Pension schemes and asset owners have set out joint demands on how they expect the banking sector to help ensure a just transition.
This investor collaboration involves Royal London Asset Management, Friends Provident Foundation and Border to Coast Pensions Partnership, and is part of ongoing engagement with the UK four largest banks Lloyds, Barclays, NatWest, and HSBC.
The engagement goal is for the banks to introduce either a standalone just transition plan or explicit incorporation of just transition into existing climate plans.
To date, two banks have committed to take the requested action, a third has included just transition ambitions in its net zero plan, and the fourth has stated support for just transition principles.
The expectations will be used in more granular engagement with the banks during 2024, covering what the investors want to see in the emerging plans. Just transition is the integration of the social dimension into decarbonisation strategies by mitigating social risks, seeking social opportunities, and a focus on place-based impacts.
The engagement programme is being supported by the LSE Grantham Institute’s new Just Transition Finance Lab.
Royal London Asset Management head of climate transition and ESG engagement Carlota Garcia-Manas says: “Just transition as a requirement of the 2015 Paris agreement has become a key objective of various governments and investor climate initiatives and is emerging as a benchmark for net zero transition plans. Our investor expectations are aligned with these initiatives and will assist leading banks to establish best practice.”
Friends Provident Foundation investment engagement manager Charlie Crossley says: “Banks are at the heart of the economy and have a critical opportunity to contribute to a just transition, both via capital allocation and support for customers to transition. By integrating just transition, we hope banks can help reduce the risk of stranded communities, workers, and customers, and support place-based transitions.”
