The need for environmentally and socially conscious investing has never come at a more important and critical time, especially in Asia. A recent study by British oil and gas company BP found that Asia accounted for 52% of global carbon dioxide emissions in 2021. This did not come without consequences, as the region continued to face some of the harshest effects of climate change globally, with over 57 million people in Asia last year severely affected by climate-related disasters.
This is compounded by a huge funding gap for climate action and sustainability efforts in the Asia Pacific region, considering the need of US$1.3 trillion ($1.7 trillion) for green financing in Southeast Asia alone. “Sustainability is at the core of Asia Venture Philanthropy Network’s (AVPN) mission,” says AVPN CEO Naina Batra, speaking at the non-profit incubator’s 2022 conference held in Bali from June 21 to 24 with the theme “The Asian Decade”.
At the conference, speakers called for organisations from a wide range of sectors, be it business development or endowment funding, to work towards Asia-tailored solutions to better support the rise of the region. “We hope to work even more vigorously to unlock capital more effectively towards climate solutions”, adds Batra, as she looks forward to network members for ideas, projects, financing and in-kind support.
Since 2011, AVPN has grown to become the world’s largest network of social investors in Asia, with over 600 diverse members across 33 markets. The network currently has nine philanthropic funds with different focuses such as healthcare to climate change in Asia, with some US$11 million raised thus far.
At the conference, AVPN launched the APAC Sustainability Seed Fund of US$3 million. With the support of Google’s philanthropic arm Google.org and the Asian Development Bank (ADB), the fund is meant to help bring together both the public and private organisations to work jointly on climate and sustainability projects across 11 countries.
Challenges ahead
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Various other organisations — even if they are not contributors to the fund — are doing their parts in their own ways. Temasek Foundation CEO Ng Boon Heong echoes Batra’s sentiment during the plenary session on the importance of prioritising sustainability efforts in this day and age. For example, a large part of Temasek’s overall portfolio of just over $400 billion as of March was dedicated to investments in Asia.
“Three of the four most populous countries in the world reside in Asia,” Ng says, in the context of how widespread the reach climate solutions can achieve in the region, “if we find innovative solutions to the needs of Asia, we will actually solve a critical part of many of the problems of the world today.” Furthermore, he says Asia is a rising hotbed for new investments ranging from venture capital to endowment fundraising, given the significant amount of area in the landscape still needful of building up. “[As] many sectors in Asia are in the early stages of development, [this] presents huge opportunities for investors,” Ng adds.
AVPN’s Batra says that many ideas are premised on Western models, which — more often than not — has failed to work as effectively in Asian countries as seen in the past decade. “Ultimately, the solutions to the challenges that we face in our region will come from our own communities, from the discussions that we have not just here [at AVPN], but at the different forums across the Asia Pacific region,” she argues.
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Climate philanthropy is growing in Asia, where an increasing number of companies — from global foundations to carbon management businesses — are working towards taking greater action to help the environment.
“Philanthropy has a big part to play in terms of reframing the climate narrative,” says Meg Argyriou, head of international programmes at Monash University’s Climateworks Centre. “While climate mitigation is critical, adaptation [to a variety of methods] is incredibly important [as well in the days to come].”
Encouragingly, Argyriou says that there has been a good history of philanthropic giving in the region. “We’re seeing a significant increase in the number of high net worth individuals these days with the tendency to give towards issues [pertinent to Asia].”
Even so, Carbon Trust’s head of Southeast Asia Xinying Tok maintains that climate philanthropy has a way to go in Asia, especially since this region is more vulnerable to climate impacts as compared to other parts of the world.
“There’s a lot of breadth [of work], but not a lot of depth [of impact in the space] right now,” says Tok. “We [are still not] seeing the [complete] impact from international [level] down to that of the [local and regional] communities.”
Tok’s goal at Carbon Trust is to translate existing philanthropic giving outcomes in the climate sector in the West to Asia. “One of the interesting things that we worked on was building on the local advisory teams here in Asia [towards climate philanthropic giving] the moment we entered the space,” she explains, “[this process] also made us more aware of how a lot of the intersectionality and co-benefits [of the space] are very localised, and different in every place.”
There is also little to no excuse to continue working and enhancing this space, especially since there continue to be many solutions that are already available on the ground today, she argues. “If there is a knowledge base that can be trusted on the ground that can be leveraged, [what’s left to be done is for] part of that decision-making process to be filtered out from the ground upwards,” says Tok, which is where local advisory teams come in.
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Talent and education matters
Another issue flagged in the area of climate philanthropy is the talent gap. “Right now, it is still difficult to find talent at all community, regional, national and international levels [equitably] and connect the dots from there,” she says. “There is an interesting role that philanthropy can play when [one] is in the climate space for a long period of time,” continues Tok, “and in the process, [one] is also invariably participating in the talent pipeline building process [which I think is very meaningful].”
Meanwhile, Argyriou advocates for more extensive education — not just that of investors, philanthropists but also for policy makers. “There remains a huge gap in terms of the knowledge around how we embed climate decision making in policy [work] and in corporate decision making,” she argues.
Quantifying the results of climate investments also remains a real challenge, as donors and investors often demand quantifiable progress before opening their wallets again. She adds: “Attempting to solve a long-lived global problem through local actions, of which the connection between those acts and the global impact can be very disconnected, while trying to measure the [reasonably intangible] impact of the money, can very much be a challenging journey.”
“It is doable, though not without the [valuable] support and a fair degree of trust and vision from the philanthropies that we work with to push us to think about measurement and the leap to impact,” Argyriou adds.
Moving forward, it might be beneficial for climate philanthropy to not be segregated from the rest of the capital chain. Tok asks: “Should philanthropy shy away from supporting industries coming together for joint action, or not? I believe that sometimes, there is some value in creating a collaborative platform for market players to come and co-solutionise some issues and help them be a collective voice to resolve any regulatory or policy directional issues.”
She adds: “There might be some value in thinking about whether or not philanthropy can also play a role [in businesses’ growth], and not necessarily just giving directly to local communities, but [creating added value from] a market perspective.”
Moving at the “speed of trust”
While pushing forward the climate agenda has never been more urgent, the importance of a solid foundation for such ventures is high for there to be longevity to the benefits to be reaped.
“At Temasek, all our programmes are funded out of endowments so that we can plan [our projects] on a multi-year basis,” says Ng. “This is because we believe that in order to achieve longterm sustainable impact, [planning a few years] in advance is key, so that there is scalability of that impact as well.”
“The licence to operate must be anchored by the pillars of good governance and sustainability [for success in this area],” he adds.
Increasingly, profit and purpose are becoming equally important to see progress in the climate space, but the key quality of good, long-lasting relationships amongst stakeholders is also increasingly more vital to see long-term success.
“Trust based philanthropy cannot be overstated,” says Batra. “We are all here, coming at different points of the continuum of capital, to collaborate and use philanthropic capital as a catalyst to scale impact [where trust is key to make] the impact most intentional.”
This cannot be truer when it comes to partnerships in Asia, says LGT Group’s managing director and head of sustainable and impact Investments in Asia En Lee. “In Asia, we only move at the speed of trust,” adds Lee, which is in contrast to the West where most things are usually more transactional in nature. “Because once [the foundation] is started on trust, so many [more] things can be built together across both private and public sectors.”
Nonetheless, Lee sees better days ahead for impact investing in the region, adding: “The fact that we do have a massive accumulation of wealth intersected with the greatest development challenges in the same place at the same time is exciting.”
Drawing on the analogy of how a traditional Batik design is formed, Lee says that the biggest opportunity right now for investors, venture capitalists, global financial institutions and the public sector alike is to “join the dots” to innovate. “We are more similar than we think we are,” he continues. “We have the ability to connect and combine solutions so much more effectively, [as long as we take the] time to make the connections that matter and ‘join the dots’ to create things as beautiful as Batik.”
Photo: AVPN
