Climate change: How investors can help deliver a Just Transition
- 16 December 2021 (7 min read)
Executive summary
- Climate change is well understood as a systemic risk, but there is less understanding of how the transition to a low-carbon economy might affect society
- A Just Transition would seek to leave no one behind and ensure the consequences of associated changes are fairly distributed. Moving to low-carbon energy, buildings, transportation and industrial production will bring dramatic adjustments and challenges to countries and industries – and therefore to workers and their communities
- A failure to anticipate the social implications of those challenges could stall climate progress and contribute to political instability through increasing inequality. This risks disrupting the fragile equilibrium between developing and developed economies
- In this paper we consider how to encourage companies to incorporate the Just Transition into business strategies, and explore how, as an asset manager, we might start to integrate this nascent concept into our investment decision making
- This will require different approaches for different sectors – but it will certainly entail a consideration of how business models are evolving, how human capital is managed and how companies develop their role as employer and stakeholder. Issues of accessibility and affordability must also be integrated in our assessment.
- The Just Transition has broad implications for the asset management industry. A world in which these issues are not addressed is a world of sustained political instability, in which it is difficult to be invested due to a risk/return imbalance. This deserves a separate and specific view, from a top-down perspective including monetary and budgetary policies
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Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
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Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
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