Investment Institute
Social

Climate change: How investors can help deliver a Just Transition

  • 16 December 2021 (7 min read)

Executive summary

  • Climate change is well understood as a systemic risk, but there is less understanding of how the transition to a low-carbon economy might affect society
  • A Just Transition would seek to leave no one behind and ensure the consequences of associated changes are fairly distributed. Moving to low-carbon energy, buildings, transportation and industrial production will bring dramatic adjustments and challenges to countries and industries – and therefore to workers and their communities
  • A failure to anticipate the social implications of those challenges could stall climate progress and contribute to political instability through increasing inequality. This risks disrupting the fragile equilibrium between developing and developed economies
  • In this paper we consider how to encourage companies to incorporate the Just Transition into business strategies, and explore how, as an asset manager, we might start to integrate this nascent concept into our investment decision making
  • This will require different approaches for different sectors – but it will certainly entail a consideration of how business models are evolving, how human capital is managed and how companies develop their role as employer and stakeholder. Issues of accessibility and affordability must also be integrated in our assessment.
  • The Just Transition has broad implications for the asset management industry. A world in which these issues are not addressed is a world of sustained political instability, in which it is difficult to be invested due to a risk/return imbalance. This deserves a separate and specific view, from a top-down perspective including monetary and budgetary policies
Read the full article
Download report (765.57 KB)
ACT Range

Climate-aware investing

Our ACT range is designed to enable our clients to take action on global issues such as climate change through their investments.

find out more

Have our latest insights delivered straight to your inbox

SUBSCRIBE NOW
Subscribe to updates.

Related Articles

    Disclaimer

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales No: 01431068. Registered Office: 22 Bishopsgate London EC2N 4BQ

    In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

    Back to top