Professor of Climate Scenarios for Sustainable Development at the Wyss Academy for Nature, Prof. Dr. Édouard Davin was one of the key initiators of the Transformation Fund. What began as an internal reflection on how the Wyss Academy could take responsibility for its own climate footprint later evolved into a collaborative initiative developed in partnership with Fondation Botnar and supported by other Swiss foundations. In this interview, Édouard reflects on the origins of the Fund, explains why it goes beyond carbon compensation, and shares what a climate contribution approach means in practice for climate action, biodiversity, and human well-being. 

Initially, what we wanted to do was take responsibility for our own climate footprint. The first step was to monitor our emissions at the Wyss Academy. We had a master’s student working on that and quantifying our emissions. We noticed that a big part of our emissions was due to travel, in particular flying. The next question was: what do we do to tackle these emissions and take responsibility?

The first approach we used was a compensation approach. We bought carbon offsets, or carbon credits, on the market to compensate the emissions we caused. Then we realized there was something wrong with this approach. Buying carbon credits is relatively cheap, so this can create the impression that an organization can continue emitting and simply compensate later. One can even claim carbon neutrality and stay at a relatively high level of emissions. But if everybody did exactly that, we would not solve the climate crisis. Emissions would remain high, or only be reduced a little, and many compensation projects also have limitations in terms of effectiveness. 

We thought this will not work as a sustainable approach to climate responsibility. We needed something else. We researched the possibilities and found that the contribution approach could be a better alternative. That is how it started: we began shifting at the Wyss Academy from compensation to contribution. 

The compensation approach is an approach many organizations use. You monitor your emissions, reduce them where possible, and then compensate the residual emissions by buying carbon credits. Mathematically, you can say: we emitted 10 tons of CO₂ and bought 10 tons of credits, so we are at net zero, in other words, we are carbon-neutral. But there are important limitations. First, the financial incentive to reduce emissions is often not strong enough, because carbon credits are relatively cheap. Second, there are limitations in the effectiveness of some carbon credit projects. You cannot be fully sure that the emissions you want to compensate are really reduced somewhere else, and the quantification of that potential reduction is always uncertain. 

The contribution approach tries to address these limitations. It puts a strong focus on reducing emissions first. At Wyss Academy, for instance, we set ourselves a target of halving our emissions by 2030. For residual emissions, instead of buying carbon credits, you pay according to the amount of CO₂ you emit, based on an internal carbon price aligned with the social cost of carbon. This is aligned with the idea of a polluter-pays principle, and it sets a higher intrinsic incentive to reduce emissions, because the social cost of carbon is much higher than the price of carbon credits. This money goes into a fund and is invested in projects that contribute to climate mitigation, climate adaptation, and more broadly to sustainable development. One big difference is that you cannot claim carbon neutrality. But you contribute much more to climate finance, because the amount you pay through this mechanism is typically much higher than through carbon compensation. 

Unlike compensation projects, which are often narrowly focused on quantifying how much CO₂ is reduced, the projects financed through a contribution approach can support broader climate and sustainable goals. Mitigation is one part of it: reducing CO₂ remains essential, because that is at the root of combating climate change. But we can also finance climate adaptation, which means making societies and ecosystems more resilient to climate change. So the focus is not only on carbon, but on a systemic approach to tackle climate change considering also synergies with biodiversity and human well-being.

At the same time as we started looking at our own climate strategy and setting up the contribution approach, we were contacted by other organizations. They were also looking into their climate footprint and how to take climate responsibility. They had heard about the climate contribution approach, and we started to discuss whether we could do this together. 

We realized it was a great idea to do this collectively, because we could maximize impact in two ways. First, if several organizations are involved, the initiative becomes more visible and can inspire others. Second, more organizations contribute resources into the same fund, which means we can finance more or bigger projects.

It is true that many organizations are trying to reduce emissions, but the reality is that the speed at which this happens is currently much too slow. Emission reduction has to be an essential pillar, whether you engage in a compensation approach or a contribution approach. Part of the issue is that compensation does not provide a strong incentive to reduce emissions. You can still make a net-zero claim without deep emission reduction, given that compensation credits are not very expensive to buy. 

What we aim to demonstrate with the contribution approach is that organizations can increase the speed of emissions reduction by using a higher carbon price, aligned with the social cost of carbon and following the polluter-pays principle. Of course, as a foundation, we are not among the main polluters, but we can show an example of how this can be done and inspire others. 

There is also a major gap in climate finance. We know roughly what is the amount of investments needed to stay within 1.5–2°C pathway and to support countries in adapting to climate change, and we also know that we are far below what is needed. The contribution approach is one way to channel new finance into climate mitigation and adaptation. 

What we often see in the voluntary carbon market is that finance is channeled through a very narrow tunnel where only carbon counts. Projects are designed to maximize CO₂ reduction or CO₂ uptake, for example in restoration projects. That does not mean these projects are not good, but at the Wyss Academy, we believe these challenges need to be tackled in a more systemic way. We should not only look at carbon, but also at nature more broadly and at human well-being. That is why we try to develop projects that benefit climate, both mitigation and adaptation, while also contributing to broader sustainability goals.

One example is a project in Peru, in one of our regional Hubs, around Amazon nut production. One issue is that drying the nuts requires energy. Currently, communities typically rely on fossil fuel to generate the energy needed for the drying process. The project aims to replace this with a process that uses the shells of the nuts in pyrolysis, generating both biochar and energy. The energy no longer comes from fossil fuel, which reduces emissions. At the same time, the biochar can be used in tree nurseries for agroforestry, helping the soil retain more water. This can increase the survival rate of trees under drier conditions linked to climate change. 

So in one project, we have several benefits combined: reduced emissions, improved resilience of trees, and better livelihood opportunities for farmers and communities. That is the kind of systemic impact we hope to demonstrate, rather than focusing only on CO₂ reduction. 

In the best case, I hope the Transformation Fund can show that climate contribution approach works in practice: that organizations can reduce their own emissions while also contributing to the emergence of new projects that support climate mitigation, climate adaptation, nature, and human well-being.

I also hope it inspires others to move in the same direction. Organizations are not decarbonizing fast enough today, and the contribution approach can create a stronger incentive to reduce emissions while directing more climate finance towards projects that address the causes and impacts of climate change. This is also about fairness: public money alone should not carry the burden. Those responsible for emissions should primarily contribute to addressing their impacts.