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Climate change: What are you doing about it?

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Summary

Philanthropy and responsible investing are two ways you can future-proof the planet.

2 min read

Climate change has hit the headlines once more this week.

 

Teenage environmental activist Greta Thunberg met the leaders of UK political parties as global network the Extinction Rebellion organised protests in London. And a BBC documentary by Sir David Attenborough saw the highly regarded naturalist and broadcaster speak of conditions deteriorating “far faster” than he imagined

These voices have all called for change. And influential figures in the world of finance have highlighted that they also have an important part to play.

The Bank of England (BoE) announced earlier this month that it would start disclosing how financial risks associated with climate change are managed across its operations. BoE governor Mark Carney said, “We need to lead by example and, by providing such disclosures, we will be playing our part to secure the transition to a sustainable financial system.”

Mr Carney also recently co-wrote an open letter on the topic with his counterpart at Banque de France and the chair of the Network for Greening the Financial System – a coalition of 34 central banks. That letter spoke of “the catastrophic effects of climate change” and warned that “no country or community is immune”.

So if climate change is a key concern, what can you do about it?

 

The power of philanthropy

Philanthropy plays a critical role in supporting many organisations which have for decades been tackling climate change, such as Friends of the Earth, Greenpeace and the Rainforest Alliance.

And it appears there is significant scope for more to be done in this area.

The most recent edition of the Coutts Million Pound Donors Report, published in 2017, analysed key trends in major philanthropy over the previous 10 years. It found that, when it came to charitable donations of £1 million or more over that time, just 1% of the total value went to environmental causes. Despite this, the report also features inspiring examples of how philanthropists are enabling systemic change. Winsome McIntosh, for example, founded the charity Client Earth, which uses the law to combat climate change.

For philanthropists, there are other ways to address the issue beyond simply giving to environmentally-focused organisations.

Lenka Setkova, from the Coutts Institute, explains: “Climate change is not just an environmental issue. It profoundly threatens many other causes that philanthropists care about – from health and poverty to the cohesion of our communities.

“How you choose to engage with it depends on whether you’re chiefly concerned about the environment itself – which you could describe as ‘environment first’ philanthropy – or more ‘social’ issues such as poverty, inequality and human rights – ‘social first’ philanthropy.”

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“Climate change is not just an environmental issue. It profoundly threatens many other causes that philanthropists care about – from health and poverty to the cohesion of our communities.”
Lenka Setkova, Coutts Institute

The power of responsible investing

Responsible investing is another important way to make a difference, and climate change concerns are integral to our approach here at Coutts.

By focusing on good governance and the most material environmental and social issues – and by engaging with the companies in which we invest – we are actively ensuring corporate strategies and actions are aligned to the Paris Agreement goal of limiting global warming to well below 2°C.

And through our partnership with Hermes EOS, which implements our voting and engagement strategy, we have links with Climate Action 100+ – an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action.  It unites more than 320 investors with more than $33 trillion in total assets under management to engage with companies on curbing emissions and strengthening climate-related financial disclosures.

Such activity is about more than doing good in the world too. A meta-study by the University of Oxford in 2014 revealed that 88% of research papers found a positive link between good corporate sustainability practices and stock performance.

Find out how Coutts can help you with your philanthropy and read more about the bank's responsible investing approach.

When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.

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