Border to Coast Pensions Partnership has published a “first-of-its-kind" just transition overlay that outlines how the asset pool integrates social risks and opportunities in the transition to a lower carbon economy. 

The investment pool managing almost £120bn for 18 Local Government Pension Scheme authorities said the overlay demonstrates the importance of just transition principles for managing long-term risk and support value creation.  

“Integrating just transition is an important part of managing long-term financial risk and enhancing portfolio resilience for partner funds,” the pool’s stewardship manager, Colin Baines, said. “It helps to mitigate multiple risk dimensions, including operational and legal risk that can lead to delays, cancellations, strikes, litigation, and reputational damage, posing material execution risks that can affect cash flows, project timelines and cost of capital.” 

The overlay includes investment governance, capital allocation, engagement, voting and reporting.  

BtC recently completed an engagement programme with UK banks together with Royal London Asset Management which it said has led to “significant integration by the banks and emerging best practice”. 

Border to Coast co-chairs the Just Transition Working Group at the Institutional Investors Group on Climate Change. Elena Vydrine, a senior investment specialist at IIGCC, called BtC’s overlay “a pioneering example”.  

Nick Robins, senior director, finance and private sector at the World Resources Institute,  said BtC’s overlay “sends a strong signal to the market about the critical importance for fund managers and companies to credibly manage the social risks and opportunities of climate action in order to secure resilient long-term returns”.