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Sustainability

Can Rockefeller, Bezos and IKEA turn the developing world green?

Published 4 November 2021 in Sustainability • 7 min read

The welcome announcement of a multi-stakeholder philanthropic partnership to accelerate the adoption of green energy in Africa, Asia and Latin America is a bold move. But, like all philanthropy, it must overcome significant challenges to achieve lasting impact. 

 

Impactful philanthropy is a difficult and complex journey that often involves working with multiple stakeholders and structures over long periods of time to deliver incremental change. It is no miracle cure for any of the world’s problems. But, when done well, it can play an important part in producing tangible solutions.  

The announcement by the Rockefeller Foundation, the IKEA Foundation and the Bezos Earth Fund at COP26 of a broad-based coalition to spur the uptake of green energy technology and reduce carbon-based energy use in developing countries must first and foremost be welcomed as a “role model” initiative for the philanthropic community.  

The Global Energy Alliance for People and Planet is an innovative move that brings together some of the guiding lights in philanthropy and eight international development finance organizations, including the World Bank, to address a specific need, with a clear strategy and targets, regional expertise, and some serious resources.  

If successful, the initiative could provide one billion people with reliable and renewable power, avert four billion tons of carbon emissions, and support more than 150 million jobs over the next decade. 

This big umbrella, platform style of philanthropy is not new, but it is indicative of an emerging trend that has seen the field shift towards professionalism, partnerships and pragmatism.  

The hope is that, when three giants such as Rockefeller, IKEA and Bezos unite for climate change, greater impact can be achieved through pooled expertise, networks and resources, and that others will follow suit with similar climate-focused initiatives to fill the gap left by governments and the market.  

The approach is interesting, with the alliance targeting a specific future pinch point in the race to cut carbon emissions. Countries in the developing world say they cannot catch up in the global economic race without carbon-based energy. While they are responsible for 24% of global CO2 emissions today, this could hit 76% by 2050 without action now.  

To play its part in trying to stop this, the alliance will support projects with an initial pot of USD 10 billion to kickstart the adoption of greener solutions in communities where private capital is not flowing quickly enough towards green energy. The premise is that, once the right solutions are found, the private sector will step in with further investment of USD 100 billion to unleash the power of the green economy. 

Countries in the developing world are responsible for 24% of global CO2 emissions today, this could hit 76% by 2050 without action now. 

This entrepreneurial “investment” method of philanthropy – where sustainable impact and “business case” long-term viability are key – reflects the move away from traditional philanthropic giving, which was recently declared a failure by Roche Vice Chairman André Hoffmann.

It remains to be seen how effective this kind of partnership, led by philanthropic foundations, can be in implementing real change in economies that have a limited footprint in green energy solutions and multiple levels of stakeholders.

Indeed, case study research for our recent book, the Family Philanthropy Navigator (co-authored with Etienne Eichenberger, Co-founder and Managing Partner of WISE philanthropy advisors), revealed the depth of challenges that even the most established philanthropic foundations face in turning well-meant ambitions into impact.

As we heard in our research from Kristian Parker of the Oak Foundation, the topic of climate change is among the most complex to address within the world of giving. Taking on this massive challenge requires diplomacy, collaboration and patience, as well as investment in partners on the ground to ensure they have the right governance, skills and capacity.

Our research has shown that the most impactful philanthropy ticks boxes in three crucial areas that are then managed in a highly-professional and focused way:  

  • Purpose: Is there clarity when it comes to the motivation, focus and ambition of a project? 
  • Relationships: What kind of partnerships are required and how will they be managed? 
  • Organization: What types of resources and governance are needed? How is impact measured? 
Wind Power in the sea of clouds,Guilin,China

Uniting for the Planet’s Future

In the run up to COP26 in Glasgow, eight business schools have joined together to equip present and future leaders to address climate change.

This new venture clearly has the purpose part well covered, and appears to have many of the top-line relationships and organizational structures in place, but there are several challenges that must be overcome. Here are three:  

Partnerships are crucial, but they are hard work 

Building effective partnerships is key to philanthropy, whether it’s collaborating with NGOs and local communities to implement the best, lasting solutions or selecting appropriate partners for financing projects. The alliance will have its work cut out for it when it comes to navigating the huge diversity of politics, culture, technology, education and business in Africa, Asia and Latin America. Key to this will be a transparent governance structure that empowers agile, shared decision-making and connects with all actors in a credible way.  

Climate change is not like funding a school 

The biggest challenge in tackling the climate crisis is the complexity of the problem. Fixing climate change involves a huge range of actors from the public sector to communities and business. While all of these stakeholders must be considered in any project, full consideration must also be given to the total impact of any action, both positive and negative. For example, if the alliance funds an affordable solar panel project in a village in Laos, what action is then taken to educate the population, change mindsets in the business community and, crucially, support the transition in commerce and jobs away from carbon-based energy? Finding the funding mechanism and implementing solutions that suit each partner and community will be crucial. 

Megaphone philanthropy as seed funder with an exit strategy 

The evolution of philanthropy has led to foundations looking to kickstart solutions that tackle global challenges in a self-sustaining way. The alliance has gambled with a big announcement that will raise expectations, which could work both for and against the future credibility of their global initiative. Will there be enough viable projects that can survive beyond the support of the alliance and attract sustained private sector investment and then future growth? If not, how will the alliance fill the funding gap?

While there are significant challenges ahead, this landmark alliance is another sign of the welcome shift within philanthropy towards professionalism, partnerships, self-sustaining impact and donor pragmatism. Whatever its final outcomes, the alliance has already succeeded in focusing attention and resources on tackling one of the biggest dilemmas in the climate crisis: How can developing countries catch up with the rest of the world without contributing heavily to global carbon emissions?   

Authors

Peter Voegel - IMD Professor

Peter Vogel

Professor of Family Business and Entrepreneurship at IMD

Peter Vogel is Professor of Family Business and Entrepreneurship, Director of the Global Family Business Center, and Debiopharm Chair for Family Philanthropy at IMD. He is Program Director of Leading the Family Business, Leading the Family Office, and Lean Entrepreneurship. Named in the Poets&Quants 2022 list of the best 40 MBA professors under the age of 40, Peter has been published in peer-reviewed academic journals and, has written a number of books, book chapters and scientific and practitioner-oriented reports.

Malgorzata Kurak

Postdoctoral Research Fellow at the Debiopharm Chair for Family Philanthropy at IMD

Malgorzata Kurak is a Postdoctoral Research Fellow at the Debiopharm Chair for Family Philanthropy at IMD. She has published work on numerous topics including family philanthropy, cohesive giving, the use of blockchain in philanthropy, and impact data management. She holds a PhD in economics, management and organization from Universitat Autònoma de Barcelona.

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