One year of impact: marking Laudes Foundation’s anniversary and outlining our strategy

Just over a year ago, we launched our ambition to build a new foundation with a clear mission to address the dual crises of climate breakdown and deepening inequality.

At that time none of us could have predicted the horrific human toll and economic impact of Covid-19. Yet, just as has happened with the pandemic, these two crises demand an ambitious, global response.

In our view, these crises represent the visible manifestation of a broken economic system – one that no longer protects people or the environment – and the long-term consequences will be severe. From poverty and marginalisation to rising global temperatures, we are arguably at a tipping point where further inaction, or insufficient action, will inevitably lead to greater suffering and hardship.

The world’s dominant economic system has brought great prosperity to many, but is weighed down by deeply rooted beliefs, particularly the notion that value is purely financial and individual needs outweigh the public good.

But it’s not easy to re-boot a system, reshape ideas and change the short-term thinking which currently governs decision-making and certainly does not take into account its impact on climate and people. Vested interests still trump climate science, but thankfully, we are not alone in our mission and now is the time for us to join with others and collectively commit to bold action.

Our vision at Laudes Foundation is one where global markets value all people and respect nature. We believe philanthropy – through its power to take risks, be disruptive and develop, test and scale ideas – can play an important role in realising this vision, particularly if we collaborate with like-minded allies in business, finance, government and civil society.

To this end, we spent the last year consulting nearly 300 senior leaders, changemakers and experts across a number of sectors to develop our five-year strategic plan and theory of change. Together, we discovered the root causes in our global economic system, which continue to perpetuate and exacerbate the climate breakdown and injustice we are seeing, and created a dynamic economic system map to visualise how change can happen in such a complex world. Together, we explored how to design interlinked programmes which would contribute to a new paradigm: one in which value is more than simply market price.

To get there, we have set ourselves a bold, time-bound ambition. By 2030, we want to see a more climate-positive and inclusive economy, where ideas have been reshaped, incentives redesigned and business and markets are working – bravely and proactively – to mitigate climate change and reduce inequality.

How are we contributing to this ambition?

First, we work with and through business and industry; specifically the fashion and built environment industries, both of which have an outsized negative impact on emissions and social inclusion. At the same time, we also focus on the finance and capital markets sector, whose influence extends far and wide, impacting decisions and corporate action throughout the real economy.

Second, we focus our activities in each of these industries and sectors on those areas where we can have the biggest impact.

In finance and capital markets, this means addressing what we see as a primary issue: money is available but allocated poorly and not necessarily resulting in long-term value creation for people or the environment. To influence this, we are focussing on four main interventions:

• Integrating the price of climate-related externalities into policy;
• Influencing investors and banks in becoming Paris-compliant across all assets;
• Engaging investors to drive business and industry toward Paris-compliance; and
• Expanding new economic thinking into practical application with policymakers and business.

In business and industry, we continue to see companies focussing solely on profit, share price and executive bonuses and not paying the true cost of their products, which, because of how our economic system is structured and incentivised, would put them at a competitive disadvantage.

Specifically in the fashion industry, global competition concentrates power at the top of the supply chain and price pressure is borne both by those with the least power to negotiate – factory workers and farmers – and by our natural environment, particularly in countries with weak regulation. We are addressing this challenge via six main interventions:

• Ensuring a just transition, including social protection for workers;
• Promoting incentives for accountability, including transparency and regulatory mechanisms;
• Promoting collective action, the agency of workers and communities, and the organisations that support them;
• Enabling legislation to incentivise next generation and circular materials (and disincentivising fossil fuel-based materials);
• Accelerating investment into next generation and circular materials (and disincentivising investment in fossil fuel-based materials); and
• Transitioning business models (in materials) to landscape approaches, creating more income security for farmers and enabling climate-positive practices.

In the built environment, we see this challenge playing out via misaligned incentives which slow the path to net zero and do not encourage new business models. We are addressing this via four main interventions with an initial focus on Europe:

• Establishing and implementing industry roadmaps as well as enabling legislation on whole life carbon and circular economy;
• Accelerating the equitable distribution of investment in net-zero carbon and resource-efficient buildings;
• Supporting communities to ensure sector decarbonisation and increased resource efficiency promote equity and inclusion; and
• Accelerating the uptake of sustainable wood and bio-based materials construction.

Third, for Laudes Foundation to succeed in the interventions above, we need to influence the mindsets and behaviours of those actors most capable of accelerating this change. These include:

• Workers, producers, and the movements that support them (ensuring those who have the most to gain from a more inclusive economy also have a seat at the table; “nothing about us without us”);
• Business owners and industry leaders (who have the means and power to embrace climate-positive and inclusive practices); 
• Financiers and investors (who can lead the change through their own assets and use their tremendous leverage to nudge business and industry into action); and
• Policymakers and regulators (who are currently facing an extraordinary opportunity to rewrite the rules of the system, as governments race to enable a green and just recovery from the pandemic).

How are we delivering these interventions?

As a philanthropic foundation, we see our value not only in the resources we can bring to the table but also in our ability to experiment, build the field, connect unlikely allies, and form coalitions.

The six approaches we believe will help us achieve the greatest impact include:

• Accelerating advocacy by building capacity, supporting, scaling and amplifying advocacy efforts by partners; 
• Strengthening accountability via funding mechanisms, including transparency, to motivate progress and enforce standards and protections; 
• Scaling research and innovation to enable adoption, monitoring and evaluation of proposed tools, models and solutions; 
• Cultivating alliances by convening partners, coalitions, networks and movements towards collaboration; 
• Amplifying narratives and changing the dominant narrative around the economic system to build support for change; and
• Reimagining the economic system through the creation of new models, solutions, narratives and policies to redefine the purpose of the system and the actors within it.

Critical to our success is our ability to partner with other philanthropic funders and participate in relevant alliances and coalitions, which not only increases funding toward our shared objectives, but also gives us the opportunity to share, learn, and ultimately improve how we work.

What will success look like?

A climate-positive and inclusive economy means we will see the following movement in each of our focus areas.

In finance and capital markets, this means:

Capital flows will be redirected towards Paris Agreement-compliant assets, while high-carbon emitting businesses that fail to demonstrate transition endeavours will struggle to raise funds and compete. Central bank policies, operations and communications will be fully compliant with the Paris Agreement. Asset valuations will reflect the real cost of carbon. Auditors will be more diligent and held to account regarding the writing down of stranded assets. And new economic thinking, which redefines value for the benefit of all (including just transition), will be the dominant narrative within the finance sector.

In the fashion industry, this means:

Governments will ensure social protection schemes are developed and implemented and businesses respect the human rights of workers throughout the supply chain. Materials will transition from environmentally harmful fossil fuel-based synthetics and forest-based cellulosics to next generation and circular materials. And power will be shared with producers through landscape approaches, which promote the restoration of the environment through land use and biodiversity-friendly agricultural processes and the reduction of emissions.

In the built environment, this means:

A critical mass of industry will set embodied carbon and resource-efficiency targets and will have started the process of achieving these. The value of, and demand for, low-carbon buildings will increase and will decrease for high-carbon buildings. Sustainable wood will become mainstream, non-compliant wood no longer viable and the built environment will enhance equity and inclusion.

What are our next steps?

We set out on our mission to challenge and inspire industry to harness its power for good only twelve months ago. Our 80-strong team is now firmly established and works alongside more than 120 international partners and alliances in its bid to transform the global economic system and the way it defines value.

And while this first year has presented some unexpected challenges (and we cannot predict what the years ahead will bring), we are now integrating our five-year strategy into our work with our partners. In doing so, we remain deeply committed to our values – courage, conviction, adaptability and accountability. We are prioritising learning and will course correct where needed. And we continue to be guided by our partners, by key stakeholders in the industries and sectors we are seeking to transform, and by other funders (many of whom have years of experience from which we can learn).

Finally, we are moving at pace. We are in a climate emergency, and we all have a part to play, be that as individuals, businesses or philanthropic funders. Laudes Foundation is committed to playing its part and we will continue to work collaboratively with all our global partners, like-minded thinkers and supporters to stimulate the creativity and ingenuity required to ensure we make an even greater impact in the years ahead.

While it may be some time before we can again convene in person, we warmly thank you all for your enthusiastic encouragement and participation in our strategic dialogues over this past year.