The ICC has been working to galvanise funding, scale impactful solutions, and facilitate collaboration across the ecosystem to enable broad-based climate action.
Here’s a glimpse into our impact in the ecosystem, since inception, as of 2022:
Galvanised over Rs. 85 crores (over USD 10 million) in commitments
100+ technical partners
35+ domestic and international philanthropic partners
30+ CSR funders
Insights on CSRs’ growing interest in climate action, challenges that funders face, and opportunities that lie ahead
To drive funding towards high-impact climate solutions in the ecosystem, we are currently building a Climate Solutions Platform. As a part of this, we have been working to understand the different groups of funders who might engage with it. One such group is corporate philanthropy, or CSR funders — and to build our knowledge of this space, we have collaborated with Give to conduct a study of how CSR funders are currently engaging with climate change. Our learnings from these interactions are shared below:
CSR is increasingly interested in climate action
Across the board, corporates in India have been setting climate and sustainability targets — including net-zero, Taskforce on Nature-related Financial Disclosures (TNFD), RE100, Science-based Targets (SBTi), and others. India leads emerging economies with the highest number of corporates committed to SBTi — 79 companies as of April 2022. This engagement is trickling down to CSR as well, with many funders expressing an interest in better understanding the climate landscape — in fact, about 80% of our respondents have expressed an interest in climate action. Currently, about 7% of total CSR funds go to the environment sector; it is the 4th largest recipient after healthcare, education, and rural
development. However, this is not an accurate proxy for climate projects, as it does not account for development projects with climate benefits that fall within other categories under Schedule VII (such as livelihood enhancement, rural development, slum development, disaster management, and others).
Climate action can be operationalised through both business operations and CSR, but is approached in different ways
Traditionally, corporates have centred their CSR work around people and communities, making their focus more aligned with adaptation projects and those that have other development co-benefits. However, given the accelerated global interest in decarbonisation, mitigation has become a key part of businesses’ sustainability work — leading to a sharp increase in CSR funders’ interest in projects that enable carbon sequestration. Some funders are exploring avenues to leverage carbon credit financing as a way to enable increased incomes for their beneficiaries as well.
CSR funding holds promise in the climate space, but faces some key challenges
Although CSR funders have close connections with grassroots organisations and development experience, their spending is determined by defined timelines and mandates. Climate projects often require long-term commitment, and spending therefore demands more flexibility than the previous year-on-year approach. Recent amendments to CSR law may prove helpful here, under which the re-defined timeline allows for longer-term projects; corporates can now support projects over a four-year duration, commonly referred to as 1+3 (a timeline not exceeding three years, excluding the year of commencement). In addition, impact assessments by an independent entity are now mandatory for CSRs with an average spend of over INR 10 crores, or for projects over INR 1 crore. This encourages funders to focus on the impact their investments are creating, and enables them to work with a partner that can help track their climate impact — commonly cited as a challenge in funding climate.
A few key challenges remain.
1.There is no shared definition or understanding of climate solutions, the breadth of what they cover, how they intersect with development priorities, and what best practices are.
a) This often leads to a concentration of funding towards a few well-known solutions, such as tree plantations or solar panels.
b) Many CSR funders — especially, but not limited to, smaller players — want support to better understand climate and have expressed the need for accessible resources and trainings without excessive jargon.
2. Measuring the impact of climate projects has emerged as a significant challenge — particularly because CSR funding has traditionally focused on short-term, output-focused projects, and climate projects usually have longer gestation periods. Carbon sequestration, specifically, can often be difficult and expensive to measure and verify.
a) Given that CSR funding is project-specific and not institutional, aspects like monitoring and evaluation (M&E) need to be built into program budgets to ensure that impact can be effectively captured.
3. Some teams face challenges in getting stakeholders’ buy-in, given that climate is a relatively nascent space and less understood than traditional sectors. Hence leadership may see this as a riskier space for their involvement, which can be assuaged through corporate collaboration.
4. Funding is concentrated in a few states, and some regions receive minimal CSR funding. For example, North-Eastern states, despite being some of the most climate vulnerable regions of the country, receive less than 2% of total CSR funds on average.
a) Certain industries, such as communications, IT, and financial services, have more flexibility in the geographies that they fund. Some of these funders are beginning to express more interest in underserved areas and aspirational districts.
Opportunities ahead for funders
1.There is a pressing need for CSR funders to come together to solve sectoral challenges. Although corporates often do so for their business challenges, they tend not to prioritise a similar approach for CSR.
a) Co-funding is a critical part of sustaining larger, long-term climate projects and can often mitigate risks associated with entering nascent sectors. An anchor funder can also help bring in smaller CSR funders who are interested in supporting these kinds of projects but lack the budget to do so.
b) Industry bodies can play a critical role in bringing CSR funders together to share knowledge and enable peer-to-peer learning.
2. Given that skilling is a popular and well-funded space within Schedule VII, CSR funders can play an important role in preparing the country for a low-carbon transition by climatising their skilling portfolios.
a) This could involve developing alternate livelihoods where mines have been retired, reskilling in the automobile sector, skilling for climate-resilient agriculture, etc. Efforts towards this kind of work are already underway, in terms of capacity building for farmers in organic farming and certification, for example, and can be extended to include other dimensions of the climate transition.
3. Adjusting our policy framework for CSR spending on climate can also incentivise funders to prioritise climate action. Suggestions include adding ‘climate change’ as a separate category within Schedule VII, enabling institutional support for CSOs (especially for aspects such as M&E, digitising M&E, fundraising, communication, etc.), and integrating CSR with existing frameworks such as BRSR (Business Responsibility and Sustainability Reporting).
By Isha Chawla, Associate, Climate Solutions Platform, ICC
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