On June 30, 2017, Confluence Philanthropy held a webinar to discuss the Implications of the U.S. Withdrawal of Support from the UNFCCC.
Co-sponsored by the Climate and Energy Funders Group and the Leonardo DiCaprio Foundation’s Planet Pledge fund, the session featured a discussion between Jonathan Pershing, Program Director, Environment at the Hewlett Foundation and former U.S. lead negotiator in the UNFCCC and John Goldstein, Managing Director at Goldman Sachs Asset Management, and co-founder, Imprint Capital Advisors .Michael Northrop, Program Director for Sustainable Development at the Rockefeller Brothers Fund moderated the discussion.
At the outset, it was noted that pulling out of the Paris agreement sparked a backlash from leaders in the business community, states and cities and boosted work on climate change in the short term, most notably in the rise of the #wearestillin campaign. However, trillions of dollars in investment are needed to finance the transition to a clean economy, and the withdrawal creates uncertainty among the private investment community who are important to filling critical finance gaps.
Investments into solutions to climate change remain a technological and market driven story, rather than a policy story says John Goldstein, partly due to the fact that much of the policy takes place at the state level. Going forward,, the decision of the Trump administration will not have a large impact on the economics of the sector. What it may change is the United States’ involvement in the international process and the ability of domestic stakeholders to participate as a result. Additionally, large investors (pension funds, large family offices) are moving more capital across their portfolio towards solutions addressing climate change: from decarbonizing their equities and bonds and looking at green bonds, to making investments ranging from private equity to private infrastructure. Investor interest and excitement remain high and, for some, it is even a cause to continue to double down
Jonathan Pershing added that the decision of the US government is unlikely to change commitments from foreign governments in the near term. However, “The uncertainty [from foreign governments] is what comes next”, especially for sectors that may need government policy support and stimulus such as non-internal combustion, parts of the industrial sector and food and agriculture. On the international front, there is a dichotomy between the massive inroads made domestically around clean energy in countries such as China and India, and their investments in countries in Africa and Asia, where they are the largest investors in new coal power plants. The lack of involvement from the US can have an impact on how this progresses in the long-term.
The panelists highlighted the need for a more dynamic approach to climate risk as well, and noted real engagement at the senior level of large asset owners and asset managers to look deeply about climate risk at the portfolio level. Investors were called to continue to look more broadly in the portfolio across asset classes as well as explore climate solutions in all sectors, such as agriculture and resource efficiency.
Suggestions for philanthropic investors
- Get in the Game - Roll up your sleeves and engage to gain a different level of insight on your portfolio and its impact on climate as well as exposure to climate risk. The work of the McKnight Foundation stands out, as they created a carbon index, engaged with their asset managers and had their investees sit with their grantees as part of their effort to be a better customer of financial services.
- Engage to minimize risk – There is an opportunity for philanthropies to engage with the rest of the world on the policy front, especially countries in the South, where they can minimize risk.