A family can care deeply about climate change, fund environmental charities, and still struggle to bring those same priorities into its investment portfolio.
In our family office work, we see the gap between interest and action. Families may genuinely want their investments to reflect their values. Yet even approving an initial review of what they own is often a difficult first hurdle to overcome for decision makers.
The obstacles deserve more attention. They involve trusted relationships, family dynamics, competing priorities, and uncertainty about what happens once uncomfortable information comes to light.
For families with charitable foundations, there is a practical way forward: start with a manageable review, connect it to the foundation’s purpose, and establish a process for making decisions.
Why looking can feel like committing
Measuring a portfolio’s climate impact sounds like a straightforward information exercise. Within a family, it can feel much bigger.
What if the review reveals a disconnect between the family’s environmental commitments and its investments? Will someone expect the portfolio to change immediately? Will a trusted investment manager feel criticized? Will the findings reopen disagreements between generations?
These concerns can make it easier to postpone the review.
One useful first step is to 1) separate the decision to gather information from the 2) decision to change investments. A family can authorize a baseline assessment without simultaneously committing to sell holdings, replace managers, or adopt a new investment strategy.
Agreeing on that distinction gives everyone room to learn without committing to change anything right away. The review becomes an opportunity to understand the portfolio and discuss choices, with any investment changes subject to a separate decision.
Give trusted managers a clear opportunity to respond
Investment relationships often carry considerable family history. An advisor may have helped the parents through difficult markets, known the grandparents, or supported the family through the sale of a business.
That history matters. A conversation about climate alignment can inadvertently sound like a judgment on decisions that helped create or preserve the family’s wealth.
A more productive approach is to explain how the family’s priorities are developing and ask the manager to respond.
How are climate considerations incorporated into investment decisions? What information can the manager provide about the existing portfolio? What changes could be considered within the current mandate? What would those changes mean for fees, diversification, liquidity, and expected returns?
The quality of those answers provides a useful basis for evaluating the relationship. Families can respect an advisor’s past contribution while setting clear expectations for the future.
Connect climate concerns to investment risk
Families don’t need to agree on every environmental question to have a useful discussion about investment risk.
Climate-related risks include physical damage to assets and disruption to supply chains, as well as changes in policy, technology, and markets as the economy transitions. These belong within a broader assessment of how investments might perform under different conditions.
That framing can help bring family members into the same conversation. Someone focused on environmental outcomes and someone focused on preserving capital may both want to understand how a manager evaluates these exposures.
There is still an important distinction: understanding the risks climate change poses to a portfolio is different from understanding the portfolio’s contribution to climate change. Families may care about both, and should be clear about which questions they want answered.
A useful review should lead to a discussion about decisions. A report that nobody knows how to use is unlikely to become a priority.
Start with the foundation’s mission
For a family that also oversees a charitable foundation, philanthropy can provide a natural starting point.
Consider a foundation funding work on climate resilience or environmental protection. It is reasonable for its board to ask how the endowment’s investments relate to those objectives.
That question connects the investment discussion to a purpose the foundation has already established. It also creates an opportunity to examine whether grantmaking and investment oversight are working toward compatible goals.
The foundation could begin with a review of its public equity holdings, ask its managers for comparable information, and identify areas that deserve further discussion. The board would then decide whether changes to reporting, manager mandates, or investment policy are warranted.
Lessons from that process may eventually help inform the family’s other investments. But the foundation has its own responsibilities and decision-making process; its portfolio should be assessed on that basis.
Give the next generation a defined role
Younger family members may be enthusiastic about values alignment while having limited authority over investment decisions.
That can create frustration on both sides. Younger members feel unheard; older members may feel that their experience and judgment are being dismissed.
A defined assignment can make the discussion more constructive. Interested family members could help prepare questions for managers, review reporting options, or present findings from an initial assessment.
The scope should be clear: what they’re being asked to investigate, what resources are available, who makes the decisions, and when their work will be discussed.
This gives the next generation meaningful participation and a chance to engage with the practical trade-offs involved in managing wealth.
Make the first step small enough to approve
Climate alignment competes for attention with succession planning, distributions, market uncertainty, administration, and the many other demands on a family or foundation.
A proposal to overhaul everything can easily be deferred. A defined first project is easier to assess.
For example, a foundation could authorize a review of one part of its portfolio, with a fixed budget and a discussion scheduled for its next investment committee meeting.
The review should answer a few practical questions:
- What do we own, and how much of the portfolio can we assess reliably?
- Where are the most significant exposures or potential conflicts with our objectives?
- What information is missing?
- What options do our managers propose?
- Which decisions, if any, should come next?
Data limitations should be visible. An apparently precise score is less useful than a clear explanation of what was measured, what was estimated, and what remains unknown.
Turn findings into an ongoing process
Measurement becomes useful when someone takes responsibility for acting on it.
After the initial review, the family or foundation should decide what belongs in its investment policy, what managers are expected to report, and when progress will be reviewed. Possible responses may include changing holdings, engaging with companies through managers, or considering investments that support the transition. Each approach needs a clear purpose and a way to assess whether it is delivering what was intended.
Financial requirements remain part of that discussion. Climate objectives need to be considered alongside spending needs, liquidity, diversification, fees, and the risks of the proposed investments.
In our role supporting families with investment policy, manager evaluation, and reporting, the practical challenge is helping people make these decisions clearly and follow through. The family and the foundation’s governing body retain responsibility for their respective choices.
A useful starting question for the next meeting is simple: What would we need to know about our current investments to decide whether they reflect our priorities?
Agree on the information needed, assign someone to obtain it, and set a date to discuss the findings. That is a concrete first step toward putting the family’s intentions into practice.
