New report shows how investors can take account of social impacts when financing action on climate change

UK investors have a “strategic opportunity” to ensure that the action on climate change that they are financing has a positive social impact across the country, according to a new report published today (4 February 2019) by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science and the Sustainability Research Institute at the University of Leeds.

The report by Nick Robins, Andy Gouldson, William Irwin and Andrew Sudmant notes that the Paris Agreement on climate change states that its Parties take into account “the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities”.

The report examines how investors in the UK can promote a ‘just transition’ through their strategies and decisions about financing low-carbon energy and other action to tackle climate change. It has been produced as part of a project carried out in partnership with the Principles for Responsible Investment (PRI) and the Trades Union Congress (TUC), and funded by Friends Provident.

The report states: “Delivering a just transition will be key to the UK’s success in building a zero-carbon and resilient economy. In essence, the just transition means making sure that action on climate change supports an inclusive economy, with a particular focus on workers and communities across the country.”

It adds: “Until recently, investors have given little attention to the social consequences of climate change. Most investors have managed climate change primarily as an environmental factor. Importantly, while climate change is certainly an environmental issue, the transition is a process of structural economic, social and technological change.”

Fiona Reynolds, chief executive officer of the PRI, said: “The climate change summit in Poland last December, COP24, raised the importance of looking at the social as well as the physical risks around climate change. As UK investors make the transition from high-carbon to low-carbon economies, this report will provide advice and guidance on how to deliver a just transition for workers and communities.”

More than 20 UK-based institutions with nearly US$2 trillion in assets under management signed an international investor statement on the just transition ahead of the United Nations climate change summit in Katowice, Poland, in November 2018.

Frances O’Grady, General Secretary of the TUC, said: “Trade unions are dedicated to meeting our climate change commitments. And the move to reduce our use of carbon has the potential to create many high-quality new jobs for the UK. But the transition has to work for communities. In particular, for workers in the industries that will be most affected, there has to be a clear path to good-quality jobs in the new economy we create.”

The report estimates that the transition to a low-carbon and green economy could affect about 21 per cent of the current UK workforce, equivalent to more than 6 million of today’s jobs. Analysis carried out for the report reveals that about 10 per cent of workers in current UK jobs use skills for which demand could increase as a result of the transition to a low-carbon and green economy. A further 10 per cent of workers could require training in new skills for low-carbon and green jobs.

The report includes a case study on the implications for the Yorkshire and Humber region. It finds that a higher than average number of current jobs in the region require skills for which demand could increase a result of the transition to a low-carbon and green economy.

It states: “Once at the heart of the Industrial Revolution, in recent decades the region has experienced immense change, with the decline of the coal, iron and steel industries gathering pace from the 1980s. In some areas this has brought poverty, lack of opportunity and a sense of communities being left behind. Naturally, there is a strong desire that any future transitions do not leave a similar legacy.”

The report identifies ways in which investors could support a just transition in the region through shareholder engagement, as well as through investments in infrastructure, real estate and bonds that have both environmental and social benefits.

 

For more information about this media release or to obtain an embargoed copy of ‘Investing in a just transition in the UK: How investors can integrate social impact and place-based financing into climate strategies’, please contact Bob Ward on +44 (0) 7811 320346 or r.e.ward@lse.ac.uk

 

NOTES FOR EDITORS

  1. The Grantham Research Institute on Climate Change and the Environment (http://www.lse.ac.uk/grantham) was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment (http://www.granthamfoundation.org/).
  2. The Sustainability Research Institute (https://environment.leeds.ac.uk/sustainability-research-institute) was established at the University of Leeds in 2004 to explore a wide range of issues, including climate change, energy, transport, water, resource use, land use, conservation, cities and communities, business and lifestyles.
  3. Launched in February 2018, the Investing in a Just Transition initiative is working to identify the role investors can play in connecting their actions on climate change with inclusive development pathways. Internationally, the initiative is led by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science (LSE) and the Initiative for Responsible Investment at the Harvard Kennedy School, working in partnership with the Principles for Responsible Investment (PRI) and the International Trade Union Confederation (ITUC).

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