Harnessing the Unique Power of Philanthropy for a Just Transition: Reflections from COP28

As we prepare for the whirlwind that is the World Economic Forum in Davos, COP28 feels like ancient history. Its underwhelming outcome may not seem memorable. Critics were also quick to point out the dissonance of COP28 being hosted by one of the top ten oil producers in the world and with the attendance of at least 2,456 oil and gas lobbyists.

Yet for me, as the CEO of a private foundation working toward a green, fair, and inclusive economy, COP28 was an important inflection point. Over this past year, we at Laudes Foundation have sharpened our strategy to focus on what it takes to accelerate a just transition that leaves no one behind. And COP28 served as an important signaling platform of the importance of fairness and equity as we transition every industry across our globe.

Specifically, the words that come out of this process matter. And from this COP, three phrases signaled that things are different.

“Transitioning away from fossil fuels.” This final text from COP28 may not have gone far enough, but it was historic for one reason. It’s the first time a transition away from fossil fuels was named. And for those of us in the philanthropy industry, this is the signal we need to continue to hold onto 1.5 degrees and intensify our mitigation efforts.

“Just, orderly, and equitable.” This focus on equity and justice is critically important, and we saw several commitments from the first endowment of the new loss and damage fund to the launch of the first just transition work program. Accelerating adaptation is critical to this, as it can preserve the dignity and well-being of those most deeply impacted by climate change. I’m proud to be part of the group of foundations pledging to accelerate action on climate adaptation. Yet, as ITUC said in its closing comments, workers and trade unions are not mentioned once in the final document. If we are going to enable a just, orderly, and equitable transition, workers need to be at the center.

“Business and Philanthropy Climate Forum.” The COP28 Presidency hosted, for the first time, a two-day forum for the private sector and philanthropy, which drew celebrity CEOs, leading foundation presidents, and the odd royal. Specifically, this forum teased out the unique power of philanthropy to de-risk, particularly in light of the trillions in investment that the private sector needs to mobilize. That’s an important role, and one that we’ve seen at many COPs, whether it is the $340 million pledged after COP26 to create the Global Methane Hub, or the $500 million pledged at COP27 to accelerate an equitable energy transition, or the $450 million pledged at COP28 to phase out super pollutants. These are critically important collaborations that have unlocked vastly more private and public sector funding.

But this is where we need to be careful. De-risking is an important role, but it’s not good enough in this increasingly worsening polycrisis moment. The recently published Global Risks Report 2024 makes that clear. As the chief economist of Triodos Bank, Hans Stegeman, said, “The risks to the global community are increasing and are becoming more existential.” How can philanthropy, with less than $1 trillion granted annually, de-risk the $4-5 trillion needed annually for a just transition? There simply isn’t enough capital in philanthropy to de-risk the investment needed by others. Nor should there be. If the climate breakdown, the destruction of nature, biodiversity loss, and social fabric unraveling risks were properly priced, we’d see more investors funding green and fewer funding brown.

Rather, this is a moment for philanthropy to do what it does best: tackle those deep, root causes that perpetuate these existential crises.

Personally, I have been inspired by the late Donella Meadows and her analysis of those leverage points that can shift a system. Such leverage points are hard, sometimes fleeting, and therefore perfect for philanthropy to tackle. For example, she outlines the need to change the rules of the system. That’s where philanthropy can support bold and brave policies that create incentives for bolder and braver corporate action. She also discusses the importance of changing the dominant paradigm. That’s where philanthropy, taking a cue from the UAE Consensus, can shape the narrative so that people, fairness, and justice are at the center of our collective climate action.

But to do this, philanthropy needs to change how it operates. We need to play the long game, taking a multi-generational approach to our funding. We need to step up our core support, strengthening those grassroots organizations on the frontlines of change. And we need to use all of the tools at our disposal – from grantmaking to the assets whose returns fund the grants.

The signals are there, and it is now our time, as philanthropy, to be brave.