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Wespath Commits to “Just Transition” on Climate Change: What You Should Know

Jake Barnett portrait photo

   By Jake Barnett
   Manager, Sustainable Investment Services
 
   January 4, 2021

I am thrilled to share that Wespath has officially signed the Statement of Investor Commitment to Support a Just Transition on Climate Change (Just Transition Statement), an action which further illustrates our focus on supporting the development of a sustainable global economy.

Wespath joins the United Nations Principles for Responsible Investment (PRI), and over 150 other investors representing more than $10 trillion in assets under management, in endorsing this statement.

The Just Transition Statement calls on fiduciaries and investors to support a transition to a low-carbon economy that is both fast and fair, with responsible management of the social impacts of this transition in the workplace and wider community:

“There is an increasing recognition that the social dimension of the transition to a resilient and low-carbon economy has been given insufficient attention… Investors can make an important contribution as stewards of assets, allocators of capital and as influential voices in public policy to make sure that the transition produces inclusive and sustainable development.”

More specifically, the Just Transition Statement recommends that investors integrate social issues into their low-carbon transition philosophy. In other words, investors should consider how individuals, workplaces and communities will be impacted by the transition. The statement then calls on investors to factor these considerations into climate change-related investment strategies, corporate engagement activities, capital allocation decisions, policy advocacy and partnerships, and learning and transparency efforts.

I think positive social impact will be a vital part of a successful low-carbon transition. Wespath’s endorsement of the statement also fully aligns with our existing approach to the low-carbon transition and vision for a sustainable global economy—one that promotes social cohesion, economic prosperity for all and environmental health.

This is important as we fulfill our responsibilities as a fiduciary. A transition that focuses on environmental issues alone, without accounting for social cohesion and economic prosperity, will likely have adverse economic consequences. The low-carbon transition represents a gradual, but major, change in the way the economy operates. Failure to approach it holistically could compromise our ability to meet the investment expectations of our participants and institutional clients, thus jeopardizing our fundamental fiduciary duties.

In support of sustainable outcomes, and in alignment with the Just Transition Statement, we commit to the following:

  • Investment Strategy: We will review our Investment Beliefs and adjust them as needed to incorporate the principles of the sustainable economy framework in a manner aligned with our fiduciary duty.
  • Corporate Engagement: We have begun integrating just transition considerations into our existing Climate Action 100+ (CA 100+) engagements and are helping to develop the Climate Action 100+ Just Transition Benchmark, which will be applied to all CA100+ focus companies.
  • Capital Allocation Decisions: As with other emerging investment areas, we will dialogue with asset owners and asset managers so that we may better understand the market opportunity for capital allocation decisions that align with the just transition.
  • Policy Advocacy and Partnerships: We will work with long-standing partners—such as the PRI, CA 100+ and Interfaith Center on Corporate Responsibility (ICCR)—in hopes of developing new standards to advocate for positive policy change regarding the just transition.
  • Learning and Transparency: We are working collaboratively with other investors and investor coalitions to identify major stakeholder groups impacted by the just transition. We seek to connect these groups directly to economic actors (companies, investors, governments) to inform their strategy regarding the just transition.

Finally, I note that our values as an agency of The United Methodist Church strongly aligns with this work. The Just Transition Statement calls on us to act with the spirit of curiosity and innovation, and the Church reminds us that humility and compassion are important core values. By faithfully implementing these values in our just transition efforts, we believe Wespath will strengthen its role as a responsible steward of the assets we manage on behalf of our participants and investors.