The world’s second richest man made an announcement recently which set the climate community abuzz, albeit for all the right reasons this time. In an Instagram post, Jeff Bezos announced his intention to launch the Bezos Earth Fund, a $10 billion donation to the climate cause. The pledge is a substantial contribution and has made Bezos the
biggest donor in the United States contributing towards climate change, even while it’s barely made a dent in his vast fortune. Climate change hadn’t really been on philanthropists’ radar until recently, with
some estimates suggesting it was just around 2% of philanthropic contribution in the US in 2017. This is startling, given the issue’s existential importance. It’s clear from the recent explosion of suggestions around where the 10 billion should be directed that there is a yawning deficit in climate finance. This is therefore an opportune time to think about the state of philanthropic contribution towards climate change, especially in India, and the importance of philanthropy for tackling the problem of climate change more generally.
The IPCC estimates that stabilising the levels of greenhouse gas emissions would need a
commitment of approximately $13 trillion by 2030. Mobilising this level of capital requires all hands on deck. Keep in mind however that ours is a world where global wealth and income inequality are at outrageous levels, and the top 10% have a carbon footprint roughly 60 times higher than the bottom 10%,
according to an Oxfam study. The bottom 50% also happen to be the most vulnerable to climate change-related calamities, since they mostly live in ill-equipped developing countries, while only producing
“10% of individual consumption-based emissions globally”. Additionally, developed countries bear responsibility for 79% of historical carbon emissions,
according to the Centre for Global Development. In response to this, the principle of Common but Differentiated Responsibilities and Respective Capabilities was enshrined as a principle within the UN Framework Convention on Climate Change (UNFCCC) in 1992. This argument is now acquiring further nuance as
voices across the world grow louder for high-net worth individuals and corporations to recognise their share of the responsibility to respond to the grave challenge that confronts us as a planet.
India’s green goals could certainly use some cash. Its Paris pledge to reduce its GHG emissions per unit of GDP by 33-35% over 2005 levels by 2030, was unexpectedly ambitious and is looking increasingly unachievable (
the Green India Mission set up to work towards the set goals is indicative, as reports emerge of it being grossly underfunded). Philanthropy could help plug this gap. It has however, for a variety of reasons, been considerably slow on the uptake.
Billionaire wealth increased by approximately Rs 20,91,300 crore in 2017 in India, a staggering sum, but only about 39 people donated more than Rs 10 crore (of which Azim Premji was the outlying single largest donor by far) according to the Hurun Indian Philanthropy List 2018. Of this, climate-focused philanthropy accounts for just about 7% of the total.
According to the Shakti Foundation’s Shishir Soti, climate change just isn’t seen as a very compelling cause in India. This possibly reflects the general perception of treating the problem as a tragedy of the commons and one with no immediate solutions. Soti also highlights that corporate social responsibility frameworks prefer what he calls “input-output models of giving” rather than giving to climate change, which is not a cause delivering visible and immediate gratification. All this while India’s ultra-high net worth individual households have gone up by 12%. Bain and Co’s India Philanthropy Report 2019 is a sobering read, revealing that wealthy Indians are
giving less and less, their donations having declined by 4% in 2019. One possible reason could be a flawed tax regime in India which fails to incentivise philanthropy, leading to a preference for the rich to leave their money for their children to inherit. Indians may also not be giving away enough because they prefer to keep a low profile, according to
Ingrid Srinath of Ashoka University.
However, the good news is that this scenario may be turning around. With climate change becoming a headline agenda item in Davos this year, it’s not just Jeff Bezos who has stepped up to the challenge. Microsoft and BlackRock among others have indicated that their company policies would be changing to reflect concerns about the environment (Amazon ironically, has been a notable laggard on this front), with
Microsoft planning on going carbon-negative by 2030. These announcements reflect the takeaway from Davos that a shift is underway in the corporate world as companies plan to take measures like incorporate ESG (environmental, social and governance) measures in investment portfolios, disclose climate-related risks and basically begin to worry about “stakeholders” again. Corporate initiative aside, Davos also witnessed a renewed interest in philanthropic collaboration. A high-level panel convened to discuss the need for responsible philanthropy in emerging economies and almost on cue, India’s big industrialists such as the Mahindra Group, Nadir Godrej and Ratan Tata among others
launched the India Climate Collective, a 40-member strategic initiative to showcase Indian philanthropy as a “leader in climate action”. They have already begun work, aiming to convene experts on air pollution, and even planning to conduct hands-on technical training for Rajasthan government officials to work on climate change. Another recent initiative, the Indian Philanthropy Initiative, brought together big names such as the Tata Trusts, Azim Premji Philanthropic Initiative and Nilekani Philanthropy, to gather funds for climate change as well. Philanthropy’s
role in supporting and complementing market-based solutions is also being increasingly recognised. Instruments like impact investing are crucial financing mechanisms but for sectors offering no revenue models, like advocacy for example, philanthropy remains a key source of support. Philanthropic contribution is also playing an important role in funding impact investing in fact, and the Bill Gates-led
Breakthrough Energy Coalition is exemplary in this regard. The coalition is playing a
critical role by providing “catalytic capital” designed to unlock high-risk long-gestation innovation and research, geared towards finding new technology-based scalable solutions for climate change. Indian businessman Mukesh Ambani and Vinod Khosla (venture capitalist) are among the directors of the $1 billion-plus Breakthrough Energy Ventures (BEV) fund launched by the Coalition to invest in clean energy solutions.
There are legitimate practical concerns which abound around making philanthropic contribution count. It is increasingly important to make sure that every penny donated is being spent right.
Research suggests that funds continue to be directed towards activities which hurt rather than help. Areas such as adaptation aren’t given their due, perhaps because they aren’t as glamorous as mitigation pledges, but also because there isn’t enough awareness around highlighting priority-sectors needing funding. In order to track impact, accounting definitions need to be clearer, and more quality data needs to be generated. Climate funding must also be made much more transparent and accountable.There needs to be greater attention paid towards tracking flows and measuring impact in order to make philanthropy more attractive. And this isn’t just about billionaires. There’s been
increased recognition around the need to get smaller funders on board and make it easier for them to donate. Sattva is examining the issue of generating data on donations given by ordinary citizens, which is an under-analysed area with no available databases. Organisations like GiveIndia, Milaap etc are now taking a crack at the problem of improving the infrastructure for ordinary citizens invested in the cause to give, and looking for innovative methods to crowdsourcing funding.
Philanthropy isn’t enough, and it’s certainly not a substitute for a more systemic response to the problem. Some reactions to Bezos’ announcement were scathing as activists and employees urged Amazon to spend the cash on fixing the company’s own hugely unsustainable practices and stop doing business with fossil fuel companies. Many argue that there is a fundamental problem with a system which relies on heavy individual contributions, which could distort the character of the mobilisation of funds for a crisis of such magnitude.
Franklin Foer makes a compelling argument that individual contributions are conditioned by whims which then set the agenda for how these contributions are used and inevitably shape the kind of solutions that are opted for (for instance, the Bezos contribution will also no doubt be constrained by the need to preserve Amazon’s business interests and concerns). Some critics also argue that if tax systems worked justly, then nation states could shore up their capability to pick up the bill. These arguments are worryingly valid, and demand a fundamental rethink of how our world must be better designed and organised to deal with these new, impending crises. The existence of extreme wealth is part of the problem that is perpetuating the climate crisis. However, without minimising the structural deficiencies of the system today, it’s incumbent on us to simultaneously recognise that the climate crisis today urgently needs every benefactor it can get. Philanthropy therefore remains an important part of the solution and must be adequately supported and incentivised to step up to the challenge.
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