LGPS pool ramps up just transition engagement
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Border to Coast Pensions Partnership, one of eight Local Government Pension Scheme pools, has launched a programme of engagement on the just transition.
The £50bn asset pool providing investment services to 11 local authority pension funds said the just transition - which takes into account the social effects of greening the economy - is already a consideration in its responsible investments, engagement and voting but is planning to engage more actively.
Contributing to a just transition helps to reduce systemic risks, realise fiduciary duties, identify material value drivers and generate positive social impacts, believes Colin Baines, stewardship manager at Border to Coast.
“Our new value-adding engagement will offer support to companies, including high level sector expectations, best practice case studies, and expert feedback on policy drafts. By integrating just transition, we hope to avoid stranded communities, workers, and customers, as well as stranded assets,” Baines said.
The new engagement programme will include three strands, one being to pilot engagement with an emerging market energy utility.
The asset pool is a founding member of the Emerging Markets Just Transition Investor Initiative and has signed up to the guiding principle to ‘Advocate for a fair transition in Emerging Markets’, including support for real world emissions reductions and economic development and equity.
Border to Coast is also planning to join other institutional investors in the Financing a Just Transition Alliance, which is co-ordinated by the London School of Economics Grantham Institute.
By becoming a member of the FJTA, the asset pool will join 50 institutional investors who aim to translate the growing commitment to a just transition in the financial sector to real world impact. Members of the alliance commit to integrating just transition factors into their climate strategies.
The asset pool is also prioritising engagement with banks and high emitters, believing that banks are better placed than most investors to consider place-based investment at the local and regional level. BtC also says they have potential social risks that require management.
“An area of engagement focus will be material decarbonisation challenges for UK banks and how these can be approached considering social risks and opportunities, such as decarbonising housing and mortgage lending books,” the pool said.
Is the just transition coming into greater focus among institutional investors?
