Catherine Brown joins the Centre for Sustainability and Business

One of Australia's most innovative social impact leaders is working with Melbourne Business School to unlock greater funding for climate change initiatives.

The push to tackle climate change could add billions to the Australian economy, but there are barriers when it comes to securing funding for new sustainability initiatives.

That's the challenge Professor Catherine Brown OAM will help solve as Enterprise Professor at the Centre for Sustainability and Business.

In her 12 years as CEO of the Lord Mayor's Charitable Foundation, Professor Brown pioneered innovative approaches to finance that blended private, public and philanthropic funds to increase impact on major social issues.

Key to that achievement was realising that while philanthropy played a role, it was only one piece of the funding and financing puzzle.

"You're overseeing a portfolio of $255 million, so I became very interested in this idea of using all the different sources of funding and finance in the best way possible," Professor Brown says.

"With a greater risk appetite in our philanthropy and to some extent in impact investing, we were able to kick start things and help get ideas to a scale where institutional or private investors might be interested."

These larger investors were then able to increase the impact of the projects. One example was a concept for energy efficient housing, which saw an initial grant of $1 million turn into a new housing development in Preston that opened last year.

"Our catalytic funding enabled the development of proposals to request free land from city councils," Professor Brown says.

"The City of Darebin agreed, and we were then able to invite Housing Choices Australia to come up with some designs that were energy efficient, climate-safe and good quality.

"Because we had done so much leg work, the organisation was then able to not only attract commercial finance for the project but also funding from the state government, and it took off."

Funding the climate transition

Professor Brown is bringing her wealth of experience to the Centre for Sustainability and Business to make an even bigger impact on one of the most important challenges of our time – the transition to a sustainable future.

"The challenge is massive. Australia needs seven to nine trillion dollars in capital between now and 2060," she says. 

"It's not going to happen with just government funding, we're going to need capital of all sizes and sources to actually do the transition.

"We need to understand how different risk appetites, return expectations, time horizons and legal constraints across the finance continuum can work together so we can get more finance into the climate transition."

Professor Brown is keen to use blended finance to overcome one of the barriers that exists in funding new climate change initiatives – the hesitation of large organisations to invest in high-risk projects. 

"That's where impact investing and philanthropy and even catalytic government grants provide an opportunity at these early stages," she says. 

"You can test a model of a business, see if it works, and then grow it and get it to a point where it's got a track record and it is investable – because it won't be looked at otherwise. You can also kick off a new project with catalytic funding and then build from there.” 

Blended finance has been successfully used to drive major international sustainability projects including the 1000 Mini-grid Initiative in Zambia – funded through the Global Energy Alliance for People and Planet, which seeks to provide reliable, affordable and modern energy to rural communities – and Drive Electric's Leapfrogging Partnership, which is supported by the IKEA Foundation and its partners.

Professor Brown believes there is a great opportunity to increase the use of blended finance approach in Australia’s own climate transition.  

"I think people underestimate what's available here in Australia in terms of philanthropic funding. The figure is about $51 billion in the endowments of foundations, universities and hospitals," she says.

"If you put a decarbonisation plan and a climate lens across all of these, what a fantastic impact it could have on our transition to a low-carbon economy."

Introducing a climate lens

Professor Brown began her career as a lawyer, working in private commercial law firms for several years before transitioning into positions as legal counsel for not-for-profits, then as the leader of a small foundation and a philanthropy consultant.

Taking the role as CEO of the Lord Mayor's Charitable Foundation brought the different strands of her experience together, and let her use them to transform the organisation’s strategic direction.

"When I arrived, there was no strategy in terms of grants, and we were not funding environmental initiatives at all," Professor Brown says.

"We were very much concerned with wanting to fund those things which would make the most impact, but it was focused on health and community services."

A chance discovery allowed Professor Brown to begin exploring climate initiatives.

"When I was going through the portfolio of bequests, I saw in one of them that 'environment' was included as an area of interest. That really opened the door for us," she says.

Professor Brown joined the Australian Environmental Grantmakers Network, the peak body for philanthropy in the environmental space, to develop her understanding further. That led to an opportunity to take part in the Call of Funders Initiative as part of COP 20, the United Nations Climate Change Conference in Paris, where the landmark Paris Agreement was signed.

Those two weeks in Paris opened Professor Brown's eyes to the severity of the issue.

"Everyday we would have a briefing on how the negotiations were going. We'd have a speaker from every possible topic, from health to agriculture to First Nations people and often we would go out to the COP and hear presentations on, for example sustainable cities," she says.

"When I came back, I thought we can't just invest in housing and in social enterprise and in health, we have to think of the climate impacts on those areas too. We have to put a climate lens across everything we fund."

Breaking down barriers

After leaving the foundation, Professor Brown knew she wasn't finished in her work to tackle climate change.

"The opportunity to come to Melbourne Business School really spoke to me," she says.

"It gives me an opportunity to explore both climate and climate finance at a great institution – and that's what I've started doing."

Professor Brown's first project is to hold a blended finance roundtable with experts in the different sources of finance that could be used to support Australia's climate transition.

"We need to find the opportunities and the barriers to rolling out blended finance for Australia's climate transition on a national scale," she says.

"How do we leverage more private and institutional capital into the climate transition and how can philanthropy and impact investment help set it up?"

One of the challenges in designing solutions that involve both business and not-for-profit is helping the different sectors to understand each other – but that's where Professor Brown works best.

"When you're trying to combine blended finance, you're talking to different sectors who are ultimately speaking different languages," she says.

"Luckily, I speak a few of these languages. I know what's possible."

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