How do we get investors to put funds into a just and equitable energy transition? Countries where thousands of jobs depend on fossil fuel extraction or high-emissions industries like clothing manufacture face extra challenges in the ecological transition. The UK’s Impact Investing Institute, an independent non-profit working to transform capital markets for a fairer, greener, more resilient future, has put the Just Transition at the top of its list of priorities. Its programme manager, Hughie Stanley, explains why.
‘We believe any transition to an economy less reliant on fossil fuels and the net zero future needs to bring with it people, their jobs and communities,’ Stanley explains. He believes that it’s essential to have the consent of people impacted by the transition for both moral and pragmatic reasons. ‘We fundamentally don’t believe you’ll achieve a Just Transition if you face backlash at every turn because you close down industries and you don’t offer the people that relied on that work alternatives, whether it’s reskilling, financial support or new employment.’
One of the Institute’s landmark projects is focused on the apparel industry in India. ‘The apparel sector accounts for around 10% of global GHG emissions,’ explains Stanley. ‘We’re working with our sister organisation, the India Impact Investors Council, to come up with both a mapping of where the industry is at in making this transition, where there might be financing gaps, where is there already innovative investment and what the future could be in terms of delivering real social and environmental impact in line with the Just Transition.’
The Impact Investing Institute has launched the Just Transition Finance Challenge for the asset management industry and other global financial institutions. This community of practice brings together more than 27 global financial institutions that are committed to financing a just transition in the UK and emerging markets. ‘They represent between them around $6 trillion of assets under management. So that’s a huge potential capital store to deploy investment strategies towards the Just Transition,’ Stanley explains. ‘There’s also a fantastic organization called GAWA Capital whose fund stands at around 300 million that is investing in solutions across particularly Latin America and Asia. We also have the Just Energy Transition Partnerships, which came out of COP26, which deploy at-scale capital into the energy transition. They’re working across South Africa, Indonesia, Vietnam and Senegal. About $10 billion has been pledged so far,’ says Stanley.
He believes investment in the Just Transition is key to the planet’s future. ‘I think it gives us practical solutions for the single issue of our time, right now and of this century. It is trying to deliver for the world against some of the biggest problems we face.’
