What is the Just Transition Finance Challenge? 

The Just Transition Finance Challenge is a flagship initiative to mobilise more public and private capital into investments that support a Just Transition to Net Zero in the UK and other developed and emerging markets.  

Launched by the Impact Investing Institute, with the support of the City of London Corporation, it brings together leading global financial institutions with over £3.6tn of assets and assets under management, including public and private asset owners, asset managers, development finance institutions and advisors, who are committed to financing a Just Transition. 

Why is the Challenge needed? 

A single focus on reducing CO2 emissions to achieve Net Zero is not sufficient – the transition needs to mitigate the negative social consequences and take advantage of the opportunities for job creation and communities that the transition presents, in order for it to receive the public backing that is required.  

The Just Transition Finance Challenge will help investors to respond to the growing demand for sustainable finance products and the urgent need to address the climate crisis, while offering an opportunity for differentiation and visibility of vehicles that advance a Just Transition. 

What will the Challenge do?

With support from Deloitte and our Founding Participants, 18 public and private asset owners and managers, we are developing a set of criteria to underpin a new Just Transition label for investment products that deliver the three critical elements of a Just Transition:

We are also supporting Founding Participants to include these criteria in the design of financing vehicles and investment mandates, across major asset classes and developed and emerging markets. 

Why join the Challenge? 

The Just Transition Finance Challenge provides an opportunity for differentiation for asset managers, of both public and private capital, and greater visibility of investment products that deliver a fair and inclusive transition to Net Zero for asset owners. All participants benefit from guidance on the inclusion of Just Transition criteria in the design of financing vehicles and investment mandates, including peer-learning with other Challenge participants. 

The Challenge is closed to new participants until the first slate of Just Transition products has been announced later this year. However, we welcome interest – particularly feedback on the proposed criteria for the Just Transition label, which will be published for consultation this summer. 

To receive updates on the Just Transition Finance Challenge, register your interest here.

Our founding participants:

Our knowledge partner:

Criteria developed in association with:

Quotes from our participants

We are really honoured and excited to be one of the Founding Participants of the Just Transition Finance Challenge. We are looking forward to exchanging experiences and ideas with our fellow participants, creating an effective framework that empowers impact investments.

Teresa Farmaki, Co-Founder and Managing Partner, Astarte Capital Partners LLP

The concept of just transition highlights how economic growth can only be considered as such if the beneficiaries are at the heart of investment policy itself. COP26 emphasised the importance of ensuring that investments not only help address climate change, but also ensure that the environmental evolution takes into account positive and negative externalities for humanity. Equality and justice are critical building blocks in defining green investment opportunities. Giving communities a face and a voice is critical to ensuring that climate does not become an excuse to exacerbate social inequalities. This is central to BlueOrchard’s mission in emerging and frontier markets.

Maria Teresa Zappia, Deputy CEO and Chief Impact and Blended Finance Officer, BlueOrchard

As we look to achieve carbon neutrality by 2050, achieving a just transition for the people, sectors and regions impacted will be critical if we are to successfully transition to an environmentally sustainable economy. The Just Transition Finance Challenge is an important initiative to demonstrate how asset managers and owners can help manage the impact of climate change through the allocation of capital and management of investment risk.

Kristina Church, Head of Responsible Investment Strategy, BNY Mellon Investment Management

As a specialist in sustainable and impact investing, Bridges has spent the last 20 years investing in solutions tackling social and environmental challenges; thereby playing an active role in supporting the UK’s transition to a more sustainable and inclusive economy. We welcome the attention that the Just Transition Challenge brings to the need for clear performance standards on what a transition-ready portfolio might look like, and we look forward to bringing what we’ve learned to the conversation.

Michele Giddens, co-CEO, Bridges Fund Management

As we scale up investment for decarbonisation growth in emerging and developing economies, it will be important that we contribute towards a Just Transition for workers and communities. This is why we have placed financing for a just transition as one of the key pillars of our approach towards Paris Alignment. We welcome the Just Transition Finance Challenge, and its work to develop a common set of criteria for Just Transition-aligned financing vehicles. This can help direct DFIs, MDBs and private investors towards those activities that enable the just transition as countries phase out unsustainable sectors such as coal, and towards economic activities that create new jobs and incomes consistent with paths to net zero.

Amal-Lee Amin, Managing Director and Head of Climate Change, British International Investment (formerly CDC)

Unless we expand social equity while pursuing net zero, we will not deliver a sustainable future for all. We are delighted to participate in the launch of the Just Transition Challenge, an effort that will galvanize investor action to integrate social and climate imperatives in capital flows that can build an inclusive and sustainable world for all.

Laurie J Spengler, Founder & CEO, Courageous Capital Advisors

Across the globe, the race is on to decarbonise as rapidly as possible, stemming the disastrous consequences of climate change. But efforts to decarbonise should not leave certain groups of individuals or communities whose livelihoods are dependent on carbon intensive industries behind, either economically or socially. That’s why we welcome the Just Transition Finance Challenge, working collectively and collaboratively on the journey to a fair and just transition to net zero.

Jenn-Hui Tan, Global Head of Stewardship & Sustainable Investing, Fidelity International

FSD Africa Investments is delighted to be a founding member of the Just Transition Finance Challenge. This is ground-breaking collaborative work that will un-lock investment capital for people, planet, and achievement of SDGs.

Anne-Marie Chidzero, Chief Investment Officer, FSD Africa Investments

More and more financial institutions recognise that a Just Transition is essential for successful climate action. This new Challenge will provide a great incentive for investors to demonstrate their commitment through innovative mechanisms that combine positive environmental and social impact.

Nick Robins, Professor in Practice – Sustainable Finance, Grantham Research Institute, London School of Economics

Building a more sustainable, more productive, and fairer economy is vital but challenging. To meet this challenge, we must invest in new physical infrastructure at a greater pace and scale, but we can only do that if we take care of people as we move towards this new sustainable world. Our BSIF strategies are delivering meaningful impact whilst creating exciting new careers and opportunities in pioneering industries like vertical farming and digital infrastructure. Our team and our work are completely aligned with the Institute’s belief that capital can and should deliver for people and planet.

Peter Bachmann​, Managing Director, Sustainable Infrastructure, Gresham House

Climate change will not wait for 2050. It is a current issue for fragile communities, assuming that the poorer you are, the sooner you will be affected.

Mathieu Cornieti, CEO, Impact Partners

The world’s most vulnerable are being harmed by a problem they did not create. We must now do the hard work of ensuring the path to net zero is a just transition – one which achieves bold environmental goals while balancing equitable social and economic outcomes. We are delighted to be a Founding Participant in the Just Transition Finance Challenge.

Clara Barby, Senior Partner, Just Climate

The Just Transition presents a tremendous opportunity for private investors to mobilise trillions of dollars and secure strong returns along with our collective future. Half of humanity is rising from low-income into the middle class, mostly in Africa and Asia; if those billions of people adopt carbon-intensive technologies, all hope of achieving Net Zero evaporates. By contrast, if we build businesses that provide low-carbon goods and services to those people, the future of humanity will be a bright one. Immense talent and growth will be unshackled, we will rise to the climate challenge that defines our era, and we will achieve the goals so eloquently articulated by the G7 Impact Taskforce. That is why LeapFrog is so proud to be a founding participant of Impact Investing Institute’s Just Transition Finance Challenge.

Andy Kuper, Founder and CEO, LeapFrog Investments

The Just Transition Finance Challenge is an important project and we’re looking forward to getting involved, helping the Impact Investing Institute produce a workable framework which shows investors are taking meaningful steps towards a Just Transition.

Investors should want to demonstrate that they’re financing a Just Transition, reassuring members and customers that the social dimension is an important part of aligning portfolios with net zero. We encourage more asset owners and managers to consider adopting the framework, not just for new products but existing funds too.

Diandra Soobiah, Head of Responsible Investment, Nest

There is a growing realization that asset managers and asset owners have a role to play in nudging their investee companies to consider and mitigate the social impact of transition on workers and communities.  We are excited to be part of this Challenge. We have to start developing the criteria that assesses funds’ performance on Just Transition.

Nazmeera Moola, Chief Sustainability Officer, Ninety One

Supporting and steering the climate transition is integral to Railpen. Understanding and managing the social impact of the transition across companies and their supply chains is key to securing our members’ future. As a founding participant of this initiative, we are thrilled to be part of the knowledge-building and criteria development process.

Michael Marshall, Head of Sustainable Ownership, Railpen

Industry initiatives such as the Just Transition Finance Challenge are crucial. No one should be left behind as we reshape our lives around a low-carbon future. Asset owners and managers involved in the UK pensions industry – with control of some £3 trillion worth of assets – have an important role to play in coming together to allocate capital, engage and collaborate with companies and governments to ensure the transition happens in a way that’s fair and just for everyone.

Maria Nazarova-Doyle, Head of Pension Investments and Responsible Investments, Scottish Widows

Rapid and sustained decarbonisation toward net zero emissions is a critical global goal and we are committed to using our voice and influence to encourage companies to commit to that transition.  However, we also recognise that how companies make that transition is as important as the emissions reductions they achieve.  Meeting climate goals will be unavoidably disruptive and its vital that companies support their employees, communities and other stakeholders in that transition.  Indeed, if we fail to ensure that transition is just and equitable, we put those critical climate goals at risk.

Andrew Howard, Global Head of Sustainable Investment, Schroders 

For more information about our work on Just Transition Finance, visit our dedicated project page.

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Case studies

Energy 4 is Actis’ fourth energy-focused private equity fund investing in electricity generation (buy and build) and distribution businesses (buy and improve) in select countries across Latin America, Africa and Asia. The fund invests across renewables (wind, solar and hydro) and gas technologies.

Ninety One Africa Credit Opportunities Fund 2 (ACO 2) is a senior private credit fund investing in market dominant companies in African financial inclusion, infrastructure and telecoms sectors.

The fund targets the development of the African Debt Capital Markets (DCM) by creating an alternative asset class, crowding in African pension funds.

BlueOrchard’s Schroder International Selection Fund Emerging Markets Climate Bond Fund (CBF) launched in Q2 2021 with seed capital of $75 million. The UCITS fund purchases mainly green bonds, as well as sustainability bonds, sustainability-linked bonds and general bonds aligned to climate action.

Publications

At the Impact Investing Institute, we aim to transform capital markets to make them fairer and work better for people and the planet. In this, our second impact report, we reflect on the achievements we have made so far and look ahead, outlining our priorities for the future.

In May 2022, BEIS, DEFRA and HMT published a call for evidence ahead of the UK government’s update to its Green Finance Strategy, expected later…

Reducing and absorbing carbon emissions at the speed and scale needed to safeguard our planet requires vast amounts of capital. At the same time a global consensus is emerging that to be sustained and successful, this transition needs to be socially inclusive. Capital will need to be invested in ways that support a Just Transition towards a Net Zero world that is fair and beneficial for all – including the delivery of the United Nations’ Sustainable Development Goals (SDGs).

News & Views

Fifteen years ago, An Inconvenient Truth sent a wake-up call to the world. The documentary featured Al Gore, former US vice-president, and shone a light on the climate crisis facing the planet. It had a huge effect on public awareness of global warming and helped spur the surge in sustainable investing, and what might be called the “ESG industry” as it exists today.

Today the City of London Corporation will host the Finance for Impact Summit alongside its partners the Impact Investing Institute (III) and KPMG, at which financial services firms with more than £3.6 trillion of assets and assets under management will announce their participation in a Just Transition Finance Challenge. Also launched during the event will be a new industry-led set of recommendations for scaling finance that delivers positive and measurable impact across the financial services sector.

We warmly welcome HM Treasury’s launch of the UK Transition Plan Taskforce and look forward to working as part of the Taskforce’s Delivery Group to develop the gold standard for UK companies’ climate transition plans. 

Events

The Finance for Impact Summit on Monday, 18 July 2022 will bring together leaders of finance, business, governments and other institutions from around the world to discuss how we can better harness finance for the good of people and the planet. This one-day event will be held in person at Mansion House in London, and streamed live to a global audience.

Research by MOBILIST and Intellidex has highlighted a growing tension between ESG investment strategies and flows to emerging and frontier markets. While…

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