The Russell Family Foundation catalyzes climate finance
"Carbon Direct's emission report was exactly what we were looking for to help us achieve net zero by 2030. This is a critical next step for TRFF that builds on our long history of impact- and mission-aligned investing supporting people and communities.”
CEO, The Russell Family Foundation
To help reach their net zero goals, The Russell Family Foundation selected Carbon Direct to calculate their carbon footprint and develop interim emissions reduction targets.
About The Russell Family Foundation
Founded by George and Jane Russell, The Russell Family Foundation (TRFF) is committed to investing for positive community impact. TRFF funds regional impact through community investment, and is working to catalyze climate finance by modeling how to transition to values-aligned and low-carbon investment portfolios.
For the past several decades, institutional investors have advocated for greater transparency around climate risk. As the stakes grow higher, many investors are now taking a much stronger, more proactive stance on climate mitigation. Member-led initiatives like the UN-convened Net-Zero Asset Owner Alliance (NZAOA) have convened global asset owners to take the necessary action to transition their portfolios to net-zero GHG emissions by 2050. NZAOA members are now the first in the financial industry to set emission reduction targets consistent with the Paris Agreement.
The Russell Family Foundation joined the NZAOA in 2022 and, in the process, set an even more ambitious goal: to achieve a net-zero portfolio by 2030.
“We know that the next ten years are the decisive decade,” says Kathleen Simpson, CEO of The Russell Family Foundation. “If we take action now, we have a good chance at meeting the 1.5-degree target.”
By divesting from fossil fuels and investing in decarbonization technologies, TRFF has already optimized its portfolio to be approximately 80% more carbon efficient than the MSCI benchmark. Even then, getting to net zero is not a straightforward path. TRFF recognizes this is even more of a challenge for the broader philanthropic field, which is why their net zero by 2030 goal isn’t just about them – it’s about an entire field.
“We could get to net zero by 2030 and celebrate,” says Kathleen. “But if we haven’t influenced others along the way, we haven’t accomplished much with our foundation on a global challenge. Finding an organization like Carbon Direct, one that we can point our peers to and say ‘they have the expertise to help you’ was key. We want to make sure that there is an opportunity to share expert, accessible tools that anyone who is trying to do the work can use.”
Calculating a carbon footprint baseline with Carbon Direct
To reach net zero, TRFF needed a baseline of their carbon footprint. The Carbon Direct team worked with TRFF to calculate a comprehensive footprint that captured all emission sources across their operations, including utility invoices, expenses, and business travel. This included: sourcing and validating TRFF data; applying emission factors in alignment with GHG Protocol guidelines; and development of a footprint dashboard for activity-level reporting and discovery.
“The main barrier to driving climate action in finance is accurate carbon accounting data,” says Kathleen. “Carbon Direct provided us with that data, and the scientific expertise to analyze what that data meant for our foundation.”
Carbon Direct also worked with TRFF’s investment advisor, AlTi Tiedemann Global, to conduct a peer review of their financed emission footprint from their investment portfolio. While financed emissions can be difficult to calculate and are often excluded from many financial institutions’ net zero plans, AlTi is addressing these challenges through high-quality and standardized financial data. AlTi has developed a repeatable process to manage complex datasets that can translate expansive global investment portfolios into accurate financed emission footprints. For TRFF, AlTi used a combination of MSCI data and their own proprietary database.
“Because all investments have an impact on the world, it is necessary for us to use the best science, data, and technologies for investment decision-making,” says Brad Harrison, Managing Director of Impact Investing at AlTi. “We take a long-term view on investing capital to fully understand the long-term trajectory that capital will have on the environment. Rather than simply do no harm, our ultimate goal is to have a net positive impact.”
Targeted emissions reduction strategies to reach net zero
Over 2023, TRFF will use the carbon footprint baselines from Carbon Direct and AlTi to set interim emission reduction targets.
“The first baseline is incredibly important,” says Kathleen. “It helped our investment committee understand where we are today, and what we need to do next to reach net zero.”
Actionable strategies for emission reduction for TRFF operations in the short-term include evaluating goods and vendor services against sustainability criteria, transitioning to cleaner energy sources, and reducing business travel through virtual events. For financed emissions, TRFF will be working with AlTi and Carbon Direct to start implementing changes to their investment portfolio based on the assets driving outsized emissions. One example of this is transitioning a prior global equity strategy to renewable energy infrastructure projects that invest in solar and wind.
“We’re finalizing interim portfolio emissions reduction targets as part of TRFF’s net zero goals,” says Brad. “We’ll continue to make changes to the portfolio that will reduce emissions and drive long-term financial returns.”
What’s next: catalyzing climate action in the financial industry
Looking ahead, TRFF plans to develop a net-zero playbook for the philanthropic field that documents best practices for carbon footprinting, emission reduction, and the role of high-quality carbon removal credits.
“When we talked to our peers, it is evident that more clarity about net zero and what it really means is needed,” says Kathleen. “I see our work at TRFF as demystifying how we can move capital to decarbonize our economy.”
As a smaller investor, TRFF views the real-world impact of their decarbonization at the industry level. They hope that by taking action today they can model both operational and portfolio-level decarbonization strategies for other foundations, asset managers, and family offices.
“We’ve been thinking about our convening power, how we can bring together other asset owners and share tools like Carbon Direct’s platform and expertise with them,” says Kathleen.
Like Kathleen, AlTi approaches decarbonizing finance from a collaborative perspective. “It has proven very helpful to partner with Carbon Direct, and going forward, we’ll explore ways to more proactively measure and monitor emissions in support of our shared clients,” says Brad.
Even while developing a playbook, Kathleen says to her fellow asset owners: don’t wait for a perfect one to exist before you get started. Philanthropic organizations can start shifting their investment decision-making today and, according to Kathleen, they should in order to preempt the financial risks of climate change.
“We know that a delay or disorderly transition to a net zero economy will shock financial systems. That’s why it’s so important for us to act now, even when there isn’t a perfect playbook. Don’t let perfection be the enemy of action,” says Kathleen.