Assessing the Climate Action Investment Practices of Canadian Community Foundations

This report by the International Institute for Sustainable Development (IISD) analyzes the endowment management practices of 191 Canadian community foundations (CCFs), focusing on the integration of climate action and environmental, social, and governance (ESG) criteria. The author finds that while CCFs are active in grantmaking, they have been "laggards" in using their combined estimated CAD 7 billion in endowments to address climate change, often treating ESG as a risk mitigation tool rather than an opportunity for climate-positive investment. The report provides recommendations to increase transparency, diversify investment committees, and adopt positive screening strategies to align financial assets with climate goals.

• Canadian community foundations (CCFs) hold significant financial capacity in their endowments, estimated at almost CAD 7 billion in 2020, which is roughly ten times the amount they provide in grants. A small number of foundations hold the vast majority of these assets, with the five largest foundations holding approximately 65.5% of the total long-term investments and other assets.
• Most CCFs have failed to integrate ambitious climate action into their endowment management, often treating ESG considerations as a means of risk mitigation rather than a tool for driving climate-positive change. Many investment policy statements (IPSs) are silent on climate change specifically, and ESG integration is frequently delegated to third-party investment managers with little formal oversight or reporting on climate outcomes.
• The Foundation of Greater Montréal (FGM) is identified as a leader in climate-aligned investing. In an October 2021 IPS update, FGM committed to a climate transition plan aiming for net-zero carbon emissions by 2050 and an interim goal of reducing portfolio carbon emissions by 45% by 2030, while requiring managers to report according to the Task Force on Climate-related Financial Disclosure (TCFD).
• Investment committees within CCFs often lack diversity in professional and personal backgrounds, which may hinder the adoption of modern ESG and climate strategies. These committees are frequently composed of conservative financial professionals who prioritize traditional return goals over the financial materiality of climate risks.
• There is a perceived tension between global climate goals and local economic interests in certain communities. For example, foundations in regions where the local economy depends on industries slow to adapt to climate change may fear that divesting from such companies could be seen as prioritizing global environmental health over the local economy.
• The report recommends that CCFs move from negative screening (excluding certain industries) to positive screening and thematic investing, such as clean energy or low-carbon transition ETFs. This shift is presented as an economic opportunity to attract younger donors, such as millennials, who show high interest in sustainable and climate-themed investments.
• The report identifies a lack of transparency in how CCFs report endowment holdings and returns. While annual reports highlight granting activities, they rarely provide disaggregated data on asset class allocations or attribute how returns were earned, making it difficult for stakeholders to assess the local or environmental impact of the investments.
• The report suggests that CCFs join the Canadian Philanthropy Commitment on Climate Change, a joint initiative that encourages funders to align investment strategies with a just transition to a net-zero economy. At the time of writing, only eight CCFs and the Community Foundations of Canada (CFC) were among the 46 Canadian signatories.
• Impact investing is viewed by CCFs as a promising area for local growth, but allocations typically remain under 10% of the total portfolio. Barriers to increasing these allocations include a lack of internal capacity for due diligence and concerns regarding the liquidity of direct impact investments.
• The report recommends that larger CCFs partner with smaller foundations to provide them access to more sophisticated endowment management and climate investing strategies, though this may be hindered by smaller foundations' desire to maintain relationships with local banks and managers.

APA

Gouett, M. (2022). Assessing the Climate Action Investment Practices of Canadian Community Foundations. International Institute for Sustainable Development. https://www.iisd.org/system/files/2022-04/climate-action-investment-canadian-community-foundations.pdf

Chicago

Gouett, Matt. Assessing the Climate Action Investment Practices of Canadian Community Foundations. International Institute for Sustainable Development, 2022. https://www.iisd.org/system/files/2022-04/climate-action-investment-canadian-community-foundations.pdf.

Wikipedia

{{cite report |last1=Gouett |first1=Matt |title=Assessing the Climate Action Investment Practices of Canadian Community Foundations |publisher=International Institute for Sustainable Development |date=April 2022 |url=https://www.iisd.org/system/files/2022-04/climate-action-investment-canadian-community-foundations.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gouett2022assessing, author = {Gouett, Matt}, title = {{Assessing the Climate Action Investment Practices of Canadian Community Foundations}}, institution = {International Institute for Sustainable Development}, year = {2022}, month = apr, url = {https://www.iisd.org/system/files/2022-04/climate-action-investment-canadian-community-foundations.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }