Investors should not solely rely on Government for Just Transition

Commenting on today’s APPG for Local Authority Pension Funds report(1) on “Responsible investment in a Just Transition 2021”, Simonetta Spaveiri, Engagement Analyst at Royal London Asset Management (RLAM) said:

“Investor actions should not be solely reliant on the Government taking a lead.

“Evidence to the inquiry has highlighted how funds large and small can address risks and make the most of opportunities, whether be it directly or through advisers, managers and local authority pension fund (LGPS) pools.

“We have been asking companies for the last three 3 years to consider ‘Just Transition’ and its social implications, not only for consumers but also for employees, supply chains and communities. We are already starting to see how some of these factors are being addressed, through our successful engagement.

“The report asks the UK government establishes a Just Transition commission and provides solid examples of similar bodies established in the EU and Scotland, acknowledging the work already done, for example through the Green Jobs taskforce and the ‘levelling up agenda’.

“We agree with the view that economic and monetary policy, which shapes investment decisions of companies and investors towards Net Zero, should also consider Just Transition implications. The social risk of climate policy could be a significant barrier to achieving Net Zero and therefore should be addressed.”

–ENDS–

(1) Notes to Editors

RLAM was asked to give evidence to the All Party Parliamentary Group for Local Pension Funds earlier this year, as part of our successful shareholder engagement with energy utility companies to adopt formal Just Transition Strategies in partnership with Friends Provident Foundation. RLAM and Friends Provident engaged with the top seven utilities companies (Centrica, E.ON, EDF, National Grid, RWE, SSE and Scottish Power) and asked for formal commitments to be put in place by November 2021. Prompted by RLAM’s and Friends Provident’s engagement, SSE were the first to announce a formal Just Transition strategy in October 2020. RLAM and Friends Provident requested the other leading companies in the sector to also develop strategies that address their expectations ahead of the UNFCCC COP26 meeting in November 2021.

The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.