Climate philanthropists lend muscle to green metal

Climate philanthropists can maximise the impact of their donations by focusing their funding on decarbonising heavy industry exports, a study found.

A report titled High-Impact Climate Giving in Australia by Giving Green, found that investors and philanthropists could help reduce global emissions by up to 7% by concentrating their efforts on iron ore production.

The government estimates that the downstream emissions from iron exports alone sit at 1500 million tonnes of carbon dioxide equivalent per year, which is more than three times Australia's entire domestic emissions.

Despite these figures, decarbonising heavy industry exports is underfunded, receiving a tiny 2% of philanthropic climate funding.

"There is ample potential for pioneering the production of green heavy industry, notably green iron," said Dan Stein, director and founder of Giving Green, noting that Australia also accounts for 38% of the world's iron ore supply.

Instead of exporting and processing this metal using high-emission techniques, companies could shift to using hydrogen blast furnaces powered by renewable energy.

Giving Green argued that this approach not only benefits the environment but is also economically viable due to the low cost of renewable energy in the country.

A separate report from the Australian Environmental Grantmakers Network (AEGN) has found that climate and environmental philanthropy rose from $148 million in 2018 to $270 m in 2021.

"It's likely the Australian statistics were significantly impacted by the 2019-20 Black Summer bushfires, both in terms of an outpouring of immediate assistance but also the way in which they sparked people's awareness of the climate and biodiversity crises more broadly," said Amanda Martin, chief executive at AEGN.

"We have plenty of first-hand experience in this country of the devastating impact that climate change is having on our communities."

She added that reducing the impact of greenhouse gas emissions has so many knock-on effects for many of the other areas outside climate change that philanthropy funds, such as disaster recovery, housing and health.

However, Martin is worried that global giving towards climate change mitigation had reached $4.5 billion in 2021 but plateaued in the years after.

"We hope that Australia can buck the global trend and keep increasing the scale of this funding," she said.

The rewards from a decarbonised economy go to both philanthropists and investors.

For example, one of Giving Green's funders is fund manager Australian Ethical.

In the three months to March, Australian Ethical's High Conviction Fund returned 8% against its benchmark's 5.4%.

"The fund benefited during the quarter from its underweight position in the carbon intensive materials sector," it said in an investor update.

"Concerns around the outlook for the Chinese economy weighed on commodity prices and negatively impacted the share prices of the major iron ore producers, which are not held in the portfolio on the basis of our ethical screening process."

Globally, more than than 20 philanthropic organisations have pledged more than $490 m towards the Methane Reduction Initiative.