Border to Coast launches new engagement programme on just transition

5 July 2023

• Active stewardship: leveraging pooling to support transition to Net Zero
• ESG (Environmental, Social and Governance) integration: driving industry best practice by improving the quality of support for responsible investment
• Adding value: piloting engagement with an emerging market energy utility

Border to Coast Pensions Partnership, the UK’s largest LGPS pool, has launched a new programme of engagement on just transition.

Just transition is the integration of social risks and opportunities into decarbonisation strategies. It enables investors to address systemic threats to long-term stability and value creation and supports the delivery of a rapid and resilient transition to Net Zero.

Border to Coast is responsible for c.£50bn of assets on behalf of its 11 local government pension schemes (LGPS) funds. Just transition is already an established and key consideration for Border to Coast in its responsible investment, engagement, and voting policies.

Border to Coast’s new just transition engagement programme includes three strands*:

• Piloting engagement with an emerging market energy utility
• Joining other institutional investors in the Financing a Just Transition Alliance (FJTA), co-ordinated by the London School of Economics Grantham Institute
• Joining RLAM (Royal London Asset Management) to engage UK banks

Colin Baines, Stewardship Manager at Border to Coast, said: “For institutional investors, contributing to a just transition offers a way of reducing systemic risks, realising fiduciary duties, identifying material value drivers, and generating positive social impacts.

“Our new value-adding engagement will offer support to companies, including high level sector expectations, best practice case studies, and expert feedback on policy drafts. By integrating just transition, we hope to avoid stranded communities, workers, and customers, as well as stranded assets.”

The new engagement programme was announced at a plenary session on just transition at the RI (Responsible Investment) Europe conference.

*Just transition engagement programme: three strands

Piloting engagement with an emerging market energy utility

As a founding member of the Emerging Markets Just Transition Investor Initiative, Border to Coast has signed up to the guiding principle to ‘Advocate for a fair transition in Emerging Markets’, including support for real world emissions reductions and economic development and equity.

This engagement will build upon the successful engagement strategy that secured the world’s first dedicated Just Transition strategies from energy utilities operating in the UK (SSE, Centrica, Eon, EDF, and Scottish Power). These were secured by Friends Provident Foundation and RLAM with support from LSE Grantham Institute.

Joining the Financing a Just Transition Alliance (FJTA)

The Financing a Just Transition Alliance (FJTA) has 50 institutional investor members and is co-ordinated by the London School of Economics Grantham Institute. Its objective is to translate the growing commitment to a Just Transition across the financial sector into real world impact. Members of FJTA commit to integrate Just Transition into climate strategies.

Border to Coast will benefit from access to Grantham Institute research and expertise and a peer network advancing practical approaches to Just Transition integration. We will utilise outputs in the company engagements.

Joining RLAM to engage UK banks

Border to Coast’s priority engagement theme of ‘low carbon transition’ prioritises engagement with banks as well as high emitters.

Banks have a key role to play in the low carbon transition, both via capital allocation and support for customers to transition. They are better placed than most investors to consider place-based investment at the local and regional level and have potential social risks that require management.

An area of engagement focus will be material decarbonisation challenges for UK banks and how these can be approached considering social risks and opportunities, such as decarbonising housing and mortgage lending books.

“Our new value-adding engagement will offer support to companies, including high level sector expectations, best practice case studies, and expert feedback on policy drafts. By integrating just transition, we hope to avoid stranded communities, workers, and customers, as well as stranded assets.”

Colin Baines, Stewardship Manager at Border to Coast

Source: Border to Coast