The power of investing in environmental and climate philanthropy

We're the first to experience the impact of climate change, and the last to do something about it.

Looking back 20 years by looking forward to a sustainable planet.

Since its establishment in 1999, the UBS Optimus Foundation has been helping clients to maximize their philanthropic impact.

Together, we have driven innovations to scale, working with social entrepreneurs and enabling social finance – our successful pilot of the world's first development impact bond helped launch a thriving social outcomes finance movement. 

Together, we have tackled some of the world's most pressing social issues across the world. In 2019, for example, we reached 3.3 million children with better health, education and protection, in South and East Asia, Africa, Europe and the Americas.

We believe in unleashing the power of philanthropy by acting together and learning from collective knowledge, forming strong relationships with nonprofits that put the voice of communities at the heart of long-term change. We understand that true philanthropy is not merely about spending money but using time and talent to achieve outcomes that no one can accomplish alone. Outcomes that help make the world a better place.

This is the reason that, to ring in our 20 year anniversary, and acknowledge the vital importance of climate change in today’s world, we have expanded to cover the area of environmental and climate philanthropy.

Four principles for effective climate philanthropy

According to the world’s leading scientists, we can avoid the very worst impacts of an overheating planet if we cut our emissions in half over the next 10 years (Intergovernmental Panel on Climate Change, 2018). But each delay and each degree of warming makes the transition more difficult and expensive. And each delay increases human suffering and loss of biodiversity. Philanthropy is uniquely positioned to catalyze a rapid scaling of climate solutions to create a cleaner, safer and a more equitable future for all. With only USD one billion annually in philanthropic dollars focused on climate change solutions, there is much opportunity for bold new donors and sustainable investors.

To support our clients entering this important space, UBS Optimus Foundation and the Climate Leadership Initiative (CLI) have developed four principles for effective climate philanthropy. In fact, CLI was created by six of the top climate donors* recently with the goal of making it easier for new philanthropists to learn, become connected to like-minded people and experts and collectively tackle the issue. Our shared principles include:

1. Understand climate solutions and impact

Understanding how experts view opportunities to solve the climate crisis is helpful as a frame for new donors. Experts generally think of solutions through the lens of three 'dials' to turn: sector, geographic region and enabling levers. By understanding how and where resources can do the most good, our clients can give with more confidence and make their philanthropic journey more rewarding.

Sectors

Several sectors of the economy provide opportunities for philanthropy to accelerate the transitions needed to reduce and then eliminate climate pollution.

The key sectors are:

• Pollution free electricity/energy
• transport
• buildings
• industry/production
• food/farming
• natural landscapes/forests

There are feasible ways to transition these sectors and philanthropy can be a vital catalyst. Necessary changes include transitioning to renewable energy sources; investing in regenerative farming practices to ensure the global demand for food is met sustainably; protecting forests and grasslands; stopping powerful methane from escaping into the atmosphere; and the all-important ways to remove carbon dioxide from the atmosphere: carbon capture and carbon dioxide removal.

Regions

The scope and scale of impact for each of these sectors vary in every region of the world. It's essential to consider local contexts, priorities and opportunities to strategically fund projects that stand to create the most change. In China and India, for example, it's critical to transition to clean fuels and power to meet rising energy demands. In Brazil and Indonesia, forest protection requires urgent philanthropic support and resources. And in the global effort to phase out coal, Southeast Asia is the last frontier for coal power plant demand and development.

Below: 70 percent of these solutions will come from seven regions by mid century.

Enabling levers

As previously mentioned, scientists and nonprofits working to solve the climate crisis are guided by sector and geographic understanding that allows them to identify 'enabling levers' which will advance solutions. These include:

• policy development and implementation
• strategic communications to win hearts and minds (or avoid disinformation)
• strategic litigation
• supporting economic transitions for communities
• political advocacy
• climate finance
• grassroots activism

2. Collaborate and take action swiftly

Many philanthropists entering a new space like to increase their giving over time, learning as they go. Solutions also require collaboration, as in all philanthropy, for maximum impact. UBS Optimus Foundation and CLI can connect philanthropists to existing climate donors, many of whom welcome aligned giving or share their thoughtful strategies because they, too, understand the importance of coordination. For climate change, potential donors should think about the importance of the situation and consider acting sooner rather than later.

3. Be prepared to stick with it

Many scientists believe we are already experiencing the impacts of climate change in extreme weather, increased refugees, fires and floods, and animal extinction and will continue to experience these challenges, even as we work toward reducing and eliminating the world’s fossil fuel emissions. There is no quick fix or one plan. Philanthropists who care about healing the world and ensuring a safe planet for the next generation will do well to stay with their investments over time and allow their grantees flexibility to adapt their best work.

4. Marshall all resources

Philanthropy is vital, but philanthropists can drive even greater change by also aligning their capital, business influence and social networks towards their climate objectives. It might be their philanthropy, their businesses or even their voice that makes that vital difference.

How to get involved

For more information or expert guidance on climate philanthropy, please reach out to UBS Optimus Foundation via your client or financial advisor at UBS. UBS Optimus Foundation is a free service to UBS clients. Our expert environment team can provide a thought partner for your philanthropy and work together with you to identify, develop, finance and manage high-impact collective initiatives tailored to your philanthropic goals.

*CLI was created by the Hewlett Foundation, Packard Foundation, Children’s Investment Fund Foundation, Oak Foundation, MacArthur Foundation and Sea Change Foundation as both an advisory service for high net worth philanthropists, families and foundations interested in learning about and giving to climate and to help current philanthropists engage their peers. 

Sources:

IPCC, 2018: Summary for Policymakers. In: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P?rtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. Waterfield (eds.)]. In Press.

Disclaimer:

The UBS Optimus Foundation is a grant-making foundation that helps UBS clients use their wealth to drive positive social change for children. The foundation selects programs that improve children’s health, education and protection, ones that have the potential to be transformative, scalable and sustainable.

Development impact bonds are not financial products.

This article is for informational and educational purposes only and should not be relied upon as investment advice or the basis for making any investment decisions. In providing wealth management services to clients, UBS offers both investment advisory and brokerage services which are separate and distinct and differ in material ways. For information, including the different laws and contracts that govern, visit ubs.com/workingwithus.

? UBS 2020. All rights reserved. The key symbol and UBS are among the registered and unregistered trademarks of UBS. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC.