Foundation capital

The Cisco Foundation drives innovation by investing in promising solutions to climate change

Posted 16 hours ago

Proposed by Cisco Systems, Inc.

It’s hard to watch the news or social media today and not be confronted with the issue of climate change. Scientific research continues to show that human-induced global warming, species extinction and habitat loss are causing widespread disruption of nature and affecting billions of people through storms, floods, forest fires, drought, food shortages and other crises.

Meanwhile, more and more people are concerned about these existential threats and are looking for ways to both raise awareness and take action. According to a recent United Nations survey of 1.2 million people in 50 countries, 64% of the world’s population believe climate change is a global emergency.

It is clear that we, as a society, need to do more to reverse the effects of climate change, as well as the related impact of human activities, which are out of balance with what our ecosystems can support. Currently, less than two percent of philanthropic dollars are spent on addressing climate change. Investment capital for innovative solutions that could reduce carbon emissions that lead to global warming is also insufficient.

For example, according to the Climate Policy Initiative, an increase of at least 590% in annual climate finance (approximately US$4.35 trillion) is needed to meet internationally agreed climate goals by 2030 and to avoid the impacts the most dangerous of climate change.

Additionally, the Intergovernmental Panel on Climate Change says recent investments in mitigation need to be multiplied by at least five times in Southeast Asia, seven times in Africa and 12 times in the Middle East. by 2030 to keep global warming below 2 degrees Celsius. compared to pre-industrial times.

The Cisco Foundation can play a role in bridging this funding gap, and in April 2021, its Board of Directors pledged to award and invest $100 million over ten years to make it happen.

What’s behind our strategy

There are three distinctions in the Foundation’s strategy for investing in promising climate solutions:

  1. Focus on solutions at an early stage. According to the Stanford Social Innovation Review, the capital invested in early-stage climate solutions is extremely low, despite the critical role these investments play in mitigating climate change. Donors may be reluctant to invest in early-stage solutions for a variety of reasons. Solutions may require long technical development times or costly testing, for example. But the Cisco Foundation is willing to take a risk on solutions that could drastically reduce carbon in the atmosphere. Investing in early-stage climate solutions allows us to drive innovation – providing valuable insights, signaling new markets or fostering collaboration between organisations. By providing “patient capital” for ideas that have longer leads, we can help achieve meaningful, inclusive and sustainable climate impact.
  2. Diversified and mixed financial approach. We recognize that different climate solutions require different types of capital in the early stages of growth. Therefore, our climate engagement consists of both a grants portfolio and an impact investment portfolio. This flexible, blended finance approach will help us to more fully close critical climate finance gaps and catalyze impact. For example, grants to nonprofits can support community climate education and engagement, market building, or proof-of-concept development. Impact investments in a combination of for-profit companies and climate impact funds could provide critical growth capital that further scales innovation. The Cisco Foundation has implemented a “venture philanthropy” grantmaking model for the past 20 years, and now, for our climate portfolio, we have added impact investment capital. Our focus on the earliest solutions in this space is one of our key differentiators.
  3. Respect for natural systems and emphasis on regeneration. We live in naturally connected systems where climate is intrinsically linked to communities. To reverse the impacts of climate change and build an inclusive future for all, we need holistic solutions that recognize the complex relationship between humanity and nature. We need to rebuild the connectivity between these systems and integrate social equity and economic opportunity into climate solutions. We also want to consider centuries of tribal and Indigenous knowledge alongside cutting-edge science and technology to co-create solutions that anticipate, prepare for, and respond to climate-related events, while seeking to support dynamic balance. You’ll see a great example of this above in Nia Tero.

What we fund

It’s hard to underestimate the demand for the kind of seed funding we provide. Within 20 minutes of announcing our $100 million commitment in April 2021, we received a LinkedIn connection request from an interested party. Since then, we’ve had hundreds of meetings with organizations led by amazing people who are devoting their full attention to the climate crisis and delivering some truly awesome regenerative solutions.

As our team dives into extensive due diligence around these grants and investments, we strive to invest in climate solutions along the “innovation continuum,” from conceptual ideas to solutions ready for commercial deployment and widespread impact.

We’ve already funded a number of solutions that I’m excited about, including:

  • Nia Tero is a non-profit grantee that exists to ensure Indigenous peoples have the economic power and cultural independence to manage and protect their livelihoods and the territories they call home. We partnered to fund Kara Solar, a community business initiative that trains indigenous community members as technicians who build, operate and maintain solar electric shuttles in rainforest communities. These boats reduce deforestation by removing the need to create roads, connecting many communities across various indigenous territories, while creating economic opportunities for community members. Its current phase of deployment encompasses 70 villages. During the first six months of our grant partnership, Kara Solar trained 13 Achuar technicians in the Ecuadorian Amazon and 13 Tumucumaque technicians in the Brazilian Amazon. Finally, Cisco support is enabling Nia Tero, Conservation Strategy Fund, and Kara Solar to conduct analysis on the impact of electric river transport on new road incursion and deforestation.
  • The Vesta Project is a hybrid nonprofit/utility venture whose solution is to capture carbon from the atmosphere and support coastal resilience using the mineral olivine. The carbon capturing properties and safety of olivine have been proven in the laboratory. Our grant allows Project Vesta to test it in real-life circumstances – spreading it on beaches to further assess the effects of olivine on wildlife and ecosystems and the rate at which it sequesters carbon. Factors such as the strength of the wave action, the temperature of the water and sand, and how the mineral dissolves will all affect the rate at which the olivine absorbs carbon. Our support is intended to help the Vesta project find the best conditions for optimal sequestration and to advance the technology, which will help them create a new carbon credit opportunity for $35/tonne of carbon removed at scale. Learn more about the work of Project Vesta in this short clip, which was recently featured in the documentary Solving for Zero.
  • Vibrant Planet & VP Data Commons is a hybrid for-profit/non-profit organization tackling the growing problem of wildfires and sustainable land management. The Cisco Foundation originally supported the Data Commons nonprofit effort. In 2020, California fires released 110 million tons of carbon, 40% more than the state’s entire annual emissions. The fires also destroy trees, which are essential for removing carbon from the atmosphere. Vibrant Planet has developed a data-driven technology platform that supports better decision-making on issues such as forest restoration, wildfire risk mitigation, land use planning, insurance and utility solutions. Using satellite data and a remote sensing method called light detection and ranging (LIDAR), they are building maps of the system that will give decision makers planning data in minutes, not years. . For example, their first licensed app, Land Tender, is designed to help accelerate ecological forest restoration and wildfire risk mitigation for communities. Their platform can be used by power companies, insurance companies, landowners, and governments to better manage resources, make critical land management decisions, and prevent wildfires.
  • Azolla Ventures. We’ve invested $5 million in the second fund created by Prime Coalition, which will build a portfolio of 20-25 otherwise overlooked climate startups from across sectors, each with the potential to reduce greenhouse gas emissions globally. gigatonne scale. In addition to meeting the high impact potential threshold, all companies in Azolla’s portfolio must also be adept at Prime’s additionality test, which means they would not be able to scale their solution. and achieve their climate impact goals without Azolla’s support. . Azolla focuses on companies that tend to have long time horizons, are capital intensive and carry outsized risks in the eyes of yield-oriented investors, but are a critical part of those needed to restore balance. of the planet. Azolla Ventures is a $200 million fund that uses both charitable capital and traditional investments in a structure that allows it to catalyze transformative early-stage climate ventures and keep them on track for impact. until the exit.

As we finalize more funding and begin to see the results of our impact, we will share more on this blog. Please subscribe to stay informed about innovations that could help society persevere against climate change and build the climate future we all want.

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