The initiative, a partnership between veterans of Canada’s climate fight and relative newcomers, raises the ante, with deep-pocketed foundations and wealthy individuals stepping into the limelight to demonstrate their willingness to spend large sums at a time when many governments seem to be retreating from climate policies.

Two prominent foundations – the Trottier Family Foundation and the Peter Gilgan Foundation – contributed $250 million, with the balance coming from smaller and newer funds, including one set up by direct-air-capture pioneer David Keith, a University of Chicago physicist who last year sold his start-up, Carbon Engineering, to Texas-based Occidental for US$1.1 billion. The Ivey Foundation also recommitted an earlier pledge of $100 million.

According to a press release, “the new commitments were made through the Climate Champions initiative, coordinated by Clean Economy Fund, which has the goal of tripling climate philanthropy in Canada from roughly $100 million to more than $300 million per year by 2030.” The Clean Economy Fund released data in September indicating that Canadian climate donations – $106 million in 2022 – represent less than 1% of all giving.

The committed funds will be allocated by the individual foundations, according to their own philanthropic programs, which may direct grants to advocacy, technology, policy-making or other initiatives, Eric St-Pierre says in an interview. St-Pierre is the executive director of the Trottier Family Foundation, which has long been active in climate philanthropy. “I would say this $405 million is first a pledge, it’s a commitment, and it’s basically a call to action.”

The target audience for this appeal, however, is definitely not mass-market. For the past two years, according to St-Pierre, officials from Trottier and a few other climate philanthropies have been quietly meeting with high-net-worth individuals and families, sounding them out on committing donations to some aspect of the fight against climate change.

This outreach campaign has sought to help smaller foundations figure out how to dip their toes in a space that can involve a good deal of technical complexity, as well as uncertainty as to the effectiveness of those donations. In many cases, wealthy families will set up family foundations with very specific philanthropic goals – healthcare, humanitarian relief, culture, scholarships, et cetera. “We’ve been sitting down for coffee, trying to explain the work that we do, trying to answer questions, trying to bring them along,” St-Pierre says.

An evolving approach to climate philanthropy

Historically, a large chunk of climate-adjacent philanthropy has gone toward conservancy organizations that buy ecologically sensitive land and establish anti-development easements that will protect those tracts in perpetuity. These gifts are also eligible for various types of tax exemptions.

Advocacy groups that target mainly individuals for support have been the other long-standing fixture of climate philanthropy, with donations underwriting lobbying, legal challenges and public action campaigns.

More recently, some foundations have invested in both advocacy and impact funding, meaning investments in either not-for-profit or for-profit revenue-generating activities, or technology start-ups, that may bring some kind of environmental benefit as well as a return on investment. But even climate-focused foundations acknowledge it will take trillions of dollars in private capital to transform and decarbonize massive sectors like energy, transportation and building materials.

Some climate philanthropists now position their role as catalysts pursuing a “theory of change,” with funding that underwrites or supports emerging economic activity, such as electric vehicle supply chains or green steel. “One of the fundamental ways in which we observe and measure this effect is in the unleashing of capital,” observed Eric Campbell, executive director of the Clean Economy Fund, in a recent blog post. “Like the small-sized domino, well-targeted and well-timed philanthropic capital can unlock much greater amounts of public and private capital.”

St-Pierre says that some climate foundations have explored the idea of establishing a pooled climate fund, to which smaller and less experienced, or less well-resourced, family foundations could contribute. “We had looked at that initially, and we’re keeping that option on the table,” he says. “There might be some foundations that might not want to make the decision on where to allocate to specific funders.”

For the time being, the foundations that signed on to today’s commitment will be able to coordinate some of their giving through the Climate Champions initiative, which is a program by the Clean Economy Fund.

Given the broad political swing to the right, and the Trump administration’s signalling that it will pull the United States out of the Paris Agreement, it might seem as if such efforts, even well-financed ones, are destined to hit a wall. But St-Pierre says he remains optimistic, noting the precipitous fall in solar and wind prices, as well as the dramatic take-up of EVs in China.

He also points out that when he talks to wealthy families, he no longer has to spend much time convincing them of the issue. “They get it. They’ve seen Jasper burn down, or they’ve witnessed smoke through their communities, and they’re probably physically feeling the effects of flooded basements. There’s no need to convince people of the gravity of climate change.”

Disclosure: John Lorinc has been retained independently by the Ivey Foundation to write a report on their efforts to wind down their granting operations.

John Lorinc is a Toronto journalist, author and editor. He writes about cities, climate and cleantech.

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In particular, the budget, released Tuesday, failed to clarify how the government plans to make up for its $14-billion climate funding shortfall – the gap that Corporate Knights has identified between federal commitments and funds disbursed as of the end of fiscal year 2024.  

While the federal government didn’t trumpet climate as a priority in its main communications about the budget, new climate funding over the next 10 years was the single largest spending increase in the budget, with a total of $14.2 billion in new climate funding commitments through 2035, according to calculations by Corporate Knights.  Two-thirds of that climate funding is via clean-economy tax credits meant to expire by 2035, while most new spending items are fanned out over the next five years.

The federal government has upped the ante on its running tally of climate funding commitments from 2015 through 2035, from more than $120 billion in Budget 2023 to more than $160 billion in Budget 2024. (While $40 billion in climate spending has been announced this year, only $14.2 billion of that was new in this budget.) But Budget 2024 reissued the same drawn-out timeline for the five climate-investment tax credits that were announced last year. And most of the new spending is backloaded into future years, with less than $1 billion flowing in 2024 to close Canada’s climate funding gap.  

When it released the 2022 budget, the federal government estimated the overall climate funding gap in Canada to be up to $125 billion per year. Over the next 10 years, planned federal climate investment averages $15 billion per year, mostly in the form of investment tax credits. 

This leaves a gaping hole of up to $110 billion a year, which the federal government along with other levels of government and the private sector will need to fill if Canada is going to meet its climate commitments and seize upon clean-economy growth opportunities.  

The federal government expects investments and tax credits for carbon capture, utilization and storage and clean technology to receive royal assent by June (six months after they were introduced in Parliament). It also plans to introduce legislation for the other previously announced tax credits for clean hydrogen, clean technology manufacturing and clean electricity this fall. The government plans to introduce a sixth climate-investment tax credit announced in this budget, called the Electric Vehicle Supply Chain Investment Tax Credit, in 2025. 

The government now estimates that its suite of climate-investment tax credits is worth up to $93 billion, up from $80 billion in Budget 2023. Normalized to gross domestic product, this would translate to about $1 trillion in the U.S., on par with the higher end of clean-economy funding the U.S. Inflation Reduction Act will provide.  

Considering that the lion’s share of the federal government’s planned climate funding over the next decade is via tax credits, it is concerning that none of the government’s six clean-economy tax credits worth $93 billion has yet been passed into law. 

But the government’s current timeline indicates that the most recently announced tax credit for EV supply chains may not be passed into law until after the next federal election. As the United States showed with the Inflation Reduction Act (with total climate spending ranging from $369 billion to $1.2 trillion), targeting clean-economy growth through more straightforward tax rebates tied to actual clean-economy outputs (such as kilograms produced of clean hydrogen), it is possible to move much faster with larger sums of money.  

 The federal budget’s running tally of climate funding commitments through 2035 leapt by almost $40 billion over the past year to $160 billion.

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The federal government is increasing its efforts to reduce greenhouse gases and meet tough new targets on the way to the country having net-zero carbon emissions by 2050. However, it has taken relatively little action to prepare for the catastrophic physical threats that climate change poses to the nation’s people, businesses and ecosystems, warns the Canadian Institute for Climate Choices. 

Provinces, municipalities and businesses have also been disregarding the coming impacts of increasingly severe floods, forest fires and droughts, the CICC said in a report released in early December.

In many cases, governments are making matters worse by approving infrastructure and other projects that reduce our resilience to climate change. A case in point: the Ontario government’s bill that could allow more construction on wetlands and other ecosystems that serve as natural flood management systems and store carbon that would otherwise be released into the atmosphere. The bill would give the minister more power to approve development in conservation areas, and faces a backlash from environmental groups who say it will result in the loss of important nature preserves across the province.

“It’s time that adaptation and resilience is seen as part of an integrated approach [along with emissions reductions] that is needed fundamentally,” the institute’s CEO Kathy Bardswick said in an interview. The institute is a federally-funded, arm’s-length think tank that provides analysis to help Canada move towards clean growth and address the impacts of climate change on the economy.

Adaptation received only modest mention in the updated climate plan released on December 11 by Federal Environmental Minister Jonathan Wilkinson which, among other measures. proposed steep increases in the carbon prices along with rebates to households. Two pages of the plan’s 79 were devoted to adaptation with few new measures announced. 

Instead, Wilkinson pledged to work with provinces, territories, municipalities and Indigenous communities to produce a National Adaptation Strategy that would guide future spending. The federal government previously endowed a $2-billion disaster mitigation fund to finance local adaptation projects.

The slow-motion response to climate adaptation has similarities to the COVID-19 pandemic. Politicians and business leaders were long warned and provided with credible scientific evidence that there was a high probability of a devastating viral pandemic, but failed to devote sufficient resources to prepare.

There is a growing awareness in government and business of the need for greater resilience in the face of the climate emergency, but action remains spotty. Far too often, required investments are put off for another day while development proceeds under a business-as-usual approach. 

Recognition of the staggering costs of climate change – economic as well as to our health and security – should propel an even-greater national and global effort to transform to a net-zero-carbon society.  

Climate risk consultant Laura Zizzo neatly summed up the need for a strategic approach in the Globe and Mail: “We have to work hard to avoid the unimaginable and manage the inevitable.”

Bardswick said many of the investments required to prepare for climate impacts provide additional benefits, including reducing GHG emissions, improving public health and providing natural water filtration and flood prevention systems.

The Institute’s report says the “known and measurable” costs of climate change to Canada are “only the tip of the iceberg” of what should be expected. It notes that catastrophic weather events have cost the insurance industry $18-billion over the past decade, with the number of catastrophic events three times higher than occurred in the 1980s.

The report noted that a changing climate is impairing prosperity and well-being through lost productivity, lower asset values, impaired health and loss of biodiversity.

In many cases, impacts like thawing permafrost and rapidly changing ecosystems will be difficult to quantify but are no less critical for the well-being of Canadians. Indigenous communities are particularly at risk given that their economies, identities and spiritual lives are more closely connected to the land. 

The effort to put financial value on nature is useful if it drives investment to protect and recover natural assets, but it shouldn’t ignore the non-material benefits that the natural world provides for humans and all the species with whom we share this Earth.

The Institute’s report urges governments at all levels to dramatically scale up public investment in adaptation, given economic and other benefits. It encourages Ottawa to coordinate with provincial governments to improve the effectiveness and efficiency of resilience strategies. 

And it calls for the government and private sector to enhance disclosure of physical climate risks in order to drive to planning and investment decisions. 

In the private sector, central bankers and other institutional investors are urging companies to do a better job disclosing their climate-related financial risks. Those risks include transition impacts that arise from government climate policies and competition from new, low-carbon technology; legal risks from lawsuits that charge corporate boards and executives with ignoring climate-related threats; and physical risks from extreme weather, rising sea levels and changing precipitation patterns.

Discussions around climate risk disclosure have tended to focus on the impacts of shifting climate policy and other transition risks rather than on the physical risks that climate change poses to infrastructure, supply chains and asset values, said Natalia Moudrak, director for climate resilience at the Waterloo-based Intact Centre for Climate Adaptation.

The Intact Centre has produced a guide for investors and portfolio managers to assess the physical risks that climate change poses to companies in various sectors – including energy, transportation, utilities and agri-food – and the risk mitigation measures companies in those sectors should be undertaking. The centre is funded by Intact Insurance Group.

The insurance industry is the loudest corporate advocate of greater adaptation effort, driven by increasing weather-related losses that it ascribes, to a large degree, to a changing climate.

Ahead of its release of a flood risk management report last week, The Geneva Association, an international insurance think tank, said Canada is “on the right path,” pointing to recent federal and provincial government commitments to expand flood insurance, enhance flood risk mapping and create programmes for relocation from very high-risk zones.

“However, further reform is needed to increase incentives for risk reduction and prevent measures for new buildings and retrofitting existing buildings and public infrastructure,” Geneva Association’s Maryam Golnaraghi said. 

As we’ve seen with the COVID-19 pandemic, coping with a crisis after it has hit is not only more expensive but also more disruptive to people’s lives than undertaking reasonable measures to prepare for it. 

Shawn McCarthy writes on sustainable finance and climate for Corporate Knights. He is also senior counsel for Sussex Strategy Group.

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