Consider Social Impact of Climate Change

Under a reboot of the Just Transition framework, responsible investors shouldn’t take into consideration just the physical aspects of climate change, but the social impacts too, according to Fiona Reynolds, CEO of the United Nations-supported Principles for Responsible Investment.

“We talk a lot in the investment world about stranded assets from a physical point of view, but stranded assets aren’t just physical. They’re also people,” Reynolds said in a podcast hosted by Jason Mitchell, Co-Head of Responsible Investment at Man Group. “They are the people who were displaced from their jobs in the fossil fuel sector. They are the people in the communities who really are engaged in that community where there might be a coal mine or something that has closed down.”

Take a look at the US coal industry, for example (Figure 1). The industry has shed jobs at an alarming rate. About 52,000 Americans are employed in coal mines currently, according to the Bureau of Labor Statistics. This compares with more than 170,000 Americans working in the mines in 1985.

Figure 1. Declining US Coal Jobs

Source: United States Department of Labor, as of March 2018.

“Look at what’s happening in places like the US,” Reynolds told Mitchell. “If people feel disenfranchised and left behind, then we see this rise in populism that’s happening. People believe when President [Donald] Trump says ‘I am bringing back coal jobs,’ for example. They believe this story and they vote for President Trump in the hope that this is exactly what he is going to do. And I can understand why people do that.”

Instead, workers in the industry can be retrained, re-educated and helped to find new jobs, Reynolds said. “We have to do better as a community -- not just investors, but companies and governments need to do better at making sure that people aren’t left behind and that workers aren’t losers in the climate change wars,” she said.

Click here to listen to the full podcast. The PRI in Person conference will be held in San Francisco from 12-14 September 2018.

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