The world needs capital at scale to achieve the United Nations’ Sustainable Development Goals (SDGs) and a transition to a world of Net Zero carbon that is inclusive and socially beneficial – in other words, a Just Transition. The need for capital is particularly acute in low-income communities and developing countries, for whom existing funding gaps were further exacerbated by the Covid-19 pandemic.
All actors in financial markets need to work together to direct more of the $154 trillion that are professionally managed towards tackling the world’s most urgent environmental and social challenges.
Our goal is to mobilise institutional investors and other market actors to unlock the capital needed to finance a Just Transition, in the UK and globally.
What we are doing to achieve it
We have launched the Just Transition Finance Challenge, a flagship initiative to mobilise more public and private capital into investments that support a Just Transition to Net Zero globally, with the support of the City of London Corporation. The Challenge 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. With support from Deloitte and Challenge participants, we are currently developing a set of criteria to underpin a new Just Transition label for investment products.
The Challenge builds upon the findings and recommendations of the G7 Impact Taskforce. The Taskforce was an industry-led initiative backed by the UK’s 2021 presidency of the G7, which we co-led with the Global Steering Group for impact investment (GSG). As part of the Taskforce, we delivered a report identifying policies and instruments to mobilise private capital at the scale needed to finance a global Just Transition.
Based on engagement with 170 finance, policy and thought leaders representing 110 institutions in 38 countries, the Taskforce’s report outlined concrete tools for investors to accelerate a transition to Net Zero that is inclusive and socially beneficial, particularly in low-income communities and those in the Global South.
To give all actors a clear and shared understanding as to what constitutes a Just Transition, the Impact Taskforce identified three critical Elements of a Just Transition, applicable across all geographies, sectors, policies and investments. To be aligned with a Just Transition, actions should:
- Advance climate and environmental action
- AND improve socio-economic distribution and equity
- AND increase community voice
The Taskforce also put forward a Blueprint to support the integration of the Just Transition Elements in the design of finance vehicles across asset classes and a series of case studies of existing financing vehicles that integrate a Just Transition approach while being attractive to institutional investors. We have also developed targeted summaries of the key findings and actions for key actors – including asset owners, asset managers and policy makers.
You can learn more about you can do to mobilise more finance towards a Just Transition here.
Summaries of key findings and actions are available for:
Case studies of Just Transition financing instruments across asset classes
We are currently leading targeted engagement with identified audience groups who have a role to play in mobilising institutional capital towards achieving the SDGs and the Just Transition. If you would like to be involved in this engagement, contact [email protected].