Funder Commitment on Climate Change: 2024

Educate and Learn

We will make opportunities for our trustees, staff and stakeholders to learn more about the key causes and solutions of climate change.

• A key focus of 2024 was to deepen our collective understanding of the causes and impacts of climate change to help us explore the implications for our areas of work and identify actions we can take as an organisation in addressing these. We organised a series of events for staff and trustees that included a climate change workshop by Climate Fresk and sessions on how climate impacts our areas of work. So far, we have had a sessions on:
  • Climate science and its impacts with speakers from The Wildlife Trusts and University of Manchester
  • Climate change and local communities with speakers from Civic Square and Bahu Trust
  • Climate change and migrant justice with speakers from Unbound Philanthropy.
• We share insights and learning from our own work as well as research and evaluation reports we’ve commissioned on our website and through our social media channels. For example, we published our first impact investing deep dive report into sustainable food and agriculture that explores food system drivers and how this intersects with nature and the climate.
• We also regularly highlight the work of organisations we support on our social media channels and newsletter. For example, we shared:
  • A Freshwater Future by the Chartered Institute of Water and Environmental Management
  • State of our Rivers by The Rivers Trust
  • Assessing the Materiality of Nature-Related Financial Risks for the UK by Green Finance Institute
  • The Blue Carbon Mapping Project led by the Scottish Association for Marine Science, The Wildlife Trusts, and RSPB
  • Getting on track for a circular economy by Green Alliance
• We host monthly sessions for staff and our Involving Young People Collective to hear from experts and key partners on issues we care about including the nature and climate crises. Last year, we heard from Our Seas on their work campaigning for more sustainable alternatives to damaging fishing.
• Together with the Environmental Funders Network, we hosted the third year of learning workshops for 15 Environmental Finance and Learning Fund participants – philanthropists and foundations that are active or planning to become active in environmental investing, but want to develop their skills, confidence and networks. We shared progress on how the group is learning to invest for environmental impact.

Commit resources

We will commit resources to accelerate work that addresses the causes and impacts of climate change.

• We are a longstanding environmental funder and Our Natural World is one of three main strategic aims, contributing to five funding priorities: peat, space for nature, freshwater, nature friendly farming, and fishing in tandem with nature.
• Our total funding towards our goals in Our Natural World as well as work to address climate change totalled £21.7m. This includes all related grant funding, social and impact investments, as well as spending using our Tools budget. In addition to funding in our priorities for Our Natural World (£20.8m), this includes work that contributes to our priorities in Creative, Confident Communities (£700k) – examples include support for The Bahu Trust to support local community-led climate action, Hope For The Future to develop climate assembly models; and solar panel installation costs for Bristol Community Energy and Solar for Schools. We publish our grants, social and impact investments on 360Giving.
• We continued our Blue Spaces programme, making six grants, totalling £1.5m. We shared an update about the Blue Spaces programme including learning so far and an overview of all the projects and our support.
• Protecting and restoring peatlands is critical for combatting climate change. This is a key focus of our influencing, which includes our support of the Peat-free Partnership, which is dedicated to implementing a ban on the sale of peat for horticultural use in all four nations in the UK. As part of this work, we signed a joint open letter to the Prime Minister calling for the Government to legislate to end peat sales.
• We recruited a Co-ordinator role to develop and support our cross-organisational work to address the causes and impacts of climate change, and make progress towards diversity, equity, and inclusion.

Integrate

Within all our existing programmes, priorities and processes, we will seek opportunities to contribute to a fair and lasting transition to a post carbon society, and to support adaptation to climate change impacts.

• We are committed to addressing the causes and impacts of climate change and to tackling injustice and inequality. They underpin our strategy and everything we do as an organisation.
• We know that environmental justice and social justice go hand in hand, and to make progress, we need to address the lack of diversity in the environment sector. We continue to proactively find and support environment organisations led by, and for, communities experiencing racial inequity, as well as organisations whose work links both environmental and sustainability issues with those from economically and culturally marginalised communities. For example, in 2024, we supported:
  • All the Elements Outdoors, who work with leaders improving diversity across conservation, environment, sustainability, and sport.
  • Women in Fisheries, to grow and support a network of women working in the fishing and seafood sector in the UK.
  • Land in Our Names, a Black and People of Colour-led grassroots collective working for land justice through reparations.
  • Impatience Ltd, for Impatience Insiders, an initiative to convene industry insiders to collaborate and organise for a just transition.
  • British Veterinary Ethnicity and Diversity Society, for a project to create an online hub to celebrate, platform and support Black people and People of Colour in the agricultural and food sectors while also educating the wider sector on diversity, equity, and inclusion.
• We continue to support initiatives to improve the diversity of the environment sector:
  • We published a report reviewing diversity initiatives in the environment sector, along with our reflections and next steps.
  • We continue to work with Ocean & Coastal Futures to improve opportunities to progress diversity, equity and inclusion in the marine sector. Last year, they published a report exploring ethnic diversity in the UK Marine and Coastal Sector and launched a series of webinars to engage the sector on diversity, equity and inclusion.
  • We also commissioned work to co-design a leadership development programme aimed at people of colour in the environment sector.
• We continue to support the RACE Report, and ask all environment and conservation organisations awarded funding from Esmée to engage with the initiative. Organisations signed up to the RACE Report are asked to submit data on the race and ethnicity of their staff as well as report on actions they are taking to progress diversity, equity and inclusion within their organisation. As a signatory, we also share information about the diversity of Esmée and progress we have made.
• We updated our strategy and funding guidance for our Creative, Confident Communities aim. We developed an outcome focused on the intersections between climate, nature and economic development. The focus of our work in this area is twofold: building community knowledge and consensus about climate change, and supporting innovative approaches to local economic development, such as through circular economy models. For example, we supported Down to Earth Project, an innovative social enterprise in South Wales using locally grown Welsh materials and supply chains to build social housing. Other examples are above under ‘commit resources’.

Credit: Scottish Wildlife Trust - A person snorkelling in the sea.

Steward our investments for a post-carbon future

We will recognise climate change as a high-level risk to our investments, and therefore to our mission. We will proactively address the risks and opportunities of a transition to a post carbon economy in our investment strategy and its implementation, recognising that our decisions can contribute to this transition being achieved.

• We have made a commitment that our investment portfolio will be net zero in terms of carbon emissions by 2040 at the latest and we continue work to make this happen. Engagement and retention decisions are informed through identifying and assessing the contribution of each individual manager. Managers are assessed on their contribution to net zero, with the aim being to maximise the number of managers who are aligned with our goals. For any non-aligning managers the rationale for keeping these will be documented.
• Our immediate goals and approach on net zero vary slightly for the different parts of our investment portfolio. The majority of our portfolio is in liquid funds investing in global stock markets and we continue to increase our exposure to climate solutions to a level which is 25% higher than that of the broad index. A short-term target for 2024/25 was to review three climate solutions funds, and we have made an investment into one fund issuing debt to emerging market companies that can demonstrate a quantifiable carbon reduction or avoidance. The Foundation has an exposure target to Climate Solutions Managers of 10% by 2030, with the current level of 7% in 2024 indicating we are on the way to achieving this.
• Our Investment Policy Statement (IPS) reflects our focus on sustainability meaning that we will take sustainability considerations into account in every investment decision. Our IPS is shared on our website and highlights fund characteristics we avoid investing in, as well as areas where there is likely to be good alignment with our strategy. These include renewable energy, biodiversity preservation and restoration, decarbonisation, social justice and thematic funds focusing on water, food and communities.
• Within our private investments, which represent around a third of our portfolio, we continue to add investments which will make direct contributions to the energy transition. In 2024, we committed to a fund targeting investments in energy transition solutions, such as renewables, energy storage, waste management and smart buildings. A number of these investments have strong cash yields and returns that are inflation-linked through long term contracts with governments, utilities or other high investment grade counterparties.
• We have a smaller allocation to hedge funds and have continued to make changes to ensure that we are invested with managers who have good transparency and are taking ESG (Environmental, Social and Governance) factors into account in the way they manage money.
• We have allocated 5% of our main investment portfolio for funds looking to achieve enhanced ESG impact as well as financial return. This allocation is for funds that do not naturally fit within our mainstream investments due to size, focus or risk profile. Examples include a fund investing in sustainable food brands, a fund investing in agriculture, food and ecosystems restoration, and an impact litigation fund. In addition to existing managers we are in the process of committing to a sustainable forestry fund. There is a strong pipeline of opportunities within the allocation, both to new and existing managers.
• Alongside our main portfolio of investments, we continue to make impact-first investments through our social investment allocation, and impact driven investments through our impact investing allocation. Last year, we increased our allocation for social investment to £60m, to support organisations creating a positive social or environmental impact. A key focus for our impact investment allocation is on solutions that directly address climate change, covering several themes including sustainable food, circular economic models, and decarbonisation. As well as publishing our first impact investing deep dive, we also outlined our approach to thematic impact investing, and plan to share more about each area as our work progresses. We want to use learning from this to inform our longer-term investment strategy.

Decarbonise our operations

We will take ambitious action to minimise the carbon footprint of our own operations.

• In the first quarter of 2024, we commissioned our second independent carbon audit of our operations (the first was in 2020). The estimated total footprint of Esmée office operations for the year January 2023 to December 2023 was 343.73 tonnes.  This was broadly similar to the results of the first survey in 2019, albeit there were changes in how this number was arrived at – in part it reflected a rise in headcount and also greater home working. We plan to perform this audit every three years.
• We developed a policy on the use of AI tools that takes into account environmental and ethical costs. This will continue to be reviewed and we are collaborating with others in the sector to explore actions we can take to minimise the impact on the environment as the use of AI grows.
• We continue to operate with internal meetings using electronic papers and file notes, and all catering is vegetarian and vegan by default. In general, our policy around flights for business purposes are only used by absolute exception and must be pre-approved by the Chief Operations Officer for consistency.

Report of progress

We will report annually on our progress against the five goals listed above. We will continue to develop our practice, to learn from others, and to share our learning.

• We take the view that sharing our learning with others so they can respond to the challenges of climate change can be impactful work in itself and our staff are encouraged to do this with peers and industry groups such as the Association of Charitable Foundations. This includes publishing this annual progress report on our website.