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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. It can be accessed, along with a list of signatories, at: https://bit.ly/2RAhJxG. It remains open for additional signatories.

 

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