The Robust Diversification Strategy

In this episode, Johannes Ackva of Founders Pledge discusses his thinking on the most effective forms of climate philanthropy.

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David Roberts

Say you’re a private individual (or a company, or a foundation) who cares about climate change and has some money to spend on it. What’s the best way to spend that money? How can you ensure the largest possible impact?

Similar questions about maximizing philanthropic impact have led to an entire field of study and practice known as “effective altruism,” which seeks to apply logical and empirical rigor to do-gooderism. But it is only very recently that effective altruists have turned their attention to climate change.

One of the leading EA voices on climate is Johannes Ackva. He’s a researcher at Founders Pledge, an organization through which business owners and entrepreneurs donate a portion of their earnings to charity. For years, Ackva has been thinking through the puzzle of how best to channel climate philanthropy, given the structure of the problem and the politics around it.

If you’re interested in what groups Founders Pledge has chosen for its donations, you can find a list on the website, but I was more interested in the thinking that led Ackva to those recommendations. Given the enormous spatial and temporal scales involved in climate change, the many social and political complexities, the extensive and irreducible uncertainties, how can a well-meaning donor have any confidence in their choices?

I found our conversation quite enlightening — a new lens through which to view this familiar problem — it and I think you will too.

Johannes Ackva, welcome to Volts. Thanks for coming.

Johannes Ackva:

Yeah, thank you, David. Thanks for having me. It's an honor and pleasure to be here.

David Roberts:

Let's start a few steps back since I'm not entirely sure that the Volts audience will be familiar with the effective altruism movement, even though it gained quite a bit of press attention recently. So to start with, just tell us briefly, what is effective altruism and what is it trying to do?

Johannes Ackva: 

So effective altruism is really a social and intellectual movement that tries to answer the question, “how can we do the most good possible?” And, not only answer that question in a theoretical way, but in a very practical way, actually trying to do as much good as possible. 

There are two components to it. The first one that I would stress is, of course: altruism, which is about trying to be really serious about helping other people and other beings. So, effective altruists usually take a global take, including all humans, also all future humans, also all animals. So, having a really expansive form of altruism. And many effective altruists donate a large part of their income to the global poor or change their careers. So this is the altruism piece of it. 

And then there's this effectiveness piece, which is like thinking really hard and long, and trying to use as much evidence as possible to think about “how can we have the most impact?”, the most positive impact. And one thing about impact here that I think is crucial, because I think it will come up throughout our conversation, is that a lot of what I'm saying on climate is motivated by this notion of counterfactual impact. Given what everyone else is doing, what is the thing that is additional, should be done next? So, not only trying to have impact, but trying to have impact that otherwise would not happen in the world. And I think that's really key to how we think about climate.

David Roberts:

And this is the concept of additionality, doing something that would not otherwise be done?

Johannes Ackva: 

Yeah, doing something that would not otherwise be done. Yes, that's the concept of additionality.

David Roberts:

I won't claim any deep familiarity with the ins and outs of the movement, but my impression over the last few years is that some of the most prominent spokespeople for effective altruism are relatively down on climate change as a target for philanthropic giving. I think the idea is that they're trying to think about all humans today and all humans that will ever be. They're thinking about what might cause the extinction of the human race, and they say climate is unlikely to cause extinction, whereas, you know, a terrible pandemic or an asteroid or an AI that becomes sentient and does a terminator on us are much greater threats of extinction. 

So why, within the context of effective altruism, do you think that climate change is a worthy target for people's giving and attention?

Johannes Ackva: 

First, I would say you're broadly right there. And it’s funny, because I was a climate person before I was an effective altruist, before I encountered effective altruism. So, it was the first instance of having to justify myself. Why am I working on climate? Growing up in Germany this was something I never had to justify. So I think that's broadly right, most effective altruists do not focus on climate and I think the reason that you’ve outlined as to why is broadly right. 

Climate is a really big threat, and I think effective altruists acknowledge that there are very serious threats from extreme climate change, so the view is not that climate isn't a serious problem. I think effective altruists take it very seriously. But seeing a broad set of problems of similar magnitude (like nuclear war, advanced artificial intelligence that you mentioned, or bio risk) where many of those issues receive far, far less attention than climate change is the reason that many effective altruists would not first go to climate.

David Roberts:

But you think they're wrong about that, that climate is a worthy target of giving and philanthropy? What is the effective altruism justification for focusing on climate?

Johannes Ackva: 

Yeah, okay, so I think the effective altruism justification for caring about climate has two different aspects. One comes from thinking about humans alive today, or humans alive in the near future. So obviously, I think we know from the literature on climate impacts, that vulnerable populations in the Global South will suffer the most from climate change, and helping them can be quite effective, also because solving climate change is related to solving some other really big problems, in particular air pollution and energy poverty. So, if you think about clean energy abundance as one possible solution for climate change, that would actually solve all of those issues.

David Roberts:

Right. So you're solving three problems in one when you solve this problem?

Johannes Ackva: 

Yeah, that's the first piece. I think the second piece comes if you think about global catastrophic risk or if you think about the importance of geopolitical stability and good international cooperation. If you think about how climate change can go wrong, how climate change can cause migration, international attention, etc. I think that's another set of reasons to care about climate change, just making the world in general less fragile, more resilient, and trying to reduce geopolitical pressure.

David Roberts:

Yeah, because they say climate is a “threat multiplier”, right? That's the term that you use. So in a sense, by decreasing the threat of climate, you are also decreasing all those other risks. 

Johannes Ackva: 

To add one little bit of nuance here, I'm not saying to effective altruists: “do more on climate, do less of these other things”. I just want to be very clear about this. What I gave you is what I see as the strongest case for caring about climate change, but it is true that there are other risks of similar order of magnitude, in terms of risk, that we're spending a 100th or less of the attention on. So I think it's probably right to think about climate not as the most neglected issue, globally speaking.

David Roberts:

So even you would say, from an effective altruism point of view: while climate is worthy of attention, there are other risks worthy of attention that are getting less attention than climate. Is that what you’re saying?

Johannes Ackva: 

I think that's what I would say if we only think about the importance and neglectedness of those problems. There is, however, another dimension. And I think that's also really important in making the case for climate. And that dimension is tractability, or the ability to make additional progress, and I think climate looks extraordinarily good on that dimension compared to many of those other problems that I mentioned for a couple of reasons.

David Roberts:

Tell us about that then. Tell us why, in terms of tractability (meaning there's progress to be made), there's “low hanging fruit” available, you might say. Why should we think that climate philanthropy in particular can produce results?

Johannes Ackva: 

Yeah, great question. So I think there are essentially three reasons why I would believe that to be true. The first one is that attention to climate overall, like societal attention including policy, economics, etc. is actually really high, and is at an all time high. We're now spending about a trillion or so in the global economy, and climate policy has been a really important part of Biden's agenda, and has been really important in Europe for a long time. So, there's a lot of attention to climate, I think that's the first piece. 

The second piece is that a lot of that attention is not spent optimally, in terms of the ultimate goal (or, what I see as the ultimate goal) of acting on climate, which is reducing climate damage as much as possible. And there are some very predictable biases. For example, the US and Europe maybe represent around 15% of future emissions, so effective climate action should always think about global emissions, but there are lots of political incentives to focus locally. There's lots of ideological issues, there's lots of special interests, so a lot of the attention on climate is not spent optimally. That's the second piece. And the third piece comes if you think about climate philanthropy as a whole and the role that climate philanthropy can play. If you conservatively assume that you can only shift how the public response is improved by something like a 10th of a percent, or something like that, that can still be extraordinarily valuable. So essentially, it’s about leveraging the attention on climate to try and help steer the climate momentum that exists in a way that’s more useful for global decarbonisation.

David Roberts:

Right. So you’ve sort of got the raw material there, you've got the attention and the will to do something, and you think a little bit of nudging in a better direction could have a big positive effect.

Johannes Ackva: 

Yeah.

David Roberts: 

I want to focus in on one of the things you said, and this is a quote from one of your papers: “the goal of high impact climate philanthropy is not to maximize emission reductions, but to minimize climate damage”. It might not be obvious to people what the distinction is there, so explain that a little bit and explain what those two different approaches would imply?

Johannes Ackva: 

Yeah, no, that's not obvious at all, and it wasn't obvious to me for a long time. I only really fully grappled with this last year when I wrote the paper. So, I guess the first intuition when thinking about maximum impact and climate philanthropy would really be: okay, we want to maximize emissions reductions. But, there's something particular about the climate challenge that I think makes this intuition wrong, and that’s the fact that climate damage is highly nonlinear. So, if we think about a 3 degree world, this is much worse than twice as bad as a 1.5 degree world. Again, a 6 degree world is much worse than twice as bad as a 3 degree world. If we think about it in terms of a concept like the social cost of carbon, the social cost of carbon at different levels of temperature is very different. It's much more valuable to avoid an additional tonne of carbon in the 6 degree world than in the 1.5 degree world. And this is standard climate science and I would say this is really one of the most uncontroversial facts about climate. 

But the key thing here is that we actually “know” things that must be true if we're in a 4 degree world compared to a 1 degree world. For example, if we're in a 4 degree world, Zeke Hausfather, the climate scientist, has said “we're not in a 4 degree world and renewables have succeeded beyond all expectations.”

David Roberts:

Right.

Johannes Ackva: 

This means that in this 4 degree world, there are solutions or hedges which can be extremely valuable. One of them would be, for example, advanced nuclear, which to some degree is a hedge against failure of renewables. It might not play a big role in the best case world, right? Maybe we’re in the best case world where renewables succeed beyond all expectations, but if not, there's an extraordinary hedging value from those kinds of solutions. Maximizing emission reductions will not lead you to this conclusion, whereas minimizing climate damage  leads you to other kinds of conclusions.

David Roberts:

Right. So if you're trying to maximize emission reductions, you would just go for the cheapest, most obvious reductions available now, which will generally be renewables or something like that. But it sounds like you're describing something more like trying to reduce risk rather than emissions.

Johannes Ackva: 

Yes.

David Roberts:

And risk rises nonlinearly, so you think philanthropy should be hedging against failure, hedging against the failure of mainstream approaches basically. Does that sound right?

Johannes Ackva: 

Alright, let me answer this in two parts. First, it's not really about time. It's not really about spending now versus long term. It's not about spending on renewables now for the cheapest buckets, it’s more about thinking about what correlates with different climate futures. So for example, if you think about one thing that's often described as very cost effective: forestry, avoiding deforestation. Having agreements between Europe and Brazil to avoid deforestation, that’s very cost effective in the best of worlds where international cooperation and the quality of agreements is stronger than it actually is right now. If we're in that kind of setting we're not going to have a lot of climate damage. So, even though that might maximize emissions reduction in expectation, it wouldn't minimize damage. So it's not about the timing, but what correlates with different kinds of scenarios. 

So, what I'm talking about is always counterfactual impact, and what to do given what everyone else is doing. So I'm absolutely not saying we shouldn't focus on renewables, or we shouldn't focus on natural climate solutions. It's more that given we have a large focus on this now, what should we do next? And then, my argument would always be about the value of hedging against the failure of mainstream solutions, because right now we're in a situation where mainstream solutions get a lot of attention. We can also see the success of that, right? Future emission trajectories have gone down a lot because of the success of renewables, more than I think most people appreciate. So there have been really big successes, and if we think about how things can go wrong (how “s**t can hit the fan”) it’s not because we spent 1% less additional climate philanthropy attention on renewables, it's because something goes wrong there or something goes wrong with another solution. Let's say international climate policy falls apart, which looks more realistic now than a couple of months ago. If something like that happens, this is how we get into those worst worlds, right? And so we want to hedge against those worlds, we want to look at solutions that on the one hand are robust to those worlds, and on the other hand provide explicit hedges and protect against failures that are likely to occur in those worlds.

David Roberts:

Right, right. And another big piece of this (and this is something I've run into a lot of times when I talk to both individuals who are thinking about what to do with their money, but also foundations and people who have access to big pots of money), is that unlike some altruistic endeavors you could imagine – like buying mosquito nets – this is the cliché example but mosquito nets for children in Africa – you can calculate pretty firmly and clearly exactly how many lives you will save per dollar spent. But when it comes to climate change, the problem is so big and sprawling, it's so long term and it's so unclear what will work and what won't, that this sheer wall of uncertainty is daunting to people and often pushes them toward those climate solutions that are more short term and tangible and measurable. But you're counseling against that approach, so talk a little bit about how climate philanthropists should think about uncertainty, and what uncertainty means for their giving.

Johannes Ackva: 

Yeah, I think that's right. I think the worst thing you can do on climate is try to avoid uncertainty. I sometimes say, “It's much better to probably have a large impact than to certainly have a low impact.” And there’s a tradeoff, if you optimize for certainty there's this huge trade off to be made there. And the reason is, as I think you alluded to, that climate is incredibly complex, right? There are three or four intertwined systems. How much will economies grow? How emissions-intensive will growth be? How will the climate system react to this? How much damage will it cause? So it's a situation of vast, vast uncertainty and not only in the climate response, but also on the solutions side. I mean, you've covered this a lot. If you think about the debates about 100% renewables, if you think about the debates about how far electrification will go, there are a lot of debates where there's really large uncertainty. And those uncertainties will not be resolved in a time frame that is action-relevant, they will be resolved when it's too late… Right? 

David Roberts:

Right. 

Johannes Ackva: 

So you have to think of this uncertainty as a fact of the situation. And we need to make decisions under this deep uncertainty, where we don't know anything for sure. So I think the way to deal with this is to think about, first of all, what do we know? What can we conclude from this? And I think there are two or three key facts that guide a lot of my thinking and my grantmaking. If you think about one thing that I mentioned before, the nonlinear climate damage, higher failure at higher warming levels is disproportionately worse. So I think that's really important. The other piece is that there's already a fair amount of attention on some of the mainstream solutions. And then the third piece is, what do we know about those uncertainties and how they might resolve? 

So, if we think about electrification or the success of renewables etc., if all of those things resolve positively (and positively here means “okay, they're resolving in a way that has minimal climate damage”), that's pretty good. In those cases, additional climate philanthropy will not be very valuable. If those solutions resolve negatively, those are the worlds that contain the most risk. So let's say a world with lots of growth in emerging economies, breakdown of international cooperation, and some limitations to getting renewables over 50%. These are the worlds where by far the most risk is, even if those worlds are not very probable, and I would not say those worlds are the majority of my probability mass, but they're the majority of the worlds that I care about because there's so much damage in them. So that's where this comes from, hedging against the worst case and thinking about the structure of how different uncertainties relate to each other. I can talk a bit more about that as well.

David Roberts:

One of the points you make that I think is really good and worth emphasizing is that even if we can't measure, in an absolute sense, what effect particular solutions or particular giving strategies might have, we can draw conclusions about their relative impact. One set of solutions versus another. And those conclusions are what you need to be able to act, right? A prioritization of solutions, not necessarily final answers about what they'll do, but just which are more likely to have positive effects. 

Johannes Ackva: 

That's exactly right. Yeah.

David Roberts:

I want to get back to one of those uncertainties. But first, I want to talk about (to get a little tangible here), one of the things you pointed out. There are some great charts in your reports about, you know, how you say that climate philanthropy is on the rise and there's been quite a bit of money flooding into this space in recent years, but there are two key imbalances in where money is currently being spent. One of those is that most of the money is going to the US and the EU, even though as you say they are together responsible for maybe 15% of future emissions, and the other is that most money is going to clean electricity and natural solutions, i.e. trees and reforestation and the like. And you know, as you say, it's not that those things are bad. But, there are spaces being neglected, and this whole notion of neglectedness plays a huge role in all the effective altruism stuff I've read. So, tell us a little bit about why you think those imbalances are bad, and what spaces –important spaces in particular– you think are most neglected these days?

Johannes Ackva: 

Yeah, just to be clear, I think the case that I want to make about neglectedness is not that we're overspending on renewables and trees. I think that the case is much more that we're underspending on a lot of other sectors. If we think about where the next dollar should go, it should probably go to those other sectors. 

I guess the first piece of this is about the geographical distribution –that about 15% of future emissions at most will come from the US and Europe. And if you think about affectable emissions, that share is probably lower, because in a world where US and European climate policy is above average binding it means that if you reduce an emission, and if you're in a liberal state in the US or if you're in the EU, the additionality of that is rarely 100%. So, the share is actually lower because there's policy already determining this.

David Roberts:

Yeah, yeah. I want to pause and put an exclamation point on that because I think it's an important point. If you’re in a place where emission reductions are in statute, it's arguable that your additional reduction thrown into that pot is not going to do anything additional since the reduction is going to happen anyway, by statute. So that's where you fail these additionality tests: when you're operating in a place where the trends in law and regulation are already mandating what you would be trying to do anyway.

Johannes Ackva: 

Yeah, that's exactly right. And that's disproportionately the case in those jurisdictions, I think that's the first piece. Obviously I'm not saying that only 15% of climate philanthropy should be focused on those regions, because if we look at climate attention and if we look at ways to shape future emissions through climate leadership, through innovation, etc., the US and Europe do play a disproportionate role. So it wouldn't be right to say what we should be aiming for is 15% for those regions. 

But, we can still see various systematic effects. I think the reason that there's so much spending on the US is not because someone decided, “okay, this is the impact maximizing solution”. The reason is because most climate philanthropy is from the US, and most people find it much easier to donate to an American focused organization. The reason that is problematic, or the reason that I would say this leaves impact on the table, is because there are dynamics related to future emissions growth (and in particular carbon lock-in) that are dependent on where you are in the world. So, they're not the result of global innovation, they're the result of infrastructure decisions, policy decisions being made right now. 

And, a lot of those 85% of future emissions come from regions that are very strongly growing right now, and are making a lot of infrastructure decisions about how to build grids, how to build new coal plants or not, which will have consequences for decades into the future. So those are really high leverage points for intervention, and there's very little attention paid to these in total. And if there is, it's very focused on a couple of key sectors and key solutions. And then you have situations where (for example, if you look at climate philanthropy targeted at Indonesia, Indonesia is one of the places where coal is growing the most) there's fairly little attention paid to this. You will find that in many of these sectors, there are large parts of future emissions that receive very little attention, and it's probable that if you looked a bit more closely, if you started to do some early philanthropic work, you would find some quite high impact or high leverage points because early engagement is often much more impactful than later engagement.

David Roberts:

Right. So the first dollar there is probably gonna have more impact than, say, the millionth dollar in the US.

Johannes Ackva: 

Yes, that's exactly right. Crucially, the millionth dollar in the US is easier to fundraise for than the first dollar there….

David Roberts:

Right, right. So, in terms of clean electricity, I sometimes think (and I go back and forth on this), that there's almost too much talk about clean electricity being a done deal, that we can move on from it now and focus on other things. But you know, when I hear that, I want to point out that clean electricity is on a positive trajectory, but not anywhere close to the slope it needs to be on or the speed it needs to be on. It's not, by any means, a “done deal”. So what's the justification for turning attention away from clean electricity, which I think you and I agree is probably going to be the bulk of the solution. What's the justification for looking elsewhere in your giving?

Johannes Ackva: 

So, at no point would I suggest we turn away attention from clean electricity. It's more like we’re in a space in climate [philanthropy] that is strongly growing, and the question is where to put additional money right now. If you look at those clean electricity numbers (and by the way, of this clean electricity funding, 90% is renewables and I think 90% of that is solar and wind), this philanthropic funding has played a huge role in triggering the policies that led to cost reductions. So, this has been hugely impactful, this was absolutely the right priority to set. But if we think about, for example, super hot rock geothermal or innovations in geothermal which are also renewable, also about clean electricity, they receive a very, very small share of that. I just talked to the Clean Air Task Force yesterday, they have a program on super hot rock geothermal, which is essentially the “geothermal anywhere” solution, right? The solution that will make geothermal available location independent.

David Roberts:

Potentially a huge, huge resource.

Johannes Ackva: 

Potentially a huge, huge resource, yeah. And potentially, exactly attacking this problem that I think is the bottleneck problem in clean electricity, which is firm sources or balancing. Right? So you had Jesse Jenkins on the show. If you think about it, that [advanced geothermal] could have a huge impact on clean electricity, but there's like a 1 million or so philanthropic effort to make it happen, right? And at the same time, we're spending something on the order of 600 to 700 million on clean electricity in general. So, I agree with you that clean electricity is not solved, but the thing that can reduce risk there is not the priority of current clean electricity philanthropic spending, geothermal it’s instead probably a bet of around 1 million philanthropically right now. And if you think about advanced nuclear, or something else, it's probably something like 10 million. So, within these categories, these are what I think of as huge imbalances. 

I think the other part is also, what's the role of philanthropy? The reason I think it was great to invest philanthropically really heavily in wind and solar until maybe 10 or 15 years ago, and that this would have been an absolute priority, is because this really helped unleash the policy change which then led to the technological change, which leads to a trajectory change in emissions and future emissions. But we're not in that moment anymore, right? We're not in the moment where solar and wind are niche industries. At this point, these industries are growing. And, while I think there are really hard problems to overcome there, if I think about philanthropy as catalyzing early change, I don't really see wind and solar failing because the next 10 million of climate philanthropy goes towards other solutions, let me put it that way.

David Roberts:

Right. So we have some clean technologies that are on a positive trajectory; whether they’re going fast enough or not, at least they’re on a learning curve. And then there's a bunch of other climate technologies that are widely expected to be needed, but are not on those trajectories at all. They're not on the learning curves at all. So to draw an analogy to what you were saying earlier, the first dollar spent on getting one of those technologies on a good trajectory will have more impact than the billionth dollar spent accelerating the wind and solar trajectory.

Johannes Ackva: 

Exactly, exactly. And I would say tremendously more impact. I would say the differentials here aren’t like two times, my best guess would be more on the order of 100 or 1000 times, because there's essentially nothing happening. Super hot rock geothermal is essentially (I mean quite literally) putting this idea on the map. Building coalitions in government, getting innovation funding for this, connecting the different industries to research labs, connecting it to people who could implement it, etc. So this is very early stuff with a really outsized impact, potentially. 

And I mean, we’ve seen similar things like carbon removal, where it's been clear from the scientific literature that we're definitely going to need carbon removal if we want to get to 1.5 degrees. I think that’s been clear of carbon removal since 2015 or so at the latest, right? And this has taken time to sink into policy discussions. And philanthropy, or NGOs that are philanthropically funded (in this case, I want to mention another grantee of ours, Carbon180) are quite important in early field building, early attention building, etc. and can play a really huge role. And now we have a stimulus in the US, or an infrastructure investment bill, and it makes a real difference. It’s clear there's going to be a huge climate component, but the organizations that are going to be present there are shaping this, so it makes a difference that there is an organization that is really strong on connecting the science to the policy needs for the most neglected technologies, this makes a difference.

David Roberts:

That gets us to innovation. My impression is that one of the things that almost everybody in the effective altruism movement who's thinking about climate agrees on is that innovation is a good target. But the mirror (I don't know if this is the right analogy) image of innovation is carbon lock-in. So we were talking earlier about uncertainties, and one of the key points you make is that not all uncertainties are additive (meaning you just sort of multiply one uncertainty by another by another and just get bigger and bigger and bigger uncertainty bars); some of them are negatively correlated. So talk about how that plays out in terms of innovation and carbon lock-in, those are two key concepts here.

Johannes Ackva: 

Yeah. When I think about future emissions and what will determine those, I think there are these two really big trajectory-changing dynamics. One of them is innovation, as we've seen with solar, as we're seeing with electric cars. Really radical changes which were early decisions and geographically quite specific decisions, not global decisions, can make a huge dent on global emissions, changing the trajectory for decades to come. So this is the innovation piece.

David Roberts:

Just to pause there, because you make this point well in the paper, one of the key players in the early innovation in solar was Germany. And as you say, if Germany had been approaching this problem from a, “how can we maximize emission reductions per dollar” approach, they never would have spent on solar. It was an extremely inefficient way to reduce emissions at the time when they were spending, but it catalyzed this trajectory, and so the indirect effects were huge in terms of emission reductions.

Johannes Ackva: 

Yeah, the short term solution would have been to buy Russian gas, this would have been the much cheaper way. And I think this is really why we shouldn't ever evaluate climate actions by their local short term effects, we should always evaluate them by their global long term effects. So this is the innovation dynamic. And then, there's this countervailing dynamic which is carbon lock-in, which is infrastructure decisions and capital investment decisions into new coal plants, new steel plants, etc., that determine or really strongly influence emissions over decades to come because once this asset is built the decision about how much to produce is much, much lower [in influence] than compared to like, just like “okay we're just gonna have this high emitting asset there”. So if you think about these two dynamics as competing, then you see that on the innovation front, pushing an innovation forward five years is often much more valuable than just five years of reduced emissions because it can act at the lever points, like, before. Let's think about how the world would look if we’d had cheap solar and wind when China started to expand, the world would look very different today. So there's these huge, huge lock-in effects. So of course, there are these two dynamics. 

And again, uncertainty, my friend uncertainty is here. If we think about the ultimate potential of acting on those two mechanisms, on the one hand trying to avoid carbon lock-in and on the other hand trying to accelerate and improve the success of innovation, the relative potential of those two theories of change is negatively correlated. What do I mean by that? So, there's a world where carbon lock-in is relatively benign, let's say it turns out that we can get renewables so cheap that it becomes easy, renewables, storage, and we solve all of the attendant problems, right? Let's say, we're in the very best case world. And in this case, maybe it becomes realistic that we're retiring coal plants early or we're replacing them with something that we're working on is repowering coal, maybe we can replace the heat source and coal plants with geothermal or with advanced nuclear. This is a world where carbon lock-in has relatively less influence because retrofitting is easy and premature retiring becomes possible politically and economically. The maximum impact of innovation will be in this world, a world where avoiding carbon lock-in is relatively less important.

And this is important, of course, because there's also this other world where it's not true, right? Where we’re maybe going to get all of those innovations, but you know, those innovations will not fully realize their potential because lock-in is really severe. There's a lot of infrastructure, political clout, invested capital,  that leads to a situation where we have new, low carbon solutions but we're not adopting them at scale. So, those two dynamics are negatively correlated which means one of them -- if we're on the more bullish side of innovation, maybe if we now invest in innovation and carbon lock-in and maybe in that case the carbon lock-in investment is less valuable. The other thing goes the other way, right? If carbon lock-in is more severe, then investing in [avoiding] carbon lock-in is more valuable. And if we're in a situation (and I think this is the situation we're in) where we’re really genuinely uncertain about those two theories of change and about the relative value of additional investments, I want to diversify.

David Roberts:

Investment in innovation versus investment in avoiding carbon lock-in?

Johannes Ackva: 

Yeah, I'm sorry, I meant philanthropic investment here. 

David Roberts:

Right. JASo yeah, I'm genuinely uncertain between those two solutions. But again I think about the nature of climate damage, and I'm reminded of the fact that my goal is not to maximize emission reductions but to minimize climate damage, and now I have these two really big uncertainties that are negatively correlated. So in this situation, investing in both of them can actually be impact maximizing because of this structure: if one succeeds a bit more; the other fails a bit more. That's a more robust investment, given the shape of climate damage and given how much worse it is to fail, if that makes sense.

David Roberts:

Right. So each is a hedge for the other, in a sense.

Johannes Ackva: 

Yes. And I think something similar applies to investing in accelerating decarbonisation and investing in carbon removal, for example.

David Roberts: 

One of your conclusions you come to, and this is a quote too, is that “the plausibility space for high impact climate philanthropy primarily contains solutions and approaches that are considered controversial, speculative, or remote”. So this is where your logic takes you, it’s that if you're counseling people where to give their climate philanthropy dollars you're probably counseling them not to give to the sexy, popular solutions that everybody's hyped about, but to some of the more obscure and controversial stuff. Spell that out a little bit.

Johannes Ackva: 

Yeah. I mean first of all, this quote was written in December, actually November, at the end of last year under the impression that climate philanthropy and climate philanthropy foundations had essentially doubled within a year, with the Bezos Earth Fund playing a huge role. And these dynamics are essentially, to a large degree, reinforcing the existing foci of climate philanthropy: increasing the emphasis on clean electricity on the one hand (particularly renewables); and on the other hand, natural climate solutions.

David Roberts:

As a side note here, do we know where Bezos’s money is going yet? Has it been laid out where his giving is going?

Johannes Ackva: 

So it's evolving, but we did include it in our November 2021 analysis. We used the data from ClimateWorks for the 2020 baseline, and then we looked at all of the Bezos grants that were made in 2021 and tried to account for those. And that's what’s included in the comparative charts we have in there. The main takeaway for me was that, by and large, the Bezos commitment (at least the early Bezos commitment) increased spaces that were already relatively well funded. It also increased funding in other spaces, but in absolute terms this was more or less increasing those existing emphases. 

David Roberts:

So if you were counseling Bezos, or whoever's controlling that pot of money, you are going to tell him to channel his money away from those things, basically?

Johannes Ackva: 

Again, it’s always about the margin. So it depends on what everyone else is doing, but given what everyone else right now is doing and given how climate philanthropy has been increasing really strongly and over a really short time, it's not that there are a lot of great funding gaps left for popular solutions. I think that's very implausible to say at this point. So yeah, that means I would say: if you're looking for the highest impact opportunities, trying to look at things that are controversial or not on the radar, etc., is probably the way to go. Stuff like super hot rock geothermal, stuff like carbon removal, stuff like advanced nuclear… solutions that are not solar, wind, electric cars, and trees. And not for the reason that those four aren't great parts of the decarbonisation puzzle, they are, but they are the ones that we all know and we all like and that we are all already invested in heavily.

David Roberts:

Right, we’re back at hedging. So, the strategy you come down on in terms of recommendations is robust diversification. Does that just mean what we’ve been discussing? Sort of, hedging by putting some of your money at the margins outside popular solutions? Or, if not, what do you mean by robust diversification?

Johannes Ackva: 

Yeah, so I think there's a couple more dimensions. The robustness here is robustness to uncertainty. I think as we've mentioned before, there are really large uncertainties that will remain on all relevant timescales, right? Like how far technologies will go, how emissions will evolve, what will happen to the Paris Agreement, etc. Part of it is about choosing a portfolio now, which hedges against the failure of mainstream solutions - based on the  logic I laid out before. Damage is much worse when the mainstream solutions fail, and right now the mainstream solutions are, relatively speaking, much, much better funded than some of the hedgier solutions, and for systematic reasons. So that's part of it. The other part is within your portfolio, trying to diversify in a way that takes into account what I mentioned, the negative correlation of the uncertainties. Because again, you're not trying to maximize emission reductions, you're trying to minimize damage. So you're complimenting your focus. That's what we’re doing with our focus on, say, accelerating decarbonisation, which we do with grantees like Clean Air Task Force, Future Cleantech Architects, TerraPraxis. These are people working on different pieces of that puzzle, then we’re combining this with a focus on carbon removal: Carbon180 would be our recommendation in that space. So, there's this negative correlation there. And right now we're trying to take the next step into looking at different theories of change and diversifying there, always driven by this idea of the importance of robustness against the worst worlds where the majority of damage is concentrated.

David Roberts:

It's not really entirely different than a sort of financial investment strategy. Johannes Ackva: No. David Roberts:It's a portfolio approach for the same reasons.

Johannes Ackva: 

It's a portfolio approach for the same reasons, right. Essentially, if you're doing this in financial terms, what you're saying is, the marginal utility of money is decreasing, right? So, you're not trying to maximize your income, you're trying to maximize your well being. If you're a millionaire, getting to 1 versus 2 million is not as valuable. So it's exactly the same logic, yes.

David Roberts:

Okay. And one of the things I found really interesting in your work is that you end up really recommending advocacy and public policy. Advocacy, as opposed to, you know…if I'm the Bezos Fund, I could make strategic investments directly in early stage companies, I could make investments directly in research or found a research center or something like that, but you end up pushing for advocacy. In other words, trying to get policy paths, trying to change public policy. Why do you come down there?

Johannes Ackva: 

Yeah. So first, a clarification. I should be clear about this in my writing, and I'm trying to be clear here. When I say advocacy, what I really mean is trying to attract large scale societal or social mobilization. This can be like changing policy etc., but it can also be changing behavior of large corporate actors. So that's one piece. And this is not only “on the Hill” lobbying, this also does and can include stuff like doing research on new technologies, the viability of new technologies, and putting things on the map (just to clarify this a little bit).

David Roberts:

Advocacy, broadly construed.

Johannes Ackva: 

Advocacy, broadly construed. Not only Beltway lobbying. So, if we think about why we’re focusing on that, I think there are two or three answers. I think the first one is that even if you take the most expensive sum of climate philanthropy (right now it's on the order of around 10 billion), this is still at most a 100th or so of the overall effort spent on climate.David Roberts:Right, compared to public money. Johannes Ackva: Yeah, compared to public money. So, this is one reason. If you think you only need to have a small multiplier (it’s not like I'm not saying you got a 100x multiplier), it’s still likely that given those numbers, focusing on advocacy can have an outsized impact. There's also literature on that, which shows that this works for other fields. 

I think the other key part of the answer, which I think is the deeper answer, is that ultimately solving climate change is a policy problem, and it requires a huge amount of policy. Technological change is not a garage factory thing, right? Technological change is fundamentally the result of government policy and government incentives being correct, and public investment and innovation, etc. And this is not only true for innovation, right? This is also true for other parts, like for rolling out technologies. So for every garage entrepreneur there's a policy behind that, that usually came before. So in that sense, I think public policy is really crucial for essentially all parts of the climate challenge. And if the policy is set right, the private action, and the research, etc. will follow. So the causal primacy –what I would call the causal primacy – really lies with making sure that political conditions are as good as they can be.

David Roberts:

I'm sort of curious about how philanthropists respond when you pitch this, because we've talked about uncertainty but if I'm Bezos, I'm an executive. I'm used to quantification and results, I want to see numbers. And if I want that from my climate philanthropy, I can spend on a forest and then I can see the forest and I can measure the tonnes from the forest, or whatever. Whereas advocacy, even broadly construed, is so uncertain. What could move politics is so unclear. This is very much the central dilemma of climate change: what can move public policy and what can get things moving? So if you commit to that, you are very much taking on the risk, the possibility, that you could be wasting your money: you could spend a bunch of money on advocacy and it could just not do anything. I think we've seen, unfortunately, in the last year or so, an enormous, enormous amount of really well organized and funded climate advocacy that is starting to look like it is not going to come to anything. And I can imagine if I'm a rich philanthropist, looking at that and saying “screw that, I'm just gonna go get some verifiable tonnes where I can”. So, how do you address that, and how do people react when you pitch this?

Johannes Ackva: 

Yeah, that's a great question, there's lots in there so let me try to answer all of those different aspects. So, the first one is that I'm not making it easy for myself saying that. I talk to a lot of entrepreneurs and executives that have, I think, as you outlined, very different intuitions on that. There are people that want to do impact investing or that want to do stuff that's fast and certain. And me saying “let's invest on this policy thing that's highly uncertain” is not the thing that maximizes the giving I can influence. It's a position I take because I believe it very strongly. And I think that's also an additional reason why we should think it to be, relatively speaking, underprovided.David Roberts:

Right. It goes against a lot of intuitions.Johannes Ackva: Yeah, and against a lot of intuitions in particular of new climate money. So if we think about new climate money coming into the philanthropy space, a lot of that is coming from people who got rich in tech. They apply their own mental models and their own success stories, so for them it's much more natural to do impact investing, or start their own company, than to say we're going to do this policy advocacy thing. So again, if you think about this, this is once again one of these psychological factors, one of these systematic features that should make you expect that advocacy is underprovided (relatively speaking to its impact). Because, while it's much more uncertain, even if it's highly effective, oftentimes you will not know it. Because the best advocacy is the advocacy where an organization will influence a policymaker, and they will never talk about it publicly, because talking about it publicly would destroy the entire impact. The whole point of it is that the policymaker thinks they came up with it themselves.David Roberts:Right, it's thankless. Johannes Ackva: Yeah, it's thankless work. But that's why it's so crucial to support it. And I think one thing I would disagree with a little bit here is saying there's been this huge effort and nothing came of it. We also invested hugely in the wake of Biden wins here in the US advocacy space, and I wouldn't say nothing came of it. There is the infrastructure bill there, there is the Build Back Better plan. The infrastructure bill is not what we hoped for, it would be much better if Build Back Better had passed as well, but there is a lot of stuff in the infrastructure bill that's helping with relatively nascent solutions. So I don't see that all of our bets there were a failure.

David Roberts:

Right, well, maybe I was too cynical. And I think you could say, even if Build Back Better ends up not passing, which is very much a possibility at this point, advocacy was successful in causing Biden (and really the Democratic Party in general) to prioritize climate, which is a long term effect. It's not necessarily measurable by just what gets passed these past two years. 

Johannes Ackva:  

Yeah, absolutely. And also, these philanthropic investments are still small compared to investments in direct technology, or what we're spending overall on climate change. So I think one really shouldn't be too cynical on advocacy at all.

David Roberts:

By way of wrapping up, let’s pull this back to (because I know a lot of listeners ask) a question anybody who writes or talks about climate change in public gets asked a lot. I'm sure you get it a lot, and it’s about individuals who want to do something but don't know what to do. You obviously get a lot more leverage affecting what Bezos wants to do than the average Joe off the street, but nonetheless, it would be nice to have guidance for “normal” people. And I think there are a lot of the same dynamics here in terms of uncertainty in the sense that individuals think, “well, if I buy an EV, there's a measurable impact, it's not huge, but it's certain and I did it”. Whereas tossing money out to an advocacy group can feel a little bit like throwing dollars out into the ocean and then never knowing what came of them. So, is your pitch to individuals more or less the same? Or, to put the question more simply, what should individuals do? If they have climate money to spend, how do they maximize their impact?

Johannes Ackva: 

Yeah. The first thing I want to say is that I don't think consumption choices or behavior change and giving is an either or. So for myself, I'm a vegetarian, I actually don't have a driving license because of climate reasons. 

David Roberts:

You also get to live in a country where that’s possible.Johannes Ackva: Yeah. And I do my fair share of lifestyle changes. At the same time, I don't believe (and this is not only because of my professional role, but also just in general because I'm a middle income person in a rich country), this is anywhere close to the maximum impact I could have. And the reason for that is twofold. If you're a typical middle class person in the Western world, in the US let's say, you're emitting something like 11 tonnes or so, something on that order, per year. And again, you can reduce that to zero, but it's really hard to reduce that to zero. Even if you did reduce it to zero, which would take really extreme measures, a lot of that reduction would actually not be additional for the reasons we alluded to before. David Roberts:

Right, because policy is in place already. Johannes Ackva: Yeah, so I think that's the first thing. And the second part is: reducing emissions by 11 tonnes per year is actually really unambitious if you think about what you can do. It’s kind of like saying your responsibility is only towards your own emissions, not towards the emissions related to the fact that the West got rich on fossil fuels. So, it doesn't really make sense as a benchmark either, even from this perspective. So that's the first part. 

The second part is if you focus on effective philanthropy, you can probably avoid a tonne of carbon for $1 or something. Even if you're 100 times more pessimistic than me, if you're doing lifestyle changes and also donate $1,000, you already have the same impact with your philanthropic investment. And of course, you don't need to stop there, right? There's no natural bound on what you can do philanthropically, while there is a very natural bound to what you can do with your lifestyle changes.

David Roberts:

Right, yeah. One of your charts that really made an impression is where you chart the tonnes of carbon impact of various lifestyle changes. And you grant that in the chart, if you buy an EV and it inspires 10 other people to buy an EV, even if you 10x all your lifestyle choices, you're still not going to have anywhere close to the impact you would have, the direct impact you would have, by giving your money to a climate organization – a climate advocacy organization basically. 

Johannes Ackva: 

Yeah, again, I guess I would add the caveat here: a climate organization that tries to maximize impact at the margin.David Roberts:Right, a good climate organization. Johannes Ackva: But one thing I really want to stress in this case, because I think it's the most common misunderstanding, and the thing that makes people really uneasy, is: I would really not think about this as offsetting. People sometimes ask me, “how much do I have to donate to a charity to reduce my impact,” and this is really the wrong mental frame. The mental frame that I want people to take is really different. It's more about, not offsetting, but acting morally in the world and in accordance with your values and trying to have a positive impact. 

The other thing is that for me, donating is not an offsetting choice, it's a political action. So in the same way as going into the streets, participating in a protest, or calling your representative. It's in that bucket of activities. It's also structurally similar in that these activities will always have more impact because they're addressing the problem. There are multipliers to be had here, and the same kind of multipliers that you can have in your civic engagement apply (probably somewhat stronger), that is, the same kind of logic applies. So if you think that going into the street or calling your representative is higher impact than your lifestyle choices, and I think in almost all cases this will be true, then you should believe the same about philanthropy and you shouldn't see it as offsetting at all. It’s a form of political action.

David Roberts:

The whole focus on offsetting is such a weird artifact of Western individualism. It's such a bizarre way to approach the problem of climate change. Like, “if I can just eliminate my tonnes, I'm good”. It just doesn't, it makes no sense in the context of climate change as a global problem.

Johannes Ackva: 

No, no, it absolutely makes no sense at all.

David Roberts:

In conclusion, let’s say I'm an individual, I'm hearing your message and I'm convinced and I want to give to a good climate organization. Is there somewhere I can go where you lay out which climate organizations you think are good and effective, like a guide to individual giving? Is there somewhere people can go for some help?

Johannes Ackva: What we, as Founders Pledge, have on this is a Climate Fund where we’re trying to make the best commitments – philanthropic commitments –- we think are possible. The logic that lies behind this is explored in our reports, which we publish on our website. For example, one of them that we’ve discussed a lot today is the Changing Landscape report from last November. You can go to founderspledge.com and find the report there, and we can also include the links in the show notes. The charities that we’re highlighting right now are: the Clean Air Task Force, with a focus on neglected solutions in decarbonization; Carbon180, with a focus on carbon removal; Future Cleantech Architects in Germany, which is focused on innovation in hard to decarbonize sectors, with a European focus where there’s less attention philanthropically to innovation but a lot of policy action; and then TerraPraxis, which is focused on advanced nuclear.

David Roberts:What if I’m on the other side of things? I’m in a climate organization, a climate advocacy organization, and I want to get on your list to make the case that I’m a worthy recipient of your funds. Is there any formalized process for that, or do you guys just go out and look, or is there some application thing, how does that process work?Johannes Ackva: So, what we’re trying to do, or what we layed out today and what we lay out in our reports, is that we’re really trying to understand systematic things about the space and then find the organizations that are doing high impact things in the most neglected areas. So we don’t have an application process as such. That being said, I’m happy for people to reach out to me on johannes@founderpledge.com, but this is not our usual process. Our usual process is to dive into the field, understand how it's changing, where the margins are, and try to support solutions at the margin that we think of as great bets for counterfactual impact.David Roberts:And I promise this is the final question, it just occurred to me, say you do an analysis and you find a neglected space that you think could be high impact and there is no organization devoted to that space, have you ever thought about trying to spin off or create organizations to fill those spaces? Johannes Ackva: Yeah, that’s absolutely something we’re open to doing. Until now this has been a little bit beyond our capacity, but I think we have been doing a lot (that I also think of as high impact – a high impact solution in general) is to support organizations that are either one or two people strong, because those are the organizations that do not have the bandwidth to apply to large foundations for funding. So this is actually a really important part of our strategy, to support those kinds of organizations. And we’re taking high risk bets, we’re very risk tolerant. We’re not expecting an organization of two people to have the same strategic plan. We’re making bets on people, we’re making bets on working on neglected solutions.

David Roberts:Yeah, diversification. Alright, well thank you so much Johannes. It’s been really interesting reading your work and watching the logical step-wise process by which you go through the space and think about the shape of the space and the shape of the uncertainties and everything. It’s quite clarifying and interesting, so thanks so much for coming on.Johannes Ackva:  Yeah, thanks so much for having me.

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