About half of signatories to a new NZ charitable fund climate-related pledge have started to lower the carbon content of their investment portfolios, according to the group’s inaugural annual report.
Launched in December 2021 and featuring 10 of the 12 community trusts as founding signatories, the ‘Funders commitment on climate action’ includes a promise to “proactively address the risks and opportunities of the transition to a low carbon society in our investment strategies”.
And the first annual report of the charitable fund climate alliance published last month shows the majority of members have made moves to align their portfolios with the pledge.
“It was recognised across all signatories that learning is needed in the investment space around the climate change related risk to trust investments. Seven signatories are in the process of decarbonising their portfolio. One signatory is waiting for advice from Toitū before it acts. Two signatories are beginning to develop criteria to ask their investment advisors,” the report says.
“Only four signatories have not begun the process of decarbonising operations, largely because they have low staff numbers and/or minimal travel in their organisation.”
The report says philanthropic investors need to work with their asset consultants to develop an appropriate decarbonisation investment strategy including divestment from fossil fuel sectors.
“Signatories considering a divestment strategy have two main choices: full or partial divestment. Currently, most signatories are opting for partial divestment.”
“… Different approaches offer distinct perspectives on divestment, ranging from exclusion to targeted analysis and proactive investment in solutions.”
Charitable funds will also have to improve climate-related reporting to meet the goals of the pledge although many are yet to formalise a strategic response.
Community trusts, which represent 10 of the 14 signatories to the climate commitment, collectively manage almost $4 billion – albeit in separately managed and advised portfolios.
Of the total 12 community trusts only the Whanganui Community Foundation and the West Coast Community Trust have yet to sign the pledge.
In addition to decarbonising investment portfolios, the commitment binds signatories to working towards seven broad climate-related goals covering “Māori aspirations”, grant policies and resource-sharing.
Esther Whitehead and Arohanui West, climate action co-leads to the Funders Commitment, share author credits on the annual report.