Earth Day 2023: How can we 'Invest in Earth?'

Since 1970, Earth Day has mobilised millions of people around the world, bringing them together to tackle a wide array of climate issues from eradicating plastic pollution to expanding regenerative agriculture. 

This year, the tagline for Earth Day is ‘Invest in Earth'.  For savers, investors and the financial services industry, the use of the word ‘invest' is a thought-provoking call to action. How exactly can we invest in Earth?

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The financial world continues to grapple with accountability and effectiveness across ESG, green finance and impact investing initiatives. In this climate, finding ways to directly ‘invest' in Earth seems particularly challenging.

Climate philanthropy is a solution to this problem that many investors do not know to look for.

Climate not-for-profits can deliver powerful climate solutions - from safeguarding precious rainforests and marine ecosystems to empowering climate litigation and building digital tools that trace and prevent deforestation.

Donating to save the planet

Donating to the organisations behind these solutions is one of the most direct, low-risk and high-impact ways to ‘invest' in our planet.

These solutions often exceed the reach of ‘green' financial products and strategies. They offer the opportunity to truly put Earth Day's call to action into practice: by funding these organisations, donors can directly regenerate the planet.

Take the work of the climate charity Global Canopy as an example.

They are a founding partner behind Trase, a digital tool which maps deforestation across industries and supply chains.

This data-driven transparency initiative delivers systemic change on a global scale, equipping companies, financial institutions and governments with the information they need to take practical steps to address deforestation.

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Global Canopy's work is scalable, highly effective and especially appealing to investors due to their work improving the environmental impact (therefore reducing the risk exposure) of financial institutions.

Other not-for-profits may undertake actions we more commonly associate with the charitable sector, such as protecting habitats crucial to carbon sequestration and biodiversity.

Trillion Trees, the united force of BirdLife International, Wildlife Conservation Society and WWF, directs funds to the very best forest conservation initiatives around the world.

Their scientific approach to this process, and their focus on political advocacy as a primary method to secure specific areas of forest, makes their work particularly effective.

These qualities are also shared by Whale & Dolphin Conservation (WDC), a not-for-profit focused on marine conservation. Research suggests that a great whale can help sequester up to 250 tonnes of CO2 per year.

Therefore, protecting their populations does not just improve oceanic ecosystems, but our wider planet's health. Like Trillion Trees, WDC engages governments around the world to achieve their conservation aims.

Philanthropy over finance

Despite the outsized impact of climate charities, they are critically underfunded. Less than 2% of global philanthropic giving goes to climate mitigation efforts.

Perhaps it is time for a change in mindset, where investors view climate philanthropy as an ‘investment' in Earth.

Where traditional for-profit investments deliver financial returns, these philanthropic donations instead deliver more holistic, non-financial, ‘global returns'.  

The way for investors to approach philanthropy, therefore, is to incorporate it into normal financial planning. In practice, this means donating a small proportion of savings and investments annually (0.25%, for example) to best-in-class climate charities every year.

If investors treated philanthropy the same way they treat other asset allocation decisions, they could make climate philanthropy easy and scale up the impact of climate solutions delivered.

Around the world, private individuals hold approximately $150trn in savings and investments.

If just 3% of individuals gave 0.25% of their assets annually to climate charities, that would total $10bn every year. That would really make a difference.

There are a number of ways individuals and financial advisers can incorporate climate philanthropy into normal financial planning. Individuals can set up a monthly or annual donation to best-in-class climate charities.

Environmental literacy and ‘investing in Earth' are key messages of Earth Day 2023, but knowing how to turn those messages into action can be difficult.

Climate philanthropy is a highly effective and often-overlooked way to achieve these aims, especially when done on a consistent basis.

The best and easiest way to do this, especially for investors, is to make philanthropy a normal part of financial planning.

When investors embrace philanthropy in this way, paying particular attention to supporting the most diverse, effective and scalable not-for-profits, the climate impacts can be bigger than you might think. There truly is no better way to, as Earth Day 2023 phrases it, ‘invest in Earth'.

Jack Chellman is chief project officer at Global Returns Project

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