French asset managers and owners representing €3.6 trillion have today launched the Investors for a Just Transition initiative to support the shift to a low-carbon world.
Finance for Tomorrow has gathered together what it says is the ‘first global investor engagement coalition on the just transition’. The new collaborative venture has attracted heavyweights of the French financial ecosystem, including Amundi, Aviva France, AXA & AXA Investment Managers.
“The decision to create the first investor coalition for a just transition stems from several observations,” said Jean-Jacques Barbéris, Vice-President of Finance for Tomorrow. “First of all, the just transition is a necessary condition for implementing the Paris Agreement. Our climate objectives can and will only be reached if we ensure that every one of society’s stakeholders is included in the process. Then, the financial sector has a role to play here by fully integrating the social dimension in their financing policies.”
The founding members are committed to working with companies, universities and research institutions to help them prioritise strategies that are aligned with advancing the goals of a just transition. To do that the coalition will set up the Just Transition Hub: an interactive tool that will allow investors to monitor companies performance in ‘the social aspect of their transition’. And ahead of its international launch at COP26 in Scotland, the coalition is urging investors and companies to join the initiative.
Mobilising money to pave the way for low-carbon economies is critical at a time when the world is in the grip of a climate crisis and global pandemic. But investment in economies must also be matched by investment in people.
The Financing for Sustainable Development Report 2021 by the UN revealed the global economy has experienced its worst recession in 90 years. And it is the world’s poorest countries that are suffering disproportionately, as the report warns the situation could ‘push the achievement of the Sustainable Development Goals’ back more than a decade.
“The growing gap between rich and poor countries is troublingly retrogressive, and requires an immediate course correction,” said UN Under Secretary-General Liu Zhenmin, Under-Secretary-General of the Department of Economic and Social Affairs, which produced the report. “Countries must be helped to not only stay afloat financially, but to invest in their own development. To rebuild better, both the public and private sectors must invest in human capital, social protection, and sustainable infrastructure and technology.”
The report says development investments that are not ‘risk informed’ will not be sustainable but that the current crisis offers an ‘opportunity to reset and ‘future-proof’ global systems’. And to do this it recommends actions including the establishment of a global reporting framework that ensures companies are ‘accountable for their social and environmental impact’; a new global taxation system for the digital economy and fiscal policies that ‘reflect the reality of a changing global economy’.
“To change trajectory, we need to change the rules of the game,” added UN Deputy Secretary-General, Amina Mohammed. “Relying on the pre-crisis rules will lead to the same pitfalls that have been revealed over the past year.”