image-for-printing

Investors set just transition plan for banks

by

31 May 2024

Green investor strategy aims to reshape how banks address the just transition. Andrew Holt reports.

ESG boardrooms

Green investor strategy aims to reshape how banks address the just transition. Andrew Holt reports.

ESG boardrooms

An asset owner, an asset manager and a charity are pushing banks into setting firm plans on reaching a green economy.

A new initiative from Border to Coast Pensions Partnership, Royal London Asset Management, and Friends Provident Foundation, has set expectations for the banking sector to help ensure a just transition.

The investor collaboration has launched the plan as part of Investor expectations on just transition for the banking sector, part of an ongoing engagement with four banks: Lloyds, Barclays, NatWest, and HSBC.

The engagement goal is for the banks to introduce either a standalone just transition plan or explicit incorporation of just transition into existing climate plans.

To date, two banks have committed to take the requested action, a third has included just transition ambitions in its net-zero plan, and the fourth has stated support for just transition principles.

The expectations will be used in more granular engagement with the banks during 2024, covering what the investors want to see in the emerging plans.

These include the developing and implementation of a responsible decarbonisation strategy for existing products and portfolios.

As well as integrate the just transition into regional corporate banking decarbonisation strategies, and identify geographic areas with high exposure to transition risk.

The plan also wants to see banks develop partnerships with public banks and community development finance institutions to provide blended finance solutions to support place-based just transition.

In addition, it also wants banks to recognise global disparities between developed and emerging markets in client transition plan expectations and assessments, with differentiation in timeframes where appropriate 

The programme is being supported by the LSE Grantham Institute’s new Just Transition Finance Lab.

Colin Baines, stewardship manager at Border to Coast, said: “The integration of just transition enables investors and businesses to address systemic threats to long-term stability and value creation and supports the delivery of a rapid and resilient transition to net zero.”

And he added: “We are pleased with the positive response our engagement has received to date and the commitments leading banks have made. As ambition is turned into action, we will use our investor expectations to engage and assess their emerging plans.”

Charlie Crossley, investment engagement manager at Friends Provident Foundation, added: “Banks are at the heart of the economy and have a critical opportunity to contribute to a just transition, both via capital allocation and support for customers to transition.

“By integrating just transition, we hope banks can help reduce the risk of stranded communities, workers, and customers, and support place-based transitions.”

Comments

More Articles

Subscribe

Subscribe to Our Newsletter and Magazine

Sign up to the portfolio institutional newsletter to receive a weekly update with our latest features, interviews, ESG content, opinion, roundtables and event invites. Institutional investors also qualify for a free-of-charge magazine subscription.

×