Market-Based Solutions: How Philanthropy Can Facilitate Sustainable, Scalable Impact through Markets
Funders working in the Global South can incorporate market-based solutions to widen the development resource pool and build pathways…
With growing environmental threats to business and society, corporate philanthropy leaders have the opportunity to be a strategic partner to business on a breadth of environmental issues. From 2020 to 2022, corporate giving for the environment grew at a rate of 51%, the highest growth rate across issue areas. Corporate foundation teams have the opportunity to connect the dots and leverage assets and capabilities across sustainability, DEI, ESG, procurement, and other relevant business units. Corporate philanthropy can also use its flexible capital to collaborate with their business counterparts and stakeholders across sectors to more fully address the intersection of environmental crises and the impacts on people and communities.
As we work with corporate philanthropy teams playing these kinds of catalytic roles to drive positive environmental impacts, we are observing three opportunities for corporate foundations and social impact leaders in 2024:
1. Put people at the center of environmental investments.
What does this look like in practice? Several elements are critical to centering people and communities, especially those impacted by environmental harm. To support leadership of/by the people most impacted by a particular issue, grantmakers can shift power toward grantees through multi-year general operating support and other practices that return power to those most proximate to the place, issue, and impacts that funders seek to address. To evaluate investments and potential impact with an equity lens, corporate philanthropy teams also need to recognize the interrelated and multifaceted ways that environmental issues show up in the lives of employees, customers, and communities—often intertwined with impacts on people’s health, job access and quality (e.g., extreme temperatures impacting outdoor workers), and the built environment in their local community.
2. Drive impact through partners building resilience in key value chains.
There are a set of corporate philanthropy leaders—many of whom are leading their peers on investing in environmental causes—that are newly focusing on the resilience of partners in key regions, supply chain, business lines, or industries. Across companies in manufacturing, textiles, food and agriculture, finance, and hospitality, we have seen emerging philanthropic strategies that support integrated approaches to address concerns about labor supply, the ability of customers and suppliers to meet net zero demands, and the ability of suppliers to withstand extreme weather and other shocks driven by climate change, like Exelon’s Climate Change Investment Initiative (2c2i). Despite innovative and emerging initiatives, there is still a large opportunity for corporate philanthropy to deepen and broaden support for the resilience of the company’s upstream and downstream supply chain across related social and environmental challenges. In particular, we foresee that the intersection of labor and climate will increasingly garner support from corporate philanthropy to address equitable access and opportunity for green jobs as a key tenet of a just transition (e.g., train and hire workers from local communities).
3. Support collaboration within the industry or across multi-stakeholder partners to drive impact at scale.
Whether addressing the climate crisis or biodiversity loss, the most urgent environmental issues of our time extend well beyond the resources and ambition of one company. Action at scale often requires changes to the existing policy, funding choices, or power dynamics holding the status quo in place. Leading corporate philanthropy teams are increasing their investments to support and/or launch multi-stakeholder, industry, and cross-sector initiatives that can shift these dynamics at scale. For instance, some corporate foundations support the development and application of industry-wide environmental standards for key issues, like the International Cocoa Initiative. Others invest in capacity building for the shared infrastructure required for industry-aligned initiatives to change policy or regulation through efforts such as the Global Energy Alliance for People and Planet. Others support initiatives—such as The Fashion Pact—to shape markets and incentivize new business models, innovation, and other solutions to environmental challenges.
As corporate philanthropy teams increasingly engage and partner with their company’s sustainability functions, these trends demonstrate how philanthropy can strategically engage and provide a source of new ideas, partners, and approaches for companies to deepen their positive environmental impacts. Companies can use their flexible philanthropic capital—as well as blended approaches across their foundations and corporations—to match the urgency of acting on the most pressing environmental issues impacting business and their stakeholders today with speed and scale.
This blog is part of a series written by FSG leaders on opportunities for corporate philanthropy in 2024. Read the full series with pieces on health equity, environment, education/workforce development, and financial inclusion here.
