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AUM in Action

UK Investors Set ‘Just Transition’ Expectations for Banks

Border to Coast Pensions Partnership, Royal London Asset Management and the Friends Provident Foundation have laid out expectations for the banking sector to help ensure a just transition. The investor coalition has done this as part of ongoing engagements with four banks – Lloyds, Barclays, NatWest and HSBC – with goals to either introduce a standalone just transition plan or incorporate it into existing climate targets. To date, two banks have committed to taking the requested action, a third has included 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 throughout 2024, with target actions including: developing and implementing a responsible decarbonisation strategy for existing products and portfolios; integrating the just transition into regional corporate banking decarbonisation strategies; developing partnerships with public banks and community development finance institutions to provide blended finance solutions; and recognising global disparities between developed and emerging markets in client transition plan expectations and assessments. The just transition refers to the integration of a social dimension into decarbonisation strategies by mitigating social risks, seeking social opportunities, and focusing on place-based impacts. “We are pleased with the positive response our engagement has received to date and the commitments leading banks have made,” said Colin Baines, Stewardship Manager at Border to Coast. “As ambition is turned into action, we will use our investor expectations to engage and assess their emerging plans.” The engagement programme is also supported by the London School of Economics’ Grantham Institute’s Just Transition Finance Lab, and is in line with the Transition Pathway Taskforce’s Bank Sector Guidance, which many institutions are expected to follow.

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