CEO of 1% for the Planet says companies can make a bigger difference when philanthropy is a core part of their strategy and aligns with their brand.
Most people know 1% for the Planet for its network of member companies that commit to donating 1% of their revenues to environmental issues. But Kate Williams, the CEO of the nonprofit, says there’s an even greater opportunity when companies embrace a strategic approach to giving. In this conversation with Climate & Capital’s co-founder David Garrison, Williams explores ways that capital giving can pack the greatest punch.
Key points:
- Philanthropy can have immense impact as a core part of strategy and operating plans. “[It’s] a targeted way to drive impact, and businesses have a choice in how they do that through the resources they generate.”
- 1% for the Planet certifies economic commitments, but Williams notes that the greatest returns come from process and brand alignment. “Where and how we find those meaningful connections have practical implications, and we’ve been expanding our definition of environment to be more intersectional as a result.”
- Transparency is critical. “The consumer data is pretty good on this: Credibility of commitments is what matters most.”
What follows is an edited transcript of Garrison’s conversation with Williams:
What’s the burning opportunity in climate change?
My mom had a sticker on the door of the house when I was growing up. It said, “What’s the use of a house if you haven’t got a tolerable planet to put it on?”
Climate change is a crisis that’s big and overwhelming and scary. That’s important to acknowledge because when people are feeling anxious or overwhelmed, there’s a tendency to ask what the one most important thing is. Everything else falls aside.
And there’s the challenge: That tendency leads us to put all our environmental funding into climate change. Now, it’s true that climate needs more funding. But it’s also important to invest in efforts like protecting endangered species. Why? Because that’s what we’re saving the planet for.
So, in our zeal to address climate change, the burning opportunity is not to forget that there’s a “why” that needs our attention, too.
In our zeal to address climate change, the burning opportunity is not to forget that there’s a “why” that needs our attention, too.
You watch leaders taking bold stances on climate. Where does that become an operational or strategic act as much as a moral one?
The answer to that has changed over time. Early on at 1%, leaders would start from the heart, saying, “This is the right thing to do.” But as we’ve grown, members have become more varied — they’re different sizes, from different sectors and there’s greater diversity in the kinds of questions people ask. Now, many start with: “Why am I doing this?”
Part of what’s happening is that giving to nonprofits has traditionally been this nice thing you do at the end of the year. At a practical level, you made a decision once you knew what you had left to work with.
But increasingly, smart people say philanthropy should be at the core of your strategy and operating plans. Philanthropy’s a targeted way to drive impact, and businesses have choice in how they do that through the resources they generate.
Once leaders make that connection, it moves philanthropy to center stage. It forces questions: “What are we trying to do in our business? How can philanthropy align with, support and expand it in ways that are meaningful?”
The truth is that the 1% of sales we engage is a lot of money, so making any shift like this isn’t instantaneous. But what we’re suggesting is that, like rent, taxes, and suppliers, we should pay the planet as an operating cost — not as an end-of-year extra.
Like rent, taxes, and suppliers, we should pay the planet as an operating cost — not as an end-of-year extra.
Talk a bit more about the discussions strategic philanthropy prompts.
As we’ve grown, more and more members want to understand how a more strategic approach will benefit their business. How’s this doing to drive sales? What’s the return on investment?
Those are legit questions. And they’re important because they challenge our ingrained thinking around doing good as a trade-off.
We now have good case studies about how communicating in meaningful ways about the 1% choice has had a positive impact on sales and customer retention. We’re also seeing consumer data that’s remarkable: 84% of consumers 18-25 are willing to spend more on sustainable products.
All this means that, increasingly, for a company to show up in the world, it has to demonstrate some level of commitment to driving change. 1%Capsb for the Planet certifies that commitment to make it credible — it’s a process that demonstrates you’re expanding your impact in powerful and meaningful ways.
You’ve recently launched a fund, the Planet Impact Fund, that gives you a way to expand into a more active investor role than you’ve played up until now. What does that do for you?
Yeah, we’ve had this awesome, incremental model that grows 1% by 1%. That’s given us a lot of philanthropic knowledge and experience understanding nonprofits. The new Planet Impact Fund is a chance to build on that, to leverage insights from members’ decisions (on annual granting, for example) and create something with more exponential impact.
When people give to our fund, it’s a donation, and the funds are invested from that. We allocate 10% of the fund each year to give to nonprofits.
One benefit of the fund is that we know members spend a lot of time working on their giving strategies, and a lot of them want that process to be simpler. So, when we tested the Planet Impact Fund with a small portfolio, it did very well, in part because it creates a simple solution. And simple is good.
Some interesting approaches are emerging around capital — e.g., Acumen’s patient capital. When you were building the fund, were there models that you wanted to build on, that you wanted to replicate or that you thought had weaknesses?
There are a lot of great models out there.
Because of our environmental philanthropy focus, we started by looking at donor-advised funds (DAFs). There was a lot of money going into DAFs at the time, but we knew there was dissatisfaction with them. People would complain, for example, that they don’t tend to give out — there’s a tax deduction, and then the money gets locked up in the funds.
There’s also a perception that DAFs are the domain of the wealthy, a way to get a tax deduction rather than drive impact from those dollars.
That all caught my attention.
Now, for technical reasons, what we have isn’t a donor-advised fund, although we do have a DAF option. But those conversations inspired us: We have a pooled fund that’s open to anyone of any size, as well as the opportunity for individual donors to set up funds.
I appreciate that your measure of action is the 1% number, but how would you like to see us thinking about success? Is it more than that?
Such a great question.
You know, we measure that metric of 1% giving. But we don’t explicitly certify the journey members go through as they define what “doing the right thing” involves for them.
Success is that journey — doing a bit more and a bit more and a bit more in meaningful ways at a pace that we can sustain.
Success is doing a bit more and a bit more and a bit more in meaningful ways.
You’ve said that you’re trying to shift how we think about access to capital. What would you like to see change?
I’d like us to develop a better collective understanding of the interplay between philanthropy and different types of investment capital.
It’s important to understand, for example, what capital is needed and when. Our partners at CapShift have been helpful there. Early-stage stuff, for example, may be too small (or too risky) to access debt, so you want investments to be program-related or recoverable.
We need to think this way for climate and other things that are good for the planet. If we’re too narrow — if we’re only thinking about where we’re going to get a financial return — we’re going to neglect investing in some of the solutions that we need to change our economy and our thinking.
If we’re too narrow — if we’re only thinking about where we’re going to get a financial return — we’re going to neglect investing in some of the solutions that we need to change our economy and our thinking.
You see the full range of environmental philanthropy. Where do you see disproportionate returns? Are there early investments, for example, that offer outsized impact?
The most effective giving we see — you could call it a return on investment — is when there’s purpose and brand alignment.
If, for example, a company that makes wetsuits were to fund desert nonprofits, there’d be a disconnect. Whereas if it gave to ocean nonprofits, consumers are likely to see a relevance that resonates and increases giving.
That brand alignment ladders up into a sense of shared purpose. That’s important because people fight for what they love. The psychology of giving shows us that giving is much more effective when people feel some emotional attachment; if it’s purely transactional, it doesn’t last as long and isn’t as meaningful.
Where and how we find those meaningful connections has practical implications, and we’ve been expanding our definition of environment to be more intersectional as a result. A few years ago, for example, we decided to allow food banks as approved nonprofits. Previously, we’d viewed food banks as sitting more on the social side. But as we came to understand the ways in which they divert food from the waste stream and how that reduces greenhouse gas emissions, it emerged as a climate solution — in addition to being an awesome social promotion.
As we’ve articulated those connections, it’s been powerful and resonant. Because most people don’t walk around thinking, “I don’t care about homeless people; I only care about the environment.”
No, we care about a lot of things. But we also have limited resources. So, when there are tangible ways we can make connections between organizations and impact — when we can bring sense to a world in crisis — that really resonates.
The kinds of infrastructure, mindsets, and relationships that have worked for us in the past will not necessarily be the same ones we need for a thriving climate economy. That suggests there are gaps. What gaps do you see?
One gap is that, as we’ve just said, we need more and better collaboration across issue areas. Right now, activities are often viewed separately when we’re actually working towards the same goal. I’d like to see us connect the dots in ways that don’t create a greater burden on the people and organizations doing the work. That would be a powerful way to bring the intersectionality we see to life on the ground.
What stands out to you — beyond simply that they commit to 1% — that the leaders having the greatest impact are doing to push their organizations?
They’re pushing their companies to see the 1% commitment as part of a journey that has integrity.
Look, no company is perfect. And sometimes companies face integrity challenges, where they want to give to a nonprofit that’s fighting hard on an issue while they’re doing the work to sort things out.
A company may have plastic in their packaging, for example, and try to solve for that by giving to a plastics-free nonprofit. Part of what we see leaders doing in taking this kind of action is trying to be clear — with employees and with their marketing messaging — that they’re not begging pardon for their sins.
The most effective leaders articulate that message: We’re about progress, not perfection. They lean into transparency over perfection. And the consumer data is pretty good on this: Credibility of commitments is what matters most.
The most effective leaders articulate that message: We’re about progress, not perfection.
Patagonia is a great example of this. They’re definitely not perfect, but they’ll own it. And they’ve made a lot of progress. Clearly, consumers appreciate the sort of candor that comes with saying, “Here’s where we are on the journey. Here’s what we’ve figured out. Here’s what we’re still trying to figure out.”
As companies go through this, where do you see them struggle?
The first moment is when they ask, “What if we grow and the 1% starts to be a bigger number?” That can be challenging — in awesome ways.
A second struggle comes when someone makes the commitment but then doesn’t really lean into figuring out a giving strategy, building connections across the company, getting engagement around it and building a brand story. It’s like signing up for piano lessons but then not practicing. When you go to your lesson, it doesn’t feel that great.
One observation at a super-practical level is that it’s a game-changer when a company clearly designates a person or team to own and carry the work.
Creating interesting relationships and sharing insights has always been part of your secret sauce at 1%. What constitutes a good connection?
The million-dollar question …
The answer is different for different stakeholders. The relationship between a business and a nonprofit, for example, involves an authentic commitment to communicating shared goals and what value each entity brings to achieving them.
One of the challenges we face as we scale any relationship business is how you keep what’s most transformational. How do you maintain it as you build in automation — because there’s simply no way you can connect with 2,000 small businesses per week.
The answer, I believe, lies in maintaining core values that can guide you alongside a set of mechanisms — mechanisms that will stay mostly intact as you scale — so that the quality of the relationship survives across the range of touchpoints.
Is there something you’d like to say to other leaders that doesn’t normally get said?
Talking about climate is heavy stuff. It can feel scary, sometimes disheartening, often overwhelming.
I’ve been thinking a lot about how we want there to be a beautiful, thriving planet and also thriving, joyful, creative communities.
Those two things mean that thinking about the urgency here in positive ways is important. It doesn’t mean we don’t take things seriously, but I believe we run faster if we’re even a little bit joyful; we make better connections if we bring hope and optimism to work.
Climate & Capital’s Leadership Interviews is an ongoing series of in-depth discussions with a wide range of leaders in the climate economy. It explores the nuance and tension in leading bold transformations — of individuals, organizations and markets — at the intersection of climate and capital. We hope these conversations give you food for thought and spark conversations as you lead in the climate age. We’re looking forward to hearing from you.
