New report shows it is vital for investors to support a just transition for workers: Institutions with US$5 trillion in assets back efforts to link climate action to social inclusion

Investors can play a critical role in making sure that action on climate change also builds a prosperous and inclusive economy – in other words, achieving a just transition. This is the conclusion of a new report released today (7 December 2018) at the COP24 United Nations climate change summit in Katowice, Poland, where the question of how countries can deliver a just transition will be one of the core issues before governments.

The imperative of a just transition for workers and communities was included in the 2015 Paris Agreement on climate change. The latest research concludes that ambitious action on climate change will boost prosperity and create net new jobs across the global economy. But these benefits will not happen automatically.

A growing number of governments, trade unions, businesses and civil society organisations are working through how they can realise this objective. Investors have been stepping up their work to respond to the risks and opportunities of climate change, but until recently had not considered the social implications.

The new report on ‘Climate change and the just transition: a guide for investor action’ has been written by Nick Robins, Vonda Brunsting and David Wood to fill this gap. It has been prepared by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science and the Initiative for Responsible Investment at the Center for Public Leadership at the Harvard Kennedy School.

The report has been produced in partnership with the Principles for Responsible Investment (PRI) and the International Trade Union Confederation (ITUC). It provides a guide for investors on why they should take action and what they can do. The report is accompanied by an investor statement, which has attracted the support of more than 100 institutions with over US$5 trillion in assets under management (AUM).

Fiona Reynolds, Chief Executive Officer at the PRI, said: “As the world begins its much-needed transition from high-carbon to low-carbon economies, investors will have to look beyond physical environmental issues and consider the social aspects: of workers and their communities who will be impacted by the move away from carbon-intensive industries.”

Sharan Burrow, General Secretary of the ITUC, said: “We can’t afford stranded workers and communities if we are serious about both ambitious climate action and sustainable futures. Investing in a climate response that generates quality jobs and secures renewal in vulnerable communities is good economics as well as socially just. The ITUC calls on all pension funds managing workers’ capital to sign on to the investor statement.”

Nick Robins, co-author of the report and Professor in Practice at the Grantham Research Institute, said: “For responsible investors, the just transition means integrating both the environmental and the social dimensions into their climate strategies. We’ve been impressed by how quickly investors have grasped the compelling case for action.”

Vonda Brunsting, co-author of the report and Just Transition Program Manager at Harvard’s Initiative on Responsible Investment, said: “We need workers and communities to be front and centre of the transition to a low-carbon economy. Investors can play an important role and this Guide aims to spur investor action, collaboration and experimentation on ways to achieve this.”

The report sets out the rationale for investor action, encompassing systemic risk, fiduciary duty, material value drivers, investment opportunities and alignment with societal objectives such as the Paris Agreement and the Sustainable Development Goals (SDGs). The Guide lays out a set of options for investor action, including investment strategy, shareholder engagement, capital allocation, policy dialogue and partnership, with a range of practical examples.

A key signal of the importance that investors are now attaching to the just transition is given by the breadth and depth of the more than 100 institutions with over US$5 trillion in assets under management supporting the investor statement. These include:

  • APG, the Netherlands: Claudia Kruse, Managing Director, Global Responsible Investment & Governance said: “A just transition to a low carbon economy will also be a great opportunity to invest in the Sustainable Development Goals. Social aspects are core to both our engagement with companies and our investments in SDGs”.
  • Aviva, the UK: Steve Waygood, Chief Responsible Investment Officer said: “It’s critical that the transition is swift enough to mitigate the growing risks of climate change. We recognise that the more that the social justice questions are considered, the faster the speed of the transition will ultimately be. We need to collectively ensure that no one is left behind.”
  • Fonds de solidarité FTQ, Canada: Mario Tremblay, Vice-président, Public and Corporate Affairs said: “Transitioning to alternate sources of energy offers great potential for economic growth, but it can also create social injustice if it is not adequately planned. To be ‘just’, the transition must enable affected workers, communities and businesses to adapt to the new realities that these big changes will bring about.”
  • Generali, Italy: Lucia Silva, Head of Sustainability & Social Responsibility said: “As a long-term investor, climate change not only means increasing green investments and divesting high-carbon assets. It also means stakeholder engagement in line with Just Transition principles, particularly in countries reliant on coal.”
  • Ircantec, France: Laetitia Tankwe, Advisor to the President of the Board of Trustees, Ircantec said: “It is absolutely necessary that investors address the ecological and economic transition (EET) in all its dimensions. Understanding and mitigating the negative social impacts of the EET is not an excuse to not tackle climate change but is the only way we could get the people on board and ready to face the challenges that are still ahead of us.”
  • New York City, USA: Scott Stringer, New York City Comptroller, said: “We in New York City are taking action on climate change – and that includes spotlighting the need for a Just Transition and a sustainable future. While we position our portfolio for the necessary and inevitable transition to a low carbon economy, we must work to ensure a Just Transition for the workers and communities who will be impacted. This important new guide provides investors with the tools and roadmap we need to continue our work.”
  • Vision Super, Australia: Steve Rowe, Chief Executive Officer said: “As fiduciaries, we believe that it’s critically important that we manage both the environmental and the social dimensions of the transition to a low-carbon economy. We look forward to working with others to make the just transition a core part of our climate strategy.”

The investor statement remains open for institutions to express their commitment to the just transition and can be accessed at: https://www.unpri.org/academic-research/climate-change-and-the-just-transition-a-guide-for-investor-action/3202.article

For more information about this media release or to obtain an embargoed copy of ‘Climate change and the just transition: a guide for investor action’’, please contact Bob Ward r.e.ward@lse.ac.uk, or Nick Robins n.v.robins@lse.ac.uk

NOTES FOR EDITORS

  1. The Investing in a Just Transition initiative is led by the Grantham Research Institute on Climate Change and the Environment and the Initiative for Responsible Investment. It is being delivered in partnership with the Principles for Responsible Investment (PRI) and the International Trade Union Confederation (ITUC).
  2. The report on ‘Climate change and the just transition: a guide for investor action’ is based on international research and dialogue with investors, trade unions, business, civil society, researchers as well as local and national governments from countries including Australia, Brazil, Canada, France, Germany, India, Italy, the Netherlands, South Africa, Sweden, the United Kingdom and the United States. It has 10 examples of where investors are already taking action.
  3. The Grantham Research Institute on Climate Change and the Environment was established in 2008 at the London School of Economics and Political Science. lse.ac.uk/grantham/
  4. The Initiative on Responsible Investment was established in 2004 and is now part of the Hauser Institute for Civil Society at the Harvard Kennedy School. https://iri.hks.harvard.edu/
  5. The PRI is the world’s leading proponent of responsible investment, with over 2,200 signatories from across the world with combined assets under management of $80trillion. https://www.unpri.org/pri/about-the-pri
  6. The ITUC is the global voice of the world’s working people. It represents 207 million workers in 163 countries and territories and has 331 national trade unions. https://www.ituc-csi.org/about-us

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