Does a climate emergency mean that E trumps S & G?

Does a climate emergency mean that E trumps S & G?

It is an undeniable fact that we are in the midst of a climate emergency, and tough actions need to be taken to stop the situation from getting any worse, a task which is becoming a priority for governments, corporates, and the general population. But does it mean that resolving environmental issues should be at the expense of social and governance issues? Research commissioned by the Nuffield Foundation - due to be published in December 2022 - will look at how to mitigate the potential negative impacts of the transition to a cleaner energy future on the poorest 20% of families and communities. A survey by the Office of National Statistics in the UK at the end of last year showed that two thirds of the UK population are not confident that the government will achieve its net zero 2050 target without leaving behind any parts of the country or local communities.


These concerns are not limited to the UK, they are applicable across the planet. In fact, the World Bank has been working on a just transition strategy since 1995 and has so far provided $3bn to support coal transitions including looking at the interdependencies between the decommissioning of coal assets – such as mining, transport, and power plants – and developing renewable energy programs to take their place. Furthermore, Greenpeace have found themselves in the unusual situation of campaigning for the rights of the oil and gas workers, something that would have been unbelievable only 10 years ago.


Why is this the case? Because it proves that although climate change is a priority, it cannot be at the expense of the social aspects affected by the transition. For the climate transition to succeed, it will require that we have a “just” transition – ensuring that the move to a more sustainable economy is as fair as it can be. It must include those who are already considered vulnerable and those people whose livelihoods depend on the most polluting industries.


This would involve reskilling workers that will otherwise be impacted by a shrinking of the oil and gas sector. Ensuring local community and government are collaborating to ensure this is as effective as possible. As we previously mentioned in our series on the COP conference in November, this kind of action requires a multi-stakeholder approach. As asset managers our influence on government can be minimal. So, what can we do?


We can use our responsibilities as active owners in companies to help encourage corporations to take a holistic view of climate change. Companies do not make it into our sustainable range of funds by only concentrating on one aspect of E, S or G at the expense of another. We want to see the companies we invest in taking their responsibilities to their stakeholders seriously and will continue to engage with them until we are satisfied they are doing so.


Tackling ESG issues is not a game of Top Trumps with climate change at the top. Progress needs to be more inclusive if we are to overcome these challenges successfully and fairly.

More about the authors

Miranda Beacham Head of UK Responsible Investment.

Miranda Beacham is Head of UK Responsible Investment.

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