Tonika Hirdman is a former bank executive and an expert in philanthropy and sustainable investments. She began her career as a diplomat. Currently, she is the Director General of the Fondation de Luxembourg, a public- private partnership that combines finance and philanthropy. Created by the Luxembourg State and the Oeuvre Grande-Duchesse Charlotte in 2008, the Fondation de Luxembourg's mission is to promote and facilitate private philanthropic engagement. The Foundation, which is active in numerous sectors, such as the environment, humanitarian projects, scientific research and the arts assists European philanthropists in the structuring, development and monitoring of philanthropic projects in Europe and worldwide.
Fondation de Luxembourg helps philanthropists make the most of their donations. But while it is up to donors to decide which causes they support, Director General Tonika Hirdman says the foundation’s adherence to the UN Sustainable Development Goals helps philanthropists direct their giving to the areas of greatest needs.
How are ESG and climate change influencing the Fondation de Luxembourg’s activities?
Philanthropy is based on individual beliefs and personal passions. While the Fondation de Luxembourg helps people realize their philanthropic ambitions, it is not our role to choose which causes to support. We leave that to our donors. Our mission is, firstly, to simplify the process and to make their philanthropy more structured. Secondly, we help guide donors’ philanthropic giving towards projects that best reflect their aspirations and resources. That said, a few years ago we aligned with the UN 17 Sustainable Development Goals (SDGs). Their aims include ending poverty, reducing inequality and spurring economic growth, as well as tackling climate change and preserving biodiversity. By integrating these goals into the project planning, we were able to help philanthropists direct their agendas to the most urgent global challenges.
Our sustainable investment approach helps ensure that the philanthropic values of the founders remain consistent with their foundations’ investments.
What role can philanthropy play in investments that help mitigate climate change?
Our founders don’t want their assets invested in activities that are at odds with their charitable goals. Our sustainable investment approach helps ensure that the philanthropic values of the founders remain consistent with their foundations’ investments. This is important. Imagine a foundation financing reforestation projects in the Sahara, while at the same time investing in multinational companies whose palm oil plantations are devastating the same habitat. It doesn’t make sense. We decided early on to invest our endowment according to an ESG (environmental, social, and corporate governance) investment policy. Our founders were a bit skeptical when we first proposed this, but today 80% of our foundations’ assets adhere to ESG investment principles, not to mention impact investing and microfinance funds, which may serve to advance the causes they support.
Can you give examples of ESG/sustainability initiatives supported by the Fondation de Luxembourg?
The Wild Flowers Foundation under our aegis works with grassroots organizations to improve the living conditions of vulnerable people in the Amazonas state in Brazil. At the same time, the foundation invests part of its endowment in the Luxembourg Microfinance and Development Fund which is active in the same region. In this way, the foundation leverages its philanthropy by investing indirectly in social purpose businesses that may last beyond the initial grant. Another example is the Akuo Foundation, which is raising awareness and supporting local communities’ transition to sustainable agriculture through a “green school” in Morocco. Meanwhile, closer to home, Fondation Campine Vivante is acquiring parcels of land to create nature reserves and promote conservation in Belgium. Finally, the Mangrove Foundation is working with local communities to install water irrigation and reforestation projects in Mali and the Philippines. Other foundations are helping local communities in developing countries become energy independent by investing in solar panels installed on schools and hospitals.
Which risks and opportunities do you see from ESG investment in the future?
In 2019, we conducted a survey among twenty private banks in Luxembourg and found that more than half of them had less than 5% of total assets invested in ESG. Thanks to the new EU regulations and the Luxembourg government’s promotion of sustainable finance, this number is improving, as banks are now challenged to expand their range of ESG offerings. Opportunity may also arise out of a crisis, such as the one we are currently experiencing. The covid pandemic is offering a glimpse of what might happen if we continue to ignore scientists’ warnings on climate change, but has also created an opening to integrate environmental aspects into the economic recovery by impelling companies to transition to a more sustainable strategy. I am convinced that climate change will be the key topic for years to come. It is connected to so many other global issues such as poverty, migration and social inequalities. Governments do not have all the answers, but in philanthropy, we see a growing number of new and younger donors seeking to play a role supporting a future in which they believe.