When it comes to taking climate action, philanthropic organizations and financial institutions alike face the same questions: What does net zero actually mean for financial portfolios, and how can it be reached without negatively impacting returns?
Kathleen Simpson, CEO of The Russell Family Foundation (TRFF), found herself asking these questions in 2021 when deciding the next step in the foundation’s climate action journey. Already, TRFF had transitioned their investment portfolio to be nearly 95% values-aligned and in the process, became an original signatory to the DivestInvest philanthropy pledge by divesting $10 million from fossil fuel-related investments.
Making a net zero commitment became that next step. “At the time, we weren’t really sure what net zero was,” says Kathleen. “But we knew that we couldn’t wait another ten years to figure it out because the climate crisis will only increase in intensity and frequency. We knew that we had to take action now.”
After consulting with their investment advisor AlTi Tiedemann Global (AlTi), Kathleen realized that the biggest barrier that they faced was finding and validating accurate emissions data—both for their operations and their portfolios. Without it, they wouldn’t be able to get a baseline of their emissions or activate an effective emissions reduction strategy.
Kathleen and TRFF’s Board of Directors wanted to develop a consistent and repeatable process that would not only address their own emissions, but also help to demystify carbon accounting for the entire field of finance, which would require the help of carbon accounting experts. TRFF selected Carbon Direct to calculate their first comprehensive carbon footprint because of its science-based approach and reputation in climate finance.
Setting the stage for actionable emissions insights
The Carbon Direct team started by conducting a baseline analysis across TRFF’s operations, including utility invoices, expenses, and business travel. With the Carbon Direct Emissions Report, Kathleen and her team had a holistic view into their operational carbon footprint for the first time, and discovered their top emitting categories. “The Emissions Report was exactly what we needed to help us achieve net zero by 2030,” says Kathleen. “It allowed our Board of Directors to know what steps we need to take moving forwards, helping us set an interim target of 30% emissions reductions by 2025.”
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Carbon Direct also worked with AlTi to do a peer review of TRFF’s financed emissions footprint from their investment portfolio. While financed emissions can be difficult to calculate, AlTi used a combination of MSCI data and their own proprietary database to calculate the financial portfolio baseline—and turned to Carbon Direct’s scientific expertise to validate their carbon footprinting methodology.
“We needed a partner like Carbon Direct who really understood the science behind carbon accounting,” says Brad Harrison, Managing Director of Impact Investing at AlTi. “It was very clear that Carbon Direct did with their team of scientists and analysts who were working with us on the project.”
With TRFF’s carbon footprints calculated and reduction targets established, Kathleen isn’t just looking to shift investments within the foundation—she’s also making it easier for other like-minded asset owners to decarbonize. She hopes that by documenting the steps that TRFF is taking, she can help to demystify what it means to make a net zero commitment and show other asset owners how to do the same.
“Carbon Direct provided us with the confidence that we can decarbonize and reach net zero by 2030,” says Kathleen. “And we believe others can, too.”
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