Launching our Just Transition Criteria – a new practical investor tool

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This post was authored by the Impact Investing Institute.

New tool for investors could unlock more than £1 trillion to finance a transition to a net zero world where nobody is left behind

Backed by 21 global financial institutions, the Impact Investing Institute launches ‘first of its kind’ practical tool for fund managers who want to invest in a transition to a net zero world that prioritises the needs of the planet and the people living on it

London, Wednesday 24 May – The Impact Investing Institute (“the Institute”) is launching its Just Transition Criteria (“the Criteria”), which will make it easier for fund managers to design financial products that help advance a just transition – a fair and inclusive transition that will come with great opportunities such as new green jobs and reskilling.

Globally, an estimated 2.2 trillion GBP are invested in sustainable funds with a focus on climate (Morningstar). Within the next five years, the Institute would like to see over half of those funds invested for a transition to net zero that combines climate action with creating and securing opportunities for people and communities to thrive in a transformed global economy.

With that goal in mind, the Institute’s Criteria were co-created and tested in collaboration and with the support of 21 asset owners and asset managers with over £ 4 trillion of assets, or assets under management – including Fidelity International, Schroders, Just Climate, Nest, and the Environment Agency Pension Fund. As part of a public consultation, the Institute also worked with a wide range of NGOs and social investors to reflect their views on how the Criteria can be most impactful.

Research shows that 81% of adults would like their investments to do some good as well as provide a financial return (UK Financial Conduct Authority). That demand is translating into investor action and the Criteria will help accelerate the flow of capital needed to invest for a transition to a low carbon world where people and communities prosper.

The Criteria have been designed to be used with existing standards and frameworks for sustainable and impact finance such as the UK’s Financial Conduct Authority’s proposed Sustainability Disclosure Requirements and investment labels as well as the EU’s Sustainable Finance Disclosure Regulation. The Criteria are applicable across geographies, investment strategies and asset classes.

Kieron Boyle, CEO at the Impact Investing Institute, says:

“The world is facing two great challenges – the transition to a low carbon economy and tackling growing inequality. Both must be addressed together. Capital markets have a major role to play in being part of a solution, but many investors are not yet clear enough on what steps they need to take to tackle these issues. The Institute’s Just Transition Criteria are a practical tool that has the power to unlock trillions of pounds of investment with impact.”

Katharina Lindmeier, Senior Responsible Investment Manager at Nest, says:

“We believe many investors want to take meaningful steps towards a Just Transition but are unsure how. The Just Transition Criteria produced by the Impact Investing Institute can be adopted by asset owners and managers into their existing strategies, providing a practical framework that helps them identify investments that deliver for people, the planet, and communities.”

Emilie Goodall, Head of Stewardship, Europe at Fidelity International, says:

“A ‘just transition’ means a transition that doesn’t leave anyone behind in the move towards a more sustainable economy – but how to measure and implement this transition is a complex task. We are pleased to have collaborated on the Just Transition Criteria, providing a practical tool for investors who want to consider a just transition in funds in a consistent and substantive way.”

Notes to Editors

The Just Transition Criteria were created as part of the Institute’s Just Transition Finance Challenge, which brings together global financial institutions with over £4 trillion of assets, or assets under management, that are committed to financing a just transition in the UK and emerging markets. The Challenge was born out of the Impact Taskforce, mandated by the UK Government under its presidency of the G7 in 2021.

About the Impact Investing Institute

The Impact Investing Institute is an independent, non-profit organisation with the goal of making capital markets fairer and work better for people and the planet. We want to foster thriving capital markets where impact investing plays an essential role within the financial system. We work to help investors and their advisors deploy capital to address social and environmental challenges, alongside generating a financial return. We also advocate for regulatory and policy environments that support that goal.

For further information and interview requests contact:

Stephanie Dawoud, Impact Investing Institute T: 077 49 74 17 93