The Investor Group on Climate Change (IGCC), representing investors with $35 trillion in AUM, has published the new resource; Investor Expectations for Corporate Just Transition Planning.
Download the report
Designed for institutional investors and key stakeholders involved in Australia’s transition to a net zero economy, the report consolidates existing resources into a simplified set of guidelines to evaluate and engage on corporate Just Transition plans. This resource also serves as a reference guide for companies in the development of their transition strategies.
As the transition to net zero accelerates, the focus on ensuring a “just transition” has become more critical. Companies are increasingly expected to develop plans that consider the economic, social, and environmental impacts of decarbonisation, not only on the environment but also on workers, communities, and other stakeholders.
Institutional investors play a pivotal role in driving these efforts, recognising that neglecting to support an orderly and equitable transition can lead to economic volatility and unintended consequences across their portfolios.
The newly released guide outlines key defining elements of a Just Transition, based on consultations with institutional investors, including IGCC members, and stakeholders such as civil society organisations and unions.
It emphasises the importance of stakeholder engagement, stable planning, workforce opportunities, and inclusive, adaptive strategies. The report also highlights actions companies should include in their Just Transition plans, such as workforce retraining, community planning, and collaboration with governments and other stakeholders to drive long-term, sustainable growth.
Quote from Richard Proudlove, IGCC Director of Corporate Engagement:
“Investors have been calling for a resource to provide clarity on this crucial aspect of Australia’s economic transition.
“Australia’s path to renewable energy and clean industry will have benefits to the economy as a whole, and it’s crucial that the workers and communities who have brought Australia this far have a clear understanding of their role in this transition and continue to share in the country’s success.”
Quote from Liza McDonald, Head of Responsible Investment at Aware Super:
“The Just Transition has become a crucial consideration for investors. By integrating just transition principles into their investment strategies, institutional investors can mitigate economic risks, support sustainable practices, and protect long-term financial returns. This guide provides the foundation for investors to engage meaningfully with companies as they navigate the complex transition to a net zero future.”
Key Highlights of the Report:
- Defining elements of Just Transition plans: The report identifies ten key elements such as two-way engagement, time-bound actions, and the interconnectedness of corporate and community efforts.
- Actionable steps for companies: Companies are advised to create transition plans with clear commitments to stakeholders, measurable goals, and tangible support for workers and communities.
- Practical tools for investors: The guide equips investors with tools to evaluate Just Transition plans, including SMART criteria (Specific, Measurable, Achievable, Relevant, and Time-bound), governance structures, and effective communication strategies.
The report underscores the growing importance of institutional investors in supporting systemic economic changes, ensuring that the benefits of the transition are shared equitably across society. With this comprehensive guide, Australian investors are better positioned to evaluate the quality and scope of corporate Just Transition plans, align their investments with long-term sustainability goals, and drive positive social and environmental outcomes.