Climate Philanthropy Group Aims to Woo the Private Sector

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Editor's Note: This article was originally published on July 10, 2023.

How much will it cost to fight climate change? A scarcely fathomable $3 trillion every year over the next three decades to reach net zero, according to a landmark climate report from the United Nations. That’s three times the combined assets of all U.S. foundations.

Only governments and the private sector have that kind of money, and philanthropy has long sought to coax both to cough up more for the cause. Over the last few years, these efforts seem to have accelerated, with funders and donors launching a series of partnerships to push more public and private capital to the climate crisis.

In 2021, the Bezos Earth Fund, the IKEA Foundation and the Rockefeller Foundation launched a fund, Global Energy Alliance for People and Planet (GEAPP), to leverage as much as $100 billion to help emerging economies transition to renewable energy.

Additionally, Bill Gates has in recent years recruited dozens of blue-chip companies and fellow billionaires to commit mega-bucks to Breakthrough Energy Ventures, whose portfolio of venture-style bets is supplemented by philanthropic investments to accelerate climate innovation. 

Bloomberg Philanthropies also has several such efforts in the works, including recently joining with Sustainable Energy for All, African Climate Foundation, ClimateWorks Foundation and others in the hopes of leveraging $850 million in clean energy manufacturing investments across Africa. Bloomberg’s also partnering with Goldman Sachs to unlock another $500 million for clean energy.

Large as those numbers are, perhaps the strongest signal of the scope and popularity of such efforts within philanthropy comes from a 60-plus-member partnership announced by the World Economic Forum in January, Giving to Amplify Earth Action, which brings together billionaire philanthropies, corporate funders, legacy institutions and Global South philanthropic networks. As the organizers themselves say, this movement now has an affinity group.

Known as GAEA, in a nod to the Greek earth goddess, the initiative aims to serve as a convening point and intelligence depot in the global effort to mobilize $3 trillion in climate financing per year. Its long list of partners shows just how many top climate philanthropists believe using grantmaking dollars to attract private capital is essential to confronting the global climate and biodiversity emergencies. Those climate givers also, apparently, want help.

“Philanthropies were coming to us saying, ‘We're realizing that we're having limited impact, and that every time we launch a global initiative, it always kind of fails when it comes to engaging the corporates,’” said Luis Alvarado, the global head of GAEA. “If the [World Economic] Forum can help us identify who are the corporates and who are the governments willing to match us, that would be exciting.”

Money, leverage and philanthropy

When former Secretary of State John Kerry, now the U.S. special presidential envoy for climate issues, spoke with attendees of the World Economic Forum meeting where GAEA was announced, he had a hard truth to share about the challenge of holding global warming to 1.5 degrees Celsius.

“So how do we get there? Well, the lesson I’ve learned in the last years, and I learned it as secretary and I’ve learned it since, reinforced in spades, is: money, money, money, money, money, money, money. And I’m sorry to say that,” he told the audience.

GAEA believes the way to solve the funding problem is for philanthropy to bridge the gap between capital with the potential to flow into climate solutions and the projects desperate for investment, whether by lifting roadblocks or giving startups a leg up. It’s an approach summed up in the effort’s current catch phrase: “public-private philanthropic partnerships.”

“What we need to get that money, money, money is leverage, leverage, leverage,” said Anthony Hobley, a former World Economic Forum executive fellow who previously led GAEA and now serves as an advisor. “How can modest amounts of philanthropy be deployed in a way that it unlocks bigger amounts of public money that in turn unlock bigger amounts of private sector money?”

What does that look like in practice? Alvarado, who’s now in charge of GAEA, says the goal is to find the “big global acupuncture points” to get money flowing. Pro bono consultants at McKinsey have interviewed more than a hundred philanthropies, governments and others to put together a list of potential interventions, including retiring coal plants in the Philippines, addressing deforestation in Indonesia and supporting green steel in India.

The initiative aims to both pilot new approaches and scale up existing efforts. Models for its work include the GEAPP, whose three partners are among GAEA’s members. Another is the Clean Cooling Collaborative, an effort to remake the cooling sector that has leveraged $10 million philanthropic funding to spark more than $600 million in public and private finance. It is run by ClimateWorks, which is another member.

“None of this is new,” Alvarado said. “What is new is: How do we stitch together partnerships in a way to make them successful and profitable?”

What’s drawing grantmakers to GAEA?

The new alliance has attracted major legacy funders and corporate philanthropies alike, demonstrating the wide range of players who see philanthropic support for climate finance as integral to piecing together the decarbonization puzzle. 

One of the former is the Rockefeller Foundation, which has long employed tools like blended finance in pursuit of lowering emissions. Carl Brinton, managing director of program strategy at Rockefeller, said the new initiative is another tool in the quest for the success of the recently launched GEAPP initiative (Rockefeller is a founding partner) and the climate fight as a whole.

“If what we were doing were solving the problem, we wouldn’t need anything new or additional,” he said. “But obviously, we’re not fully solving the problem, so we are open to any type of thing that would meaningfully move the needle.”

In Brinton’s view, mobilizing more dollars is only one part of the mission. He pointed to the power of foundations to convene people who otherwise would not work together and may hail from disparate industries or organizations. “There’s a lot of things… sometimes it sounds trite, but that money can’t buy,” he said.

Another member of the GAEA initiative is Salesforce, the database and cloud computing giant, which launched a 10-year, $100 million climate fund in 2021. The company is also part of the White House-convened First Movers Coalition and a co-founder of the Trillion Trees project, among other climate efforts. It sees GAEA as a way to help put more options on the table for investors. 

“Thirty percent of the climate solutions that we need can come in the form of nature-based approaches,” said Naomi Morenzoni, senior vice president of climate and innovation philanthropy at Salesforce. “But when we're talking to others out there, we consistently hear that there's not enough projects to support. The pipeline isn't there.”

Salesforce’s answer? Philanthropy can provide early-stage, risk-tolerant support for the research, demonstration projects and other steps needed to create more shovel-ready projects, Morenzoni said. GAEA, meanwhile, can serve as the forum where such funders collaborate, not to mention broker connections with public and private financing and attract more philanthropies to the table.

Salesforce has already gotten started. It granted $500,000 over three years to the Ocean Foundation to study and restore the mangrove forests of a traditional Mayan fishing area in Xcalak, Mexico. The region is far from tourist hubs like Cancún, but hurricanes have pummeled the area and increasing development is threatening its ecosystems. The nonprofit is investigating what can be done, what local communities want, where best to intervene, what kind of permitting is needed and other questions. That process is ongoing, including restoration at initial sites.

“I think about it in the way of an angel investor,” Morenzoni told me. “Only a small portion of its portfolio is going to be this knock-it-out-of-the-park success. But they make a lot of investments along the way, knowing that some will go there. I think that philanthropy needs to take that same approach.”

Alvarado is particularly excited about the potential role of businesses like Salesforce. Their options for impact, after all, go well beyond grantmaking programs. Corporations can deploy their purchasing and procurement power, equity and debt, and other business processes to fight climate change. It adds up to a lot of money.

“They have so many tools they can access,” he said. “A thousand times compared to what philanthropy has.”

“You’re never gonna get the scale we need to save the planet”

GAEA is getting off the ground at a time when interest in climate finance has risen to a fever pitch, particularly among the conference-attending set. Take the response to a presentation at last year’s Climate Week by Jocelyn Matyas, the head of climate impact investing at Cisco Foundation.

“She was inundated with folks that were like, ‘Oh, this is amazing, we need so many more people to do this blended finance approach,’” said her colleague Peter Tavernise, who leads Cisco Foundation’s new climate initiative. Like its competitor, Cisco has committed to spend $100 million on climate efforts over a decade. It’s not currently a GAEA member.

That’s not to say climate finance hasn’t been popular for a while. Foundations spent an average of $115 million a year between 2017 and 2021 on sustainable finance, adding up to close to 7% of total climate funding, according to ClimateWorks Foundation. ClimateWorks’ numbers include things like influencing financial system rules, changing fiscal policy and developing markets. 

But considering the vast resources the private sector already has at its disposal, not to mention the lack of consistent funding that continues to afflict smaller grassroots climate groups, should foundations really be putting so many of their scarce chips on this bet?

Alvarado said he often hears that exact question. “Many of the conversations we have are philanthropy saying, ‘Why am I funding these multitrillion-dollar industries? They have enough money, right?” he said. He agrees, but in his view, the problem is speed. “I think if we had 100 more years to fix this, it would be an absolutely valid thing to say.”

Alvarado believes the private sector needs a push from philanthropy because the transition is moving far too slowly. Philanthropy neither can nor should pay for the energy transition, for installing the necessary infrastructure or for developing the necessary technologies. But it can push the right buttons to get those things moving. He cited examples like funding research and data, training for locals, or advocacy campaigns to change opinions or policies. Strategies could also involve seed capital for startups and first-loss positions in investments. And Alvarado stressed that the solutions need to involve communities.

Those not convinced could also listen to someone who’s trying to prevent his own home from disappearing: Avinash Persaud, a Barbados-born former London banker who is now special envoy on investment and financial services for the climate-threatened island nation, serving alongside prime minister and climate star Mia Mottley. 

“If you focus only on grants, only on people transferring money to you, you’re never gonna get the scale we need to save the planet," Persaud told Bloomberg earlier this year. He later added: "Eighty-one percent of all climate mitigation and green transformation stuff is financed by the private sector in rich countries, but only 14% in poor countries. So we've got to change that equation."

Wealthy governments, incidentally, are also falling short. Rich nations promised more than a decade ago to provide $100 billion a year in climate finance support starting in 2020, but will hit that mark for just the first time this year, and only by counting loans and reducing other aid, charges a recent report from Oxfam International.

Of course, the details count. How exactly private wealth is mobilized could determine whether those trillions in investments empower the communities where they land, or instead exploit them. GAEA and its philanthropy-backed models are among those tasked with getting that balance right. And it’s worth emphasizing that the track record of such efforts is, to put it mildly, awful. Yet GAEA’s list of partners makes it clear that a lot of major funders see this as a table worth sitting at. We’ll see whether they can ensure everyone gets a seat.