Trawalla Foundation

What’s wrong with capitalism?

22 August 2023

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Alan Schwartz reflects on the limitations of capitalism in the face of environmental crises, how philanthropy can intervene, and the business opportunities arising with the transition to a green economy.

Part of the AEGN’s mission is to deepen members’ understanding of the many ways their philanthropy can support the environment — ultimately to maximise their impact. To this end, we produce a regular podcast series where members share stories of effective leadership for our planet, climate and future.

Alan Schwartz AO generously shared his story with AEGN CEO Amanda Martin in August 2023. Key take-aways from their conversation follow.

To listen to the episode and access a full transcript and show notes, head to our podcast page.

Measure what matters (internalise the externalities)

“Why is capitalism unable to solve our social and environmental problems? The answer, of course, is that profit and value are not the same thing. And business gets rewarded for profit, but not for value destroyed or created.”

Change the system

“You see all these net-zero commitments of all these companies and countries, and then you get a Safeguard Mechanism, then you get the Inflation Reduction Act [US], and you say, ‘Oh, my God, who is going to do this?’ because it needs to be done now. The institutional systems demand this change … [So], how do you change the system so that the rules are different, so that we actually create incentives for private capital?”

Invest in solutions

Alan is investing $100 million into carbon reduction initiatives to help speed our transition to a clean economy, with millions more to advocate for policy and regulatory change. “As long as what you’re investing commercially is good for the world, no one should be able to criticise you for that … You invest for profit, but you contribute to the change that’s necessary in the institutions, in beliefs and regulations that actually make it possible for more good things to happen.”

On carbon credits

“If the carbon reduction is real — if it’s real — it should be possible for another person who has an obligation to reduce their emissions to buy it and to claim it. That, to me, is clear. So, therefore, the only question left is, is it real? And therefore, that’s a measurement and supervision activity … greenwashing or illegitimate carbon credits are the enemy of both.”

On philanthropy’s role

“There’s no political argument anymore. When you’ve got 215 companies in a safeguard [mechanism] that have to reduce their emissions by 5% a year, the role of philanthropy is to make sure that they do … what I’m saying is that pushing now is no longer should we do it, but are we doing it?”

Fund systems change

“The most important philanthropy is the one that has the greatest leverage. And the greatest leverage is to change people’s minds, change governments, change incentives for business.” (The Schwartz family foundation Trawalla supports ClimateWorks — “they drive systems change, they do it intelligently, they do it diplomatically” — Grata Fund and Beyond Zero Emissions, among many other NGOs.)

Give — and invest

“The answers don’t all lie in philanthropy anymore. Yes, continue with your philanthropy, but if you’ve got commercial opportunity, there are plenty of commercial opportunities. Pour your capital into those because it’s needed. We’re going to need a lot of capital to make the change.”

The most important philanthropy is the one that has the greatest leverage. And the greatest leverage is to change people’s minds, change governments, change incentives for business.

Alan Schwartz AO

Meet More Members

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Stephen Pfeiffer

Stephen Pfeiffer shares why he decided to spend down an inheritance to fund climate action and the sense of purpose and healing he’s found in the process.

Advancing women’s leadership on climate

Trawalla Foundation

Established in 2004, The Trawalla Foundation works with organisations and individuals who have a vision for Australia’s future that will help strengthen gender equality, creativity, sustainability and social justice.