The role of labour trustees in driving a just transition

Investors are recognizing that they must participate actively in the transition to a low-carbon economy. This is apparent in the growing inventory of investor responses to climate change risks and opportunities.

Until now, a consideration of the social dimension of this transition has been missing from many of these responses. The trade union movement is fighting hard to chart a roadmap for investors that addresses the systemic risks of climate change for workers and communities, promotes inclusive growth and contributes to sustainable development.

This year was marked by a noticeable shift, with a growing number of investors recognizing that their responses to climate change must incorporate social considerations. Securing the trust of workers and communities is increasingly understood as integral to navigating the profound and systemic changes ahead.

A first edition of a new investor guide has been released by the Investing in a Just Transition initiative, a project led by LSE’s Grantham Research Institute and Harvard’s Initiative for Responsible Investment, working in partnership with the Principles for Responsible Investment (PRI) and the International Trade Union Confederation (ITUC). This work outlines why and how investors can connect environmental and social priorities on the issue of climate. It was launched at the Committee on Workers’ Capital Conference and the UN PRI in Person in San Francisco in September, and as a side event of the Global Climate Action Summit (GCAS).

Pension funds, as asset owners, sit at the top of the investment chain and play a key role in the just transition. The just transition framework allows pension funds to connect their climate risk strategies to the rampant social change that lies ahead for workers and communities across the globe. As outlined in the Investing in a Just Transition Initiative’s recent blog, a growing number of pension funds are recognizing that they have a powerful role to play in ensuring the transition ahead is inclusive.

Just transition is aligned with the fiduciary duty of labour trustees to consider long-term investment value drivers that serve the interests of beneficiaries. Investors can advance the just transition in various ways, including through investment strategies, shareholder engagements with portfolio holdings, capital allocation decisions and policy advocacy.

Ahead of the December 2018 COP 24 Summit, trustees and pension funds are invited to signal their commitment to Support a Just Transition on Climate Change by singing onto an investor statement coordinated by the UN PRI. Already, several pension funds are among the first 20 signatories, with assets over $3.5 trillion.

Workers and communities must be at the heart of the transition to a low-carbon economy. It follows that the stewards of workers’ capital must be at the heart of investor initiatives in support of a just transition. We invite worker and union-nominated trustees to bring this statement to their fund boards and commit their funds to driving the just transition agenda.

To sign the statement, please click here.

Are you a labour trustee interested in connecting with others who are striving to link social issues with climate action? There is a growing network and resources to support you. Please get in touch for more information.

Click here to view a PDF of the Investor Statement.