Racial Equity and Climate Investing
Climate change is a powerful accelerant to existing social and economic injustices and vulnerabilities. Decades of racial discrimination in environmental policymaking has resulted in BIPOC communities being more likely to live near sources of contamination and away from clean water, air, and soil, exposing them to the brunt of the impact of climate change.
Increasingly, foundations and other impact investors are investing to address the disproportionate harm climate change has on BIPOC communities by utilizing a variety of financial tools, including private equity, recoverable grants, loans, and loan guarantees. This page provides a starting point for organizations to consider how racial equity and social justice can be an active consideration in their approach to climate-related investing. Feel free to reach out to Laila Hussain if you have questions or additional resources to share.
Foundation Impact Investing Strategies to Advance Climate Justice
Sierra Club Foundation invests in solutions-based programs and community partnerships to move beyond fossil fuels and advance equity. The Foundation has no holdings in companies, and considers broader environmental, social, and governance (ESG) factors, investing in companies that are actively working to address their greenhouse gas emissions, comply with ESG best practices, and incorporate sustainability into their businesses. Through its catalytic capital portfolio, the Foundation invests a portion of its assets in climate solutions that also advance racial and economic justice.
Surdna Foundation's $100 million committment to impact investing works alongside the foundation's grantmaking portfolio through a mix of mission-related investments and program-related investments. The foundation uses program-related investments to support environmental and climate justice — specifically through the adoption of a just transition, increased power in communites most impacted by climate change, improved policies rooted in environmental and climate justice solutions, and increased environmental funding.
McKnight Foundation uses a focused, four-point framework to leverage impact investments in support of its two priority grantmaking areas related to climate. The Foundation has also committed to achieving net-zero greenhouse gas emissions across its $3 billion endowment by 2050 at the latest.
With six investment portfolios — clean power, oil, energy efficiency, forests and land use, non-CO2 mitigation, and cross-cutting strategies — ClimateWorks is helping donors work individually and collectively to solve the climate crisis, target high impact investment opportunities, and provides strategies to make collective efforts more impactful.
Tools and Frameworks For Investing
This strategy outlines the ways in which investors, including those pursuing a path to net-zero greenhouse gas emissions, can implement an intersectional approach to climate justice in their portfolios, both holistically across themes and within each asset class. It lays out the following three steps investors should consider to help ensure our transition to a low-carbon economy is inclusive and just:
- Prioritize climate justice in the investment policy statement
- Engage with fund managers on climate justice
- Select inclusive investment managers
A framework developed by Dalberg seeks to apply a human-centered approach to climate impact investing. The framework provides step-by-step guides and exploratory questions to support integrating diversity, equity, and inclusion into climate investment choices, design, and governance. It helps investors examine their role in the market from three viewpoints:
- What you invest in
- How you invest
- Who you are as an investor
Alliances and Partnerships For Action
Climate Justice Alliance is a member-led organization of urban and rural frontline communities, organizations, and support networks in the climate justice movement. The Alliance aims to address the climate crisis by placing race, gender, and class at the center of solutions.
Formed by the Donors of Color Network, the Climate Funder Justice Pledge calls on foundations—particularly the nation’s 40 largest climate funders—to commit to directing 30% of their climate funding to BIPOC-led environmental justice groups, and to share those figures publicly.