Feature – ESG Club Conference 2022
ESG CLUB CONFERENCE: A JUST TRANSITION
Oil and gas changed the world. Burning fossil fuels created a level of economic prosperity that some people could never have dreamt of. It helped us travel around the world faster and make products that transformed our standards of living. Oil appeared too good to be true… and that proved to be the case. As our prosperity changed, so has our climate. Fossil fuels are deeply intwined in our economies and untangling them is not easy. If coal mines are closed, for example, millions of people working directly or indirectly in the industry will lose their livelihoods. So how can we create regenerative economies without pushing people into poverty? To find out, three insiders took to the stage to discuss how to achieve a just transition.
If the world is to achieve carbon neutrality, mining practices need to change. This could mean millions of people around the globe, including whole communities, lose their livelihoods. Yet John Mulligan of the World Gold Council believes that the mining industry, particularly gold, could make emerging econ- omies one of the winners of the energy transition. “To the just transition point, [if mines use renewable sources of energy] the gold value chain can have an impact way beyond the mine or the asset, because in many countries gold will be the driver of the energy transition,” he said.
This is, he explained, due to the gold industry decarbonising and being an important driver of socio-economic development and growth in regional and remote economies, driving further opportunities by bringing in technologies and infrastructure. “It is a complex story in some ways, but it is a simple one, too,” he said. “Basically, if you decarbonise the mine, and decarbon- ise the value chain, you bring decarbonisation to economies that would not otherwise have access to it. “It is not just green technology because it is cleaner,” Mulligan said. “The key aspect is that 50% to 60% of gold production is in developing or frontier economies. In many of those econo- mies, economic activity driven by power is generated and cou- pled with emissions. If you bring clean energy to communities for the first time, you then enable refrigeration, which is key to food provision and healthcare, without emissions.
34 | portfolio institutional | September 2022 | issue 116
“So decoupling emissions from development opportunities has impacts way beyond the mine for socio-economic develop- ment,” he added. “A key driver of social wellbeing can be the decarbonisation, if it extends beyond the mine.” Therese Niklasson, global head of sustainable investment at Newton Investment Management, was due to join this panel but unfortunately was unable to attend. portfolio institutional spoke to Therese in April about this topic and she perfectly summed up the difficulty of the challenge we are facing: “There will be winners and losers in the transition to a regenerative economy, but the losers will not necessarily be the polluters and the winners will not necessarily be the solu- tion providers.”
No need for a drill Railpen, which manages retirement assets for the workers on Britain’s railways, says it is committed to considering the social dimensions of its investments. Chandra Gopinathan, a senior investment manager focused on sustainable ownership, said the scheme “likes to walk the talk behind these commitments”. He pointed to Climate Action 100+ having a just transition indicator, which covers the basics of re-skilling and training workforces to avoid job losses. “That is just the beginning,” Gopinathan said. “There is a lot more work to be done in terms
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