Investors in clean energy can be harming workers if they don't pay attention to the human capital aspect. Unlike traditional energy-sector jobs with strong wages, benefits, and health and safety controls, those in the budding green energy industry typically start with less, which can impact workers and their communities, said Erin Hutson, director of corporate affairs for the Laborers' International Union of North America in Washington, with $45 billion in pension fund assets. Negative impacts on communities can also delay or derail regulatory approval for projects, and the fallout can lead to investment losses, Ms. Hutson said. "I think people do recognize it's a topic they need to talk about," she said.
The Rev. Kirsten Snow Spalding, senior program director of the Ceres Investor Network in Berkeley, Calif., put it bluntly: "If it is not a just transition, there will be no transition." By failing to engage local communities and workers, developers and investors in clean energy projects jeopardize the adoption and future uptake, Ms. Spalding said. The network's 200-plus institutional investor members manage more than $47 trillion in assets. The parent organization Ceres is a non-profit that works to advance sustainability in capital markets.
"It's about risk and opportunity. As investors make these huge commitments, if they don't talk about (just transition) they are ignoring the risk. We expect to see in corporate transition plans how workers are engaged and what the outcomes are going to be," said Ms. Spalding.
Asset owners and managers focused on just transition are engaging with companies they hold to see how their green energy transition plans address the issue of economic fairness for workers.
One example is Royal London Asset Management, with £148 billion ($198.4 billion) under management. In collaboration with the £30 million Friends Provident Foundation, York, England, RLAM has seen good responses from U.K. energy utility companies when it asks to see just transition strategies that address economic opportunities as well as decarbonization, according to RLAM.
"You see some big investors for the first time engaging companies on this. They are asking what the transition plan is. I don't think companies have been asked that," Ms. Hutson said. LIUNA is also engaging most infrastructure and private equity managers on the topic, and the response has been "generally positive," she said.