Veronica Colondam champions the field of social entrepreneurship in Indonesia with the establishment of YCAB Foundation in 1999

Veronica Colondam was the youngest ever recipient of the UN-Vienna Civil Society Award, a World Economic Forum Young Global Leader, and received accolades throughout her career including Globe Asia’s Most Powerful Women in Indonesia, Forbes’ one of 10 most inspiring women in Asia and one of Asia’s 48 Philanthropists, and one of UN’s Solution Makers;  through YCAB Foundation she helms a social enterprise that aims to improve welfare through education and innovative financing, running programmes that have reached over 5 million underprivileged youth. She speaks with LUX Leaders & Philanthropists Editor, Samantha Welsh about creating a sustainable system that scales change.

LUX:  How have your spiritual beliefs informed your leadership values?

Veronica Colondam: I established YCAB Foundation in 1999 when I was 26 years old. Yayasan Cinta Anak Bangsa Foundation (YCAB) means ‘Loving the Nation’s Children Foundation’) and reflected my love for all Indonesia’s children and my aspiration to nurture intelligent and innovative young minds. As a committed Christian, I believe we are called to be the Salt & Light of this world, to be a Good Samaritan, to love our neighbour and to help all those in need. My leadership values foster a culture that prioritises Integrity, Service, Empathy, Resilience, Vibrancy, and Excellence (iSERVE.)

LUX:  Was there a catalytic ‘aha’ moment, when the scale of social injustice in Indonesia impelled you to set-up YCAB to drive change?

VC: For me it all started with education injustice.  About three years after YCAB was founded, I realized that the school drop-out rate in Indonesia was very high.  Millions of students did not complete their primary education. Further, the ASEAN Free Trade agreement 2010 put Indonesians at a competitive disadvantage as our schools did not offer teaching in tech and English.  In response, we launched our first Rumah Belajar (Rumah = house, Belajar = learning to improve English and tech literacy.  The ‘aha’ moment was when my 12-year-old daughter, Adelle took me as parent chaperone on her school community project and introduced me to the concept of microfinance.  This catalysed our YCAB family intervention model.

YCAB Foundation is the founding and flagship organisation in the YCAB social enterprise group which bases its operations on a mutually reinforcing and financially sustainable social change model

LUX:  What was the thinking behind that?

VC: We implement a family intervention model that empowers both mothers and children – ‘prosperous mothers smart kids’.  We can transform low-income families and lift them sustainably out of poverty. We focus on the mothers because research shows the critical impact of a mother’s prosperity on the household.  Economically-empowered earning mothers are in a better position to support their children’s education, reducing high school drop-out rates and lifting the family unit.

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LUX:  Why is YCAB’s microfinance model sustainable?

VC: This comes down to the integration of financial support with educational advancement.  We deploy capital to fund low-income women entrepreneurs ensuring their children’s education is a precondition for loan access.  This dual focus on immediate financial aid and long-term educational goals fosters a cycle of empowerment.  Additionally, YCAB’s transition into a self-reliant social enterprise, where profits from its ventures are reinvested into its mission, underpins its sustainability. The model’s success is evidenced by its recognition and supervision by the Indonesian Financial Services Authority, highlighting its impactful and sustainable approach to breaking the cycle of poverty and promoting community welfare

YCAB’s change model has one clear mission which is to improve welfare through education and innovative financing. YCAB aims to vitalize underprivileged youths to become self-reliant through economic empowerment and education, bringing them from mere subsistence to sustainable livelihood

LUX:  Twenty five years on, how successful has YCAB been in mobilising resources throughout Asia?

VC: We mobilized more than $120M US to reach over five million low-income young people, together with hundreds of thousands of mothers. This is equivalent to a per capita increase from $2 to the threshold of an aspiring middle class at $8.

LUX:  How did YCAB evolve from a not-for-profit to a social enterprise model?

VC: Honestly, I didn’t know anything about the concept of social enterprise back in 1999!  In fact, the term “social enterprise” only began gaining recognition in Indonesia about 12-15 years ago. I initially founded YCAB with financial sustainability in mind and after the first year, I started-up a company as the first business unit of the foundation.  Over time, we developed several business units to support the foundation’s mission and around 10 years’ later, after my INSEAD program, I realised we were operating under a social enterprise model.

LUX:  Where does microfinance fit within social impact entrepreneurship?

VC: Microfinance operates as a business model and enables the poor to access capital. This embodies the essence of social entrepreneurship, where business and social impact are integrated into the model. We leverage our for-profit businesses to support the mission of YCAB, the foundation, so we operate our education program under the YCAB Foundation structure, and the economic empowerment program for mothers (or MFi) under YCAB Ventures, a company licensed by the Indonesian Securities and Exchange Commission (OJK) since 2015. Under the Ventures structure mandated by OJK, we engage in equity-like investments to support SMEs and have expanded into impact investment. This structure allows us to consolidate all our companies that support YCAB’s mission into a portfolio — from our original business units to new impact investments. The Ventures structure provides us with the flexibility to engage in financing (MFi), investments across all business units and new impact ventures, all while advancing our agenda of empowering families out of generational poverty towards a prosperous future.

YCAB believes in the power of education to improve welfare. To date, YCAB has brought impact five millions underprivileged youths and hundreds of thousands of low income families

LUX:  YCAB’s partners rank among the world’s leading corporates;  what is it about your approach to partnerships over 25 years that secures engagement at this level?

VC: We are commited not only to meet the needs of our beneficiaries but also to align closely with the objectives of our partners, some being the world’s leading corporations. One key aspect of our partnership strategy is our engagement with governments. Sustainable change requires collaboration across sectors, so partnering with governments allows us to leverage their resources, expertise, and influence to optimise our impact. Furthermore, our board members bring their expertise, networks, and insights to the table which enhances the value proposition for our partners, because partnerships are strategic, impactful, and mutually beneficial. Successful partnerships are built on a foundation of trust, collaboration and a shared commitment to driving positive change.

Read more: Zahida Fizza Kabir on why philanthropy needs programmes to achieve systemic change

LUX: Was there any time that you overcame a barrier that, in retrospect, catalysed a systemic solution to a particularly challenging social problem?

VC: The first standout catalytic moment was our shift in focus from preventing youth drug addiction to primary prevention through education and soft skill development, addressing the root causes of youth curiosity toward substance abuse. However, gaining access to schools, the focus of our target audience was a significant challenge. In 2002, in a pivotal moment for YCAB, I and our board member Professor Rofikoh Rockim met the former Minister of Education, Mr. Yahya Muhaimin. He granted us his influential letter of recommendation so we could access schools and campaign with authority. This shows the impact of personal connections, advocacy, and strategic partnerships that sparked transformative change and empowered communities throughout Indonesia.

The second catalytic moment was the covid pandemic. During lockdown, we could only help people who had basic literacy and smartphones to access e-support, including e-donations.  We also used a WhatsApp-based chatbot. This revolutionised the financial literacy of mothers, the clients of our MFi program.  The pandemic also opened the door to financing social goods using capital market products, such as mutual funds. To coincide with YCAB’s 25^th Anniversary in August 2024, we will launch financial products that offer financial returns with social impact. This is gamechanging because with philanthropy in Indonesia, there is generally no tax deduction for donations aside from Islamic zakat giving which is regulated by a national zakat collection body. For non-religious non profits like YCAB, giving is not tax deductible so private corporate CSR donations are taken from EBITDA, contrary to public-listed companies.

YCAB is now exploring ways to implement the last link in its change model, that is, to create a sustainable system whereby students who graduate and become entrepreneurs or employed can pay it forward

LUX:  What is impact exactly for a social impact entrepreneur and how can you measure it fully?

VC: At YCAB, we embed impact measurement into all our programs. With our microfinance initiative, for example, we conduct our “welfare survey” with our beneficiaries tracking our impact on their increased earnings, business expansion, and perhaps most significantly, the educational opportunities their children receive as a result of our interventions.

LUX:  Finally, how do governments and financial institutions benefit by partnering with SIEs?

VC: We are not sitting behind our desks, we are out there in the heart of communities, listening, learning, and understanding their real needs. These grassroots connections mean our initiatives are genuine and address issues where they make impact, right where people live and breathe. We are always pushing boundaries, finding fresh ways to tackle age-old problems. When governments and financial institutions join forces with us, they are tapping into that spirit of innovation. When we innovate together, that vision becomes more than just a dream – it becomes our shared reality.

ycabfoundation.org

Nina Hoas of LGT (right) and Silvia Bastante de Unverhau (left) of LGT Philanthropy Advisory in Kenya, tree planting

Global annual philanthropy giving today is estimated at over $1tr. The world will see the largest intergenerational transfer of wealth in history by 2045, some $84tr being passed down in US alone. Next gen inheritors are finding purpose in their wealth, responding to urgent causes, and driving change ‘in my lifetime’. LUX Leaders & Philanthropists Editor Samantha Welsh speaks with Head of LGT Philanthropy Advisory, Nina Hoas, on strategies for enhancing impact through collaboration, leadership, innovation and doing good, well.

LUX: What made you decide on a career centred on addressing inequalities and social justice?

NINA HOAS: I am Swedish,  but when I was growing up my family moved and travelled around a lot, from Latin America to Asia, and I had the opportunity to live in places like Bangkok in Thailand where my family was for seven years. So I grew up in a family that was not afraid of being in different communities or sharing their experiences and being with different cultures. Every year from when I was one year old we would go to Kenya to stay with my godparents who lived in Nairobi and had a holiday home outside Mombasa. We would go to the Swedish school for a few weeks where my aunt was a teacher, and visit the nature conservation areas. Those experiences in Kenya really shaped my awareness of the socio-economic contrasts to my own home in Sweden as well as of course nature and biodiversity.

Preserving and replanting mangroves, which store carbon, preserve coastlines and act as biodiversity incubators, is important to many next generation philanthropists

LUX: What did that perspective teach you about privilege and shape your ambition?

NH: That holiday home outside of Mombasa was a different world to Sweden, with the housekeepers Kasongo and Yomo living a long bike ride away, in a mud hut, in a tiny village with no running water or electricity. Every year our family would visit and see their kids growing up. Back in the day we only thought in terms of charitable giving, not the empowerment approach we promote today. Donating clothes and food to their extended family was my first real experience of doing good. Schooling and education was not taken for granted for these children either, and all those experiences formed my career path. My godparents lived in Nairobi and were part of the United Nations (UN) community there, so I knew quite a bit about the UN and decided that was what I wanted to do. I therefore studied political science, and received a scholarship by SIDA, Sweden’s development agency, to make a MinorField Study in a refugee camp in West Africa for my Master’s degree. But already before University, I had interned in Kenya with an NGO and UNICEF which coupled with my studies set me on the path to a UN career.

LUX: What for you is ‘doing good, well’?

NS: Strategic philanthropy advisory at LGT is about encouraging more and better philanthropy. We share our network of experts and change-makers, provide platforms where philanthropists can come together, connect and learn from each other with the aim to help them embark on the philanthropy journey in a more strategic way. Strategic philanthropy is about the long term impact your wealth can have.

LUX: What is the approach to wealth in strategic philanthropy?

NH: The relationship managers in our office, together with family advisors, have conversations with clients around the elements of wealth as the starting point. How their wealth was created, how it is invested, how it is spent, how it is given and how wealth is governed and passed on. Every time there is a financial transaction there is an opportunity to have a positive impact. It is about how family values are passed on with the wealth and how these values are reflected in the philanthropic activities.

Rainforests are a carbon sink and produce life-giving oxygen; they are also essential for the maintenance of the earth’s biodiversity, which is inextricably linked to the planet’s habitability and sustainability as outlined by the United Nations Sustainable Development Goals (SDGs)

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LUX: Has your network been affected by the women social investment entrepreneurs’ (SIE) phenomenal growth globally, also why are they so successful in scaling?

NH: We usually talk about seven trends and right now next generation funders and specifically women funders is a significant one within those. Looking at our philanthropy network, we have a lot of women philanthropists we are working with and we noticed that for them it is not only about giving. They are keen to have a strategic approach to their philanthropy and ensure impact. Women drive a lot of the development and community. As a woman, I hence see it as not only the right thing to do, but also economically efficient to focus on the women in communities.

LUX: How far is technology influencing next gen investing strategies?

NH: Technology is very important, especially in scaling various invtiatives, which our Guide to Strategic Philanthropy we co-wrote with Pi covers this in one chapter. Though we increasingly see foundations start asking for technology and even AI and they want it because they understand they can grow and deliver faster services. On the approaches towards social good, the giving is one part, but it does not matter what the methodologies are that you are using, whether through impact bonds, mezzanine funding or partly impact investing or pure giving, whichever, you have a social goal and there are many approaches. We notice some entrepreneurs are very successful in using technology and are very often the ones that also want to adopt or adapt their skills and their experience to do good and they’re using that space.

LUX: Has ‘giving while living’ and philanthropy within a limited time frame created volatility and been disruptive?

NH: With next generation wealth holders in particular, they may have created a structure but want to show they are putting a time frame on it to clarify to donors, to family members and peers that if, for example, it is an endowment then they would spend down within 20 to 30 years. They are still relatively young, in the middle of their careers, and embarking on their philanthropic journey, and they want to act right now on the urgent issues, well before those issues worsen. They also feel strongly and passionately that they want to enjoy doing it in their lifetime and not leave the responsibility to another after their death.

Read more: Terre Blanche: The luxury resort pioneering sustainability

Recent research shows that forests are not just collections of distinct flora and fauna; they vast interlinked collective ecosystems which communicate with each other, and underpin sustainable development

LUX: What does inherited wealth mean to next gen U/HNWIs?

NH: LGT’s newest study is about wealth and about what wealth can do. We are asking only next generation wealth holders, the inheritors not the wealth creators (though some are both). Wealth needs to come with purpose. It is very hard for some of them inheriting and by being rich they do not want to feel poor. They want to separate themselves from their net worth and to have self worth. They want to use their wealth in a catalytic way to do good. They bring purpose to their own life if they can use their wealth through investment for a purpose to empower others. For example, one of our women philanthropists is working in communities in a few developing countries to empower women. In one community, she is reaching around 10,000 women and while they know the funds are coming from a specific foundation, they do not know that the founder is out there in person in the field alongside them as technical support; she remains anonymous to avoid the donor dynamic as she wants to be out there, able to hear if something is not right. She is caring for there to be a good systemic change on the ground and is concerned she will not get truthful feedback because the community will fear the funds will dry up if the project is not going right. She really wants to know what is going wrong so she can learn from mistakes, improve it and change it.

LUX: How does peer-to-peer collaboration help your clients?

NH: This is where strategic advisory comes in as well the connection to other philanthropic leaders. Our clients want to meet others who are focused on similar issues because they want to maximise impact and to collaborate to achieve that. Philanthropists can feel isolated so our purpose is also to connect philanthropists with one another, introduce them to others working in the same area, in order to learn and potentially to partner and to add value. This works well for example in the area of biodiversity and nature. We advise around 50 individuals that are focusing specifically on scaling conservation and nature-based solutions. In this context we took a group to the Massai Mara, which is one of the key initiatives of LGT Venture Philanthropy – the independent charitable foundation established by LGT Group Foundation and founded in line with the vision and values of the Liechtenstein Princely Family. The Princely Family’s long-term vision and commitment to sustainability are deeply rooted in LGT’s corporate culture, and they are very happy to collaborate with others also in philanthropy and impact investments.

www.lgt.com

Small Pacific island nations like Tuvalu are at most risk of rising sea levels due to climate change; COP27 last year created a Loss and Damage Fund to alleviate their plight, but no funding has yet been forthcoming

There is a major issue with meeting our sustainability goals: the financial and structural support is, in many cases, just not there. Deutsche Bank’s Markus Müller explains to Darius Sanai what needs to happen to close the gap

LUX: What is the sustainable financing gap and what is the biggest problem we face for bridging it?
Markus Müller: It is usually defined as the difference between the cost of meeting United Nations Sustainable Development goals (SDGs) and the amount of investment actually being delivered. Big numbers are common here but we need to put them in perspective – the latest OECD estimated the annual financing gap is 3.9 trillion USD, but this is much smaller than global GDP of around 100 trillion USD. The biggest problem isn’t the size of the gap, but making sure that investment projects and systems are viable. Bringing down borrowing costs and making sure there’s a level playing field for investments are big parts of this.

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LUX: Financing sustainable development should be a priority. But is short-term thinking still making it difficult?
MM: I wouldn’t blame the sustainable finance gap simply on short-term thinking. I think most people are rightly uncomfortable with how close we are to the planetary boundaries, and this is spurring action: we aren’t just leaving this to future generations. Fixing the finance gap now needs innovation, an ability to break free of current ways of thinking and a clear view of where we want to be. Returns and cost of capital remain key issues.

Houston, Texas is attracting new technological investment due to incentives created by the US Inflation Reduction Act, which is in effect a green subsidy

LUX: You have observed that our international social infrastructure for dealing with global collaborative action (the UN, and the economic institutions arising from Bretton Woods) are from another era. Do they need to be updated?
MM: Existing international institutions provide good framework to support transformation. They can cooperate in new ways with other bodies if necessary – note President Macron’s Global Financial Pact summit earlier this year. This is a matter of evolution, not replacement. Look at the discussions, for example, around how to repurpose IMF Special Drawing Rights (SDR, invented back in 1969) to support biodiversity and other initiatives.

LUX: The climate crisis – or triple planetary crisis – requires global nations’ collaboration on a probably unprecedented scale. But is such collaboration now more difficult in our increasingly multipolar world?
MM: Collaboration is fragile by nature, but it is still possible in a multipolar world. We start from a base point where the world’s resources – financial, material, natural – are unevenly distributed. Developing economies have more physical resources (for example, metal and minerals deposits) so it may make sense for them to collaborate. But if developed economies want to participate in these discussions, they must deliver more real support. This is often lacking: for example, there have been no inflows into the Loss and Damage Fund agreed on at last year’s COP.

At COP27 in Egypt in 2022, world leaders agreed to take tangible steps towards alleviating the climate crisis, but it remains to be seen whether they will be executed

LUX: Are you optimistic that the US, EU, Russia and China (for example) will agree on and enact workable policy solutions to counter the climate crisis? What would be significant markers of progress?
MM: Yes, I am. We have seen one important, recent example of this: major technology disputes between the U.S. and China did not stop the two sides meeting for climate talks. This shows that environmental issues do not have to become a destructive bargaining chip in broader trade or investment disputes, although we should not ignore the fact that environmental operating standards do have an impact on competitiveness and thus trade tensions. For me, the key marker of progress is continued discussion and agreement to stay within overall multilateral environmental policy targets.

LUX: If we are indeed entering a more unstable era (in terms of global climate and related issues like biodiversity), do the fundamentals of policy making need to change in order to accommodate constant change?
MM: I think this is a matter of learning how to overcome unforeseen challenges, rather than simply accepting instability. As our understanding of environmental issues and how to tackle them gets better, policy will change. The fundamental shift may involve us stopping seeing policymaking as proceeding along an inflexible straight line. We need to be more flexible and accept that policy may zig-zag. Policymakers’ ability to adopt to changing knowledge to find optimum solutions should be seen as an indication of strength, not weakness.

China, one of the world’s biggest sources of greenhouse gas emissions, has recently cleaned up its urban pollution and has agreed to restart formal climate change talks with the U.S. as of November 2023

LUX: Past successes like the Montreal Protocol were one-time events. How can we ensure more sustained policy progress?
MM: I don’t think we should think of policy advances as one-time “successes”. In reality, we often don’t know the real impact of policy agreements for many years. Some agreements that are hailed as successes at the time – for example, the Aichi goals of 2011 – have subsequently proved insufficient to meet the challenge at hand. The importance of agreements is really that they drive us, one uneven step at a time, towards better environmental outcomes.

Read more: Marküs Muller on the economy and biodiversity

LUX: How important are subsidy and protection programmes for transition technologies, and can they be harmful?
MM: It’s important to distinguish between different sorts of policy support. There are good and long-standing arguments for the support of “infant industries”, in the economics jargon, but we have to be careful that this does not slide into protectionism as these industries mature. U.S. support via the Inflation Reduction Act (IRA) is giving us a good preview of transition policy support, and what really determines where new industries locate and thrive. (Consider why Houston is attracting new technologies and Miami is losing out, for example.) Ultimately, it’s all about kickstarting specific industries that will really work.

Markus Müller is Chief Investment Officer of ESG & Global Head of Chief Investment Office at Deutsche Bank’s Private Bank

Find out more:  deutschewealth.com/esg

Teahpoo Bubble, 2 August 2017, Teahupoo, Tahiti, French Polynesia. © Ben Thouard

As Secretary-General of the Commonwealth of Nations, a central pillar of Patricia Scotland’s diplomatic work is to help the group of 56 Commonwealth countries – many with historical links to the UK – adapt to the impacts of climate change. It is an issue she knows all about

Scotland first became familiar with the effects of climate change in August 1979, when she was 24. In that month Hurricane David, a category 5 tropical storm, made landfall in her country of birth, Dominica, in the Caribbean. “It was one of the biggest category 5 hurricanes we’d seen,” she says. The damage was devastating: Dominica’s capital, Roseau, was described as “resembling an air raid”. Around three-quarters of Dominica’s population were made homeless and three-quarters of banana and coconut crops were destroyed.

“I remember it so graphically,” says Scotland. “My father, who was a very skilled carpenter-builder, left the UK and went to Dominica for months to help rebuild, because people had no houses and nowhere to stay. And it was a great shock.”

At the time, it was assumed that such severe storms would occur perhaps once a lifetime. But, owing to climate change, they may be becoming more frequent, as Scotland is only too aware, following two further disasters related to climate-change hazards. In August 2015, Tropical Storm Erika caused severe damage in Dominica and neighbouring countries. Then, in 2017, came Hurricane Maria.

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“It was the biggest hurricane the world had seen at that point,” remembers Scotland. Another category 5, Hurricane Maria encompassed the entire nation. “Everyone on the island was impacted,” she says. Dominica is thought of as a natural idyll with lush green vegetation, but when Scotland visited that year she barely recognised it. “Even the bark from the trees had been removed. I remember looking at one tree – it had one leaf and everything else was brown.” Decades of development, from bridges and schools to roads and houses, had been ripped from the ground and dumped in the sea.

Four decades on from her initial experience, the challenges, says Scotland, are to be ready for hurricanes and storms. “How can we build resilience while also mitigating the issue of climate change more broadly?” she asks. Today, these challenges, which also include encouraging financial institutions to step up and get creative, have become part of Scotland’s job.

Patricia Scotland was born in Dominica in 1955, moving at the age of two with her family to London, UK, where she still lives. In the 1970s she obtained a law degree and was called to the bar, and in 1991 she made history by becoming the first black woman appointed to be what was then a Queen’s Counsel (QC), marking her as an elite lawyer.

Later, in the 1990s, Scotland entered the UK government, holding a number of posts related to law and diplomacy, including a stint as Attorney General, the government’s most senior legal adviser. Her post came to an end in 2010, when the UK government changed. Then, in 2016, Baroness Scotland took up her current role as the sixth Secretary- General of the Commonwealth, a post she holds until 2024.

The Right Honourable Baroness Scotland

The Commonwealth is a voluntary association of countries, many of which were once part of the British Empire. Established following decolonisation to maintain the links between the countries, today there are 56 members. Commonwealth states are on the front lines of climate change, says Scotland.

Of the 56 countries, 33 are small states, and 25 of those are small island developing states. “We’d rather call them ‘big blue ocean states’,” she says. “Some of them have [marine] jurisdictions larger than the largest big land states.” These states are heavily exposed to sea-level rise and tropical cyclones, and many depend on marine ecosystems such as coral reefs – which are also threatened by climate change.

Extreme weather events such as hurricanes will keep happening, but, as Scotland points out, we can reduce the impacts if we take action. There are two major approaches to climate change, which go hand in hand: mitigation and adaptation. Mitigation means cutting greenhouse-gas emissions as much and as fast as possible, so the climate changes as little as possible. Alongside this, adaptation means helping countries and communities become resilient to the unavoidable impacts of climate change. Communities that have adapted suffer fewer deaths and less damage from extreme weather events, and recover more quickly and thoroughly. But adaptation costs money.

In 2009, developed countries promised to finance adaptation programmes in developing nations. They committed to provide $100 billion per year by 2020. “It was a bold recognition that this was necessary in order to assist those member states that had not contributed to the creation of the crisis,” says Scotland. “This was a real question of equity and fairness, because they were the ones who were going to have to adapt and mitigate a situation that they had not created.”

However, the promise was broken: even in 2023, annual adaptation funding is far short of $100 billion. “Although the world made that commitment, it didn’t actually identify how the $100 billion was going to be raised,” says Scotland. Worse, some governments were still contesting the reality of climate change. “That seems unreal now in 2023, but it was very real in 2009.”

And today, the adaptation bill has gone up, partly because of inflation, and partly because the delay has meant more urgency and more severe impacts. A 2021 UN Environment Programme report estimated just how much money is required annually for environmental projects, including adaptation. The bill comes to more than $500 billion per year. Other estimates are even higher. The bill for climate adaptation and other environmental needs will keep going up the more we delay, but there is a silver lining, says Scotland. Investing in adaptation reduces future costs and will enable the global economy to grow more. “This is a real invest-to-save,” she says.

The challenge is mobilising the money. It’s a multi-pronged challenge, but innovative financial strategies are a “really important” part of the solution, says Scotland. Several strategies have been proposed, and she says governments and funders should cast a wide net. “It’s not either-or, it’s all of them. People tend to say, ‘we’ll do this or we’ll do that’. It’s not ‘or’, it’s ‘and, and, and’.”

The Crack, 8 September 2017, Teahupoo, Tahiti, French Polynesia. © Ben Thouard

One useful form of finance is debt restructuring. Many developing countries have significant debts that reduce their ability to pay for new projects and make it harder for them to raise money from elsewhere. Countries like Dominica took out loans to pay for infrastructure, but when the hurricanes destroyed the infrastructure the government still had to pay the debts. “You still have that high level of indebtedness, but then you have to build back better [to become resilient],” says Scotland. “The costs are two or three times higher, but you’re burdened with the last debt with no relief.” This creates a “terrible cycle”.

To tackle this issue, multiple initiatives are helping countries manage or reduce their debt. During the COVID-19 pandemic, the G20 countries created a Debt Service Suspension Initiative. This relieved the debts of dozens of low-income countries, helping them to fight the pandemic, but it expired in December 2021. Meanwhile, the Commonwealth offers its member states a number of tools to manage their debts. The more that low-income countries can control their debts, the more money they will be able to raise for adaptation.

A related concept is a debt-for-nature swap. Here, a country has some of its debt written off, and, in exchange, the government commits to undertake environmental-protection initiatives, which can include climate adaptation. The Seychelles, a Commonwealth member, is a prominent success story. In the 2010s, the country set out to convert $21.6 million of its national debt into nature programmes. These included financing for climate adaptation by improving management of coasts, coral reefs and mangroves – all of which protect against tropical storms and rising seas, and provide other ecosystem services.The country also protected some of its waters.

Read more: Jean-Baptiste Jouffray on the future of the world’s oceans

Scotland says it’s essential to help countries obtain the climate money that is out there. “Most of the countries, unfortunately, that are most in need are least able to get access,” she says. Often they are told that they do not have enough empirical data to support their application, or that they haven’t followed arcane bureaucratic procedures. Scotland compares it to Waiting for Godot. In response, the Commonwealth has created a Climate Finance Access Hub, which provides expert advisers to help countries navigate the application processes. “We’ve already delivered into the hands of our small developing member states $70 million,” says Scotland. The pandemic caused delays, but more is coming. “We have over $420 million worth of projects in the pipeline.”

For Scotland, it’s creative and collaborative projects like these that will ensure countries adapt to climate change. “I believe we can do this,” she says. “This is a matter of choice.”

Perhaps it should be no surprise that an organisation like the Commonwealth, which has such a mix of countries among its members, is ahead of the curve on tackling climate change. Back in 1989, three years before the Rio Earth Summit, where countries agreed in principle to stop climate change, the Commonwealth issued the Langkawi Declaration on the Environment. The declaration highlighted “the serious deterioration in the environment” and called on governments to commit to “sustainable development”. More than three decades later, everyone else is catching on.

Find out more: thecommonwealth.org

This article was first published in the Deutsche Bank Supplement in the Spring/Summer 2023 issue of LUX

Idris Khan, ‘I Thought We Had More Time’, print created to raise funds for Ukraine

Sir Lawrence Freedman is one of the world’s foremost scholars of strategy and war. Here he answers our questions on the geopolitics around the Russian invasion of Ukraine and potential outcomes

Sir Lawrence Freedman

LUX: Was the West culpable of negligence and/or triumphalism in its policies towards the former Soviet Union/Warsaw Pact territories after the fall of the Berlin Wall, during the 90s?
Sir Lawrence Freedman: Within Europe at least, the end of the Cold War was a victory for liberal capitalism. The members of the Warsaw Pact plus the three Baltic states joined Western institutions (NATO/EU) and followed liberal democratic/ rule of law policies. This was also the case with the former Yugoslavia. In a few cases there has been backsliding into more illiberal ways, notably with Hungary and Poland, but by and large this has worked well. These countries are more prosperous and secure than they would have been outside these institutions.

This is the other side of the coin to ‘the NATO was wrong to push for enlargement’ narrative. As someone who was engaged in these issues at the time, and was not a great fan of enlargement, it was hard to avoid the strength of feeling in former Warsaw Pact countries that they wanted to be protected against some future Russian resurgence. They now feel vindicated in this view. Without gathering all these countries together in a single alliance there was also a risk of antagonisms developing among these countries.

For the first decade after the Cold War this was not a big issue with Russia (NATO entered into a special partnership with Russia in 1997 to prevent tensions). In retrospect the biggest failure was to advise a short and unregulated transition to a capitalist system which led to gross inequalities, cronyism and corruption.

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LUX: Vladimir Putin started off wanting to create a mutually respectful and harmonious relationship with the West, but was rebuffed, and swung instead to Russian extreme nationalism. True or false?
Sir Lawrence Freedman: Putin was not rebuffed. There were serious efforts in the early 2000s to work with Putin and consult Russia during this period. It took until 2007 for Putin to start to break with the West, when he made a speech at the Munich Security Conference condemning Western policies. He had two lots of concerns. The first reflected his view that Western countries did not follow their own rules when it suited them. His examples were Kosovo in 1999 and Iraq in 2003. The second was his anxiety about the so-called colour revolutions – Rose in Georgia in 2003 and then Orange in Ukraine in 2004-5, that saw popular movements demonstrate against rigged elections and corrupt regimes. This developed into a fear of a comparable movement in Russia, combined with a conviction that they were being manufactured by Western intelligence agencies.

Putin’s approach to exercising influence within Russia but also his views about how others operated was shaped by his background in the KGB and then his later role in its successor, the FSB. He shared the strong view among the Russian elite that Russia was, and must be treated as, a great power. As he became more antagonistic towards the West after 2005, which was gradual and not sudden, the nationalism increased. But the biggest driver has been his determination to protect his own power, which has also led to the increased oppression of oppositional elements at home.

LUX:At this stage, post-invasion, can you draw any parallels with any other invasions in modern European history?
Sir Lawrence Freedman: Not really. It is not on the scale of Hitler’s Operation Barbarossa of 1941 and far more substantial than the Warsaw Pact occupation of Czechoslovakia in 1968, and also the operations against Ukraine in 2014.

Tomás Saraceno, ‘Zonal Harmonic 2N 55/11’, part of the ‘Artists for Ukraine’ Exhibition at Tanya Bonakdar Gallery

LUX: Neither Ukraine nor Russia will suffer an outright defeat, so this war will end with negotiation. How can negotiations succeed if the principal Russian actors know they will be prosecuted for war crimes once they sign any peace deal? And what can be done about this?
Sir Lawrence Freedman: It depends on what you mean by outright defeat. It has been apparent from the first days of the invasion that Russia could not achieve its basic objectives of conquering Ukraine and installing a puppet government. It is however possible that Ukraine will achieve its core objective of getting Russian forces to withdraw from its territory, either through force of arms or diplomacy. Militarily Russia has already suffered one major defeat by being forced to withdraw from Kyiv and has now lost 40 percent of the territory taken in February. Russia is now gearing up to take and hold all of the Donbas which is the battle now just starting.

The war crimes issue is important for the long term but not so relevant to the short term. The key issues in a negotiation between Russia and Ukraine will be security guarantees and, most important, who holds what territory. The big issue for the external actors, including the EU and NATO countries, will be what happens to economic sanctions if Putin stays in power.

It is entirely possible that if either Russia acquires a chunk of land that it believes is defensible or if Ukraine pushes Russian forces back that there will be at best a temporary cease-fire and no proper peace settlement. In which case sanctions will stay and war crimes investigations will continue.

LUX: How likely is leader change in Russia in the short term?
Sir Lawrence Freedman: It is certainly possible but Putin has a firm grip on the levers of power in Moscow and he has put his people in all the key positions. His fear of popular movements has led to the suppression of independent media and free speech, and opposition figures have either been killed or imprisoned or pushed into exile.

A self-evident Russian defeat in Ukraine, reinforced by the numbers of killed and wounded, combined with the economic pressures resulting from sanctions, is likely to produce strain on the structures of power. We have already seen the start of purges as Putin blames others for his setbacks. These may start to produce a reaction amongst members of the elite. It is hard to see how Putin’s position could not be affected. The war was his decision and it has already gone badly wrong. But this is an area in which it is hard to make firm predictions.

Sabine Hornig, ‘It requires’, part of the artists for Ukraine Exhibition at Tanya Bonakdar Gallery

There have been rumours of poor health, most recently thyroid cancer. A medical condition could either oblige him to stand down or provide an excuse should he be forced to do so.

One should not assume that a new regime would be more liberal or technocratic. A failure in Ukraine would produce a backlash from the extreme right as well as from remaining moderates.

LUX: There is no world without Russia, says Putin, and Putin believes he is Russia. Does that mean that he will do what Hitler would have dreamed of, and unleash nuclear apocalypse, rather than be removed? And would his orders be obeyed?
Sir Lawrence Freedman: I don’t think so. This is obviously everyone’s nightmare but he would need others to implement the decision and there is still sufficient rationality remaining in the system for this to be allowed to happen. Signs that he was contemplating such a measure might even be a reason for those opposed to him in the elite to mount a coup.

NATO has been very careful not to get directly involved in the fighting, which would provide Putin with most grounds for escalation, even while assisting Ukraine in other ways. Putin is already getting his vengeance on Ukraine for resisting his aggression by attacking its infrastructure, economy and civil society.

LUX: Given how deeply the links between oligarchs and the state run, how can sanctions be lifted, even if there is a negotiated settlement?
Sir Lawrence Freedman: For reasons given above I think it will be difficult to lift sanctions while Putin is in power unless it is absolutely essential to confirming a satisfactory settlement. Moreover the negative effects of conflict on the Russian economy are not only the result of sanctions. There is a now a European policy to reduce energy dependency on Russia and many companies have either abandoned Business interests in Russia or will not now consider new investments.

LUX: It’s 2025. What do relations between Russia, Ukraine and the West look like?
Sir Lawrence Freedman: Relations between West and Ukraine will be closer. Whatever happens now in the conflict, the bulk of Ukraine will not be under occupation. I suspect it will be too early for membership of EU and NATO. These require demanding transitions, and will require Ukraine to deal with corruption. There will need to be a massive reconstruction programme in Ukraine to repair damage and help the economy recover. As for Russia it all depends. I would like to think that Putin will be gone so that there can be a start of a new relationship but lots must now happen for that to be the case. Either way it will take a long time for Russia-Ukrainian relations to recover. It will be very hard for Ukrainians to forgive what has been done to their country.

LUX: How severe will be the economic shock of this war be, beyond Russia and Ukraine?
Sir Lawrence Freedman: The economic shock is going to be severe. The war already risks pushing the West into recession next year. Food and energy costs are going up around the world, with poor countries often the worst hit. It is worth recalling that the Arab Spring of 2011 was triggered by rising food prices. The longer the conflict lasts the worse the economic hit, especially if it continues for more than six months and into next winter.

Olafur Eliasson, ‘Flatland Light’, part of the ‘Artists for Ukraine’ Exhibition at Tanya Bonakdar Gallery

LUX: Will China, the US or Europe gain or lose more, geopolitically, from the war?
Sir Lawrence Freedman: When this started it was assumed by many that China would gain because it would draw the US back into Europe with less time for Indo-Pacific. In addition, China had forged a virtual alliance with Russia just before the war began. At the same time it has had decent relations with Ukraine. From the start of the war it has talked about the need for peace but has not done much about it – for example offer services as a mediator. It has abstained at UN votes. It has supported some Russian anti-American propaganda points and argued strongly against economic sanctions (which it dislikes for other reasons). It would find an evident Russian defeat an embarrassment as it would undermine a partnership in which it had invested politically (if not economically). Beijing is also aware of lessons being drawn about the threat China poses to Taiwan because of the Russian experience in Ukraine.

The US has largely handled the war effectively. It has pulled NATO together effectively and has worked hard to support Ukraine without taking risks of being drawn into the war itself. It has reminded the world – post-Trump – that the US can be an effective foreign policy actor. It has acquired a lot of intelligence about Russian military capabilities. Assuming that Russia is a diminished power after this war, then US strategic calculations become easier.

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The EU has had a less happy time, mainly because the conflict has exposed the way in which a number of member states, but in particular Germany, allowed themselves to become dependent on Russia for energy supplies. Also Germany was risk averse when it came to supporting the Ukrainian militarily and with France offering itself as a mediator. Macron could justify his efforts to keep the conversation going with Putin just in case it was possible to help with peace talks and humanitarian relief but he has so far little to show for the effort.

The UK has had by and large a good war. It has pursued close relations with Ukraine since 2014 and played an important role in training Ukrainian forces, and was the first country to respond to the current crisis (after its intelligence agencies called out the risk of an imminent invasion with the US) with weapons supplies. It has continued to take a lead in either supplying weapons itself or encouraging other donors. Less positively it has struggled to take in Ukrainian refugees and has had the role of the City of London as a home for Russian money highlighted, leading to more restrictive measures.

Sir Lawrence Freedman is Emeritus Professor of War Studies at Kings College London