Focused philanthropy, methane levels rise and investment shift from fossil fuels to clean tech

Charitable foundations becoming more strategic

The days of corporate foundations dolling out bank cheques to the favoured charity of the chairman’s wife appear to be dying out. New research suggests that nearly three-quarters (73%) of corporate foundations worldwide link their giving to the business focus of their parent company,  up from 58% in 2013.

A survey of corporate foundations in more than 20 countries by consultancy firm Corporate Citizenship finds a growing strategic intent in private-sector philanthropy.

Around two-thirds of corporate foundations imagine themselves developing a new pro-social product or service, for instance, while more than half measure the impacts of their donations. Leveraging business skills represents another growing trend, with 70% of corporate foundations drawing on employees at their parent company as volunteers.

The report’s optimistic findings are countered somewhat by a separate study of US charitable foundations. The Center for Effective Philanthropy report finds that only 13% of foundation chief executives consider that they are making a “significant” difference in society, despite 67% believing that such an impact is possible.

According to around two-thirds of the foundation leaders surveyed, the main hurdles relate to internal sticking points, such as disputes over objectives or too many goals. Meanwhile, external factors such as a slow-moving economy or political gridlock are cited by more than half of respondents as stumbling blocks.

Looking forward, the three big factors that will impact foundations’ effectiveness are expected to be wealth and inequality (48%), government (29%) and changing demographics (23%).

Methane emissions reach new high

Emissions of methane surged by 12.5 parts per billion (ppb) in 2014 and 9.9 ppb in 2015, marking a substantial increase from the 0.5ppb annual average at the beginning of this century. The findings, which appear in the 2016 Global Methane Budget, are worrying as methane traps 28 times more heat than carbon dioxide.

The average annual concentration of methane in the atmosphere is now estimated to be around 1,834 ppb. Annual emissions of methane averaged 558m tonnes per year between 2003-2012, the study reveals. Of this total, 60% are caused by human activities, with agriculture and waste the main contributor (at 118m tonnes per year), followed by fossil fuel production and use (105m tonnes per year).

The main natural cause of methane is wetlands, which produce 167m tonnes per year. Historically, methane emissions have been largely offset by neutralising chemical reactions in the atmosphere, which annually “sink” 515m tonnes, and in soils (33m tonnes).

Methane in the atmosphere has increased by 150% since 1750, and is now responsible for 20% of greenhouse gas-derived global warming, according to the report.

Paris Agreement prompts fossil fuel divestment

Investors have pledged to divest $5.197trn of assets under management from fossil fuels since the Paris Agreement on climate change was signed 15 months ago.

Total divestments in the year preceding the Paris event stood at $2.6trn, according to a report by investment specialist Arabella Advisors.

The report finds that 688 institutions and 58,399 individuals across 76 countries have committed to pull their investments from oil, gas and coal sectors since the Paris Agreement. More than half (55%) are located outside the US.

Faith-based institutions and philanthropic foundations dominate the list, each representing around one quarter (23%) of those divesting. Other notable groups include local government (17%), educational institutions (14%) and pension funds (12%). For-profit asset managers, on the other hand, only comprise 3% of those divesting.

In addition, the report reveals a booming clean energy sector, with investment deals in 2015 worth $329bn.

Meanwhile, many of the institutions and individuals that have committed to divest from fossil fuels have made corresponding commitments to invest in clean energy and climate solutions. Collectively, these investors control $1.3 trillion worth of assets under management.

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