LGPS committee members and managers have been asked to elevate the importance of the “S” in ESG (environmental, social and governance) to help protect workers’ rights as the world confronts global warming.
The call came from Nick Robins, a professor in sustainable finance at the London School of Economics’ Grantham Research Institute on Climate change.
Speaking at the annual conference of the Local Authority Pension Fund Forum (LAPFF) in Bournemouth, Robins laid out the work towards a “just transition”, a campaign to protect livelihoods and quality of work for employees, as businesses and investors prioritise “sustainability” agendas to help tackle climate change.
Robins said: “If we are going to accelerate climate action it needs to have a very clear social dimension.
“When we’ve been thinking about climate, as investors, for the last ten or fifteen years, the ’S’ of ESG has often been rather silent.”
A “just transition” forms part of the 2015 Paris agreement on climate change and seeks to ensure “the creation of decent work and quality jobs” in line with nationally defined “development priorities”.
The institute, which advised the United Nations (UN) and is backed by the campaign group Principles for Responsible Investment, has jointly authored a guide for investors, on behalf of the UN, to help them integrate the principles of a just transition into their decision making.
Published last year, the guide both identifies the positive role investors can play, but warns they have failed to do enough so far.
The guide says that “investors have so far given insufficient attention to the social consequences of climate change.
For investors, the just transition provides the framework for connecting climate action with the need for an inclusive economy and sustainable development.”
In his LAPFF presentation, Robins underscored the impact LGPS funds could have, saying its investment leverage and engagement practices could play a “key role”.
“I’d like to emphasise – this might seem like a nice thing to do, it’s certainly the right thing to do.
“It’s a necessary thing in order to build the political and social consensus for the change we need,” said Robins.
“But also for you [LGPS managers and committee members] looking for long-term returns, it’s also crucial in that sense.
“Certainly talking to other businesses, they believe a just transition is important for the resilience of their returns.”
Robins details five areas for investor action including changes to investment strategy; corporate engagement; capital allocation; policy discussions with government at national and international levels; and learning from disclosed results so that best practice is shared.
The LAPFF conference focused on a host of engagement topics for LGPS funds.
Sir Peter Gershon, chair of NationalGrid, spoke about greening energy production in the UK, reducing greenhouse gases and carbon capture. Martin Gilbert, chair of Aberdeen Standard Investments, offered his positive views of workers on boards.
Delegates also heard speakers discuss the effects of tailings dams in Brazil and the thorny topic of executive pay.
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