We cannot fight climate change with one hand while financing it with the other.
Yet foundations fund climate solutions while their endowments hold fossil fuels, and governments invest in renewable energy while subsidizing the industry driving the crisis with our hard-earned tax dollars.
Our energy future is shaped by two principal sources of capital: private investment, including funds held by foundations, pension funds and universities; and public finance, channelled through taxation, subsidies and government expenditure.
A just energy transition requires both.
At Wallace Global Fund (WGF), we decided our investments had to align with our climate mission. Philanthropy cannot claim to be solving a crisis while its capital helps drive it.
If you own fossil fuels, you own climate change. Full stop. A foundation cannot use a small portion of its assets to fund climate solutions while allowing the rest of its capital to finance the problem.
In 2010, before fossil-fuel divestment became mainstream, WGF moved its entire endowment out of fossil fuels and other harmful industries into a 100% mission-aligned portfolio, investing in climate solutions and backing movements confronting fossil-fuel power.
WGF’s final report records 23% invested in climate solutions, another 2% in energy access and justice, and 5% deployed as catalytic investment capital to projects like a grid scale wind farm being developed by the Standing Rock Sioux Tribe.
We rejected the assumption that divestment meant sacrificing returns. Our portfolio achieved top-decile returns for more than a decade.
But changing our portfolio wasn’t enough.
By backing early organizers, mobilizing student activists and bringing more than 200 foundations into the effort, WGF helped grow a global divestment movement reaching more than 1,700 institutions representing over US$40 trillion in assets under management publicly committing to divestment with untold millions more moving money in alignment without public announcements.
Divestment was never simply about selling stocks. It was about taking capital and social legitimacy away from an industry driving the crisis, challenging its political and financial power and putting that capital behind solutions instead.
Who Holds the Power in the Energy Transition?
The energy transition is often framed as a technological challenge: batteries were once too expensive, and solar panels were less efficient and durable. But technology has advanced considerably, making renewable energy such as solar among the cheapest sources of electricity in many parts of the world. Costs continue to fall and performance continues to improve. The challenge is no longer technological alone; it is also political and economic.
Fossil-fuel interests retain considerable economic and political power. Renewable-energy projects can leave local communities without reliable electricity, while coal-plant closures can leave workers without viable alternatives. The extraction of critical minerals needed for the transition can also perpetuate environmental damage and human-rights abuses.
A just transition depends on who has power over what gets built, who owns it and who benefits. Who gets electricity? Who gets the jobs? Who makes the decisions? Who receives the financial benefits? These questions matter especially in communities already harmed by energy poverty and fossil-fuel development.
One example is SHINE Collab, created by Sustainable Energy for All, GreenFaith and WGF. This women-led and centered campaign expands electricity access across Africa while strengthening local participation in energy decisions. Its Just Transitions Hub in Bikita, Zimbabwe, connects clean energy directly to livelihoods, including solar-powered food processing and improved water access.
In South Africa, WGF has supported Earthlife Africa, the Centre for Environmental Rights, groundWork and the South Durban Community Environmental Alliance as communities develop alternatives to fossil-fuel dependence.
That work helped lead to the Community Just Transition Centers and Fund, giving communities a direct role in financing local energy-transition and climate-resilience projects.
The women-led Soweto Center, for example, supports organizers and distributed solar projects intended to benefit households, local businesses and women-led enterprises.
Matching commitments from the Ford Foundation and ClimateWorks Foundation doubled our investment, attracting capital while centering communities.
Philanthropy must fund more than technology. It must support community organizing, legal advocacy, leadership development, climate litigation and movements capable of challenging entrenched interests.
You have to build power to confront power.
Public Money Needs to Stop Financing the Problem
Governments shape energy markets through subsidies, tax policy, infrastructure spending and regulation. Yet public money continues sustaining the industry we must leave behind.
It’s not enough to ask what our endowments finance. We must ask what our tax dollars finance.
While federal policy reduces projected spending on Medicaid and SNAP, taxpayers continue subsidizing an industry driving the climate crisis. Public budgets reveal our priorities.
As data centres proliferate, they continue to receive substantial public subsidies despite unresolved questions about their electricity demand, power sources, impact on the grid, water use and who ultimately pays for the necessary infrastructure. These incentives deserve the same scrutiny.
WGF’s report highlights the United to End Polluter Handouts coalition, launched in 2025 to challenge federal, state and local fossil-fuel subsidies. The coalition calls for repealing these subsidies, expanded under the One Big Beautiful Bill Act, and redirecting hard-earned tax dollars towards programs that support working families and communities, protect public health and serve the public good.
Philanthropy Cannot Declare an Emergency While Keeping Capital on the Sidelines
WGF increased its payout to 20% in 2020 and accelerated its spend-out again in 2025.
The climate crisis is here now. Worldwide assaults on democracy are now a force multiplier for threats to our climate, when fossil fuel interests control government policies. Why preserve philanthropic capital for some undefined future when communities confronting interesting crises and building solutions need it today?
Not every foundation will spend out. But every foundation has a responsibility to examine whether its investments reinforce its mission, whether enough capital reaches frontline communities and whether its response matches the urgency of the crisis. A just energy transition will require substantial flows of capital. But there is no shortage of private funds, either from corporations or philanthropies, and government funds can expand based on tax and budget priorities.
What that money stops financing, where it goes, who controls it and who benefits will determine whether we simply replace one energy system with another, or build something genuinely more just. And if we put more resources into the hands of communities, advocates, and movements, we believe that we can achieve climate breakthroughs, strengthen governments response, and center peoples’ needs and rights in the process.
