The Impact Investing Institute has launched a new Just Transition Criteria, designed to help make it easier for fund managers to create financial products that help advance a just transition to a net-zero economy.

The criteria were co-created and tested in collaboration with 21 asset owners and asset managers with over £4trn of assets under management, including Fidelity, Schroders, Nest, and the Environment Agency Pension Fund.

They were designed to be used alongside existing standards and frameworks for sustainable and impact finance, such as the Financial Conduct Authority’s (FCA) proposed Sustainability Disclosure Requirements and investment labels, and the EU’s Sustainable Finance Disclosure Regulation, and are applicable across geographies, investment strategies and asset classes.

The criteria aim to help accelerate the flow of capital needed to invest for a transition to a low carbon world where people and communities prosper, with the Impact Investing institute citing recent research from the FCA that found that 81 per cent of adults would like their investments to do some good as well as provide a financial return.

Impact Investing Institute CEO, Kieron Boyle, stated: “The world is facing two great challenges – the transition to a low carbon economy and tackling growing inequality. Both must be addressed together.

“Capital markets have a major role to play in being part of a solution, but many investors are not yet clear enough on what steps they need to take to tackle these issues. The Institute’s Just Transition Criteria are a practical tool that has the power to unlock trillions of pounds of investment with impact.”

Adding to this, Nest senior responsible investment manager, Katharina Lindmeier, suggested that while many investors want to take meaningful steps towards a Just Transition, they are currently unsure how.

“The Just Transition Criteria produced by the Impact Investing Institute can be adopted by asset owners and managers into their existing strategies,” she continued, “providing a practical framework that helps them identify investments that deliver for people, the planet, and communities.”

Fidelity International head of stewardship, Emilie Goodall, added: “A ‘just transition’ means a transition that doesn’t leave anyone behind in the move towards a more sustainable economy - but how to measure and implement this transition is a complex task. We are pleased to have collaborated on the Just Transition Criteria, providing a practical tool for investors who want to consider a just transition in funds in a consistent and substantive way.”

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