Climate Change and How We Can Achieve a Just Transition — An Interview with Nick Robins

Sasja Beslik
15 min readJan 3, 2021


A ‘just transition’ for workers and communities was included as part of the 2015 Paris Agreement on climate change. Research has shown that the shift to a resilient, low-carbon economy presents an opportunity for job and wealth creation.

However this shift also presents transitional challenges for workers, communities and countries. Those in the UK will recall all too vividly the effect in the 1980’s of the Conservative government’s decision to close 20 coal mines. The scars left by this decision are still felt socially and politically in the UK today.

Nick Robins is Professor in Practice for Sustainable Finance at the London School of Economics’ Grantham Institute. Over the past 3 years he has been focusing on how to mobilise finance for a just transition.

I wanted to learn more about Nick’s work and the crucial role investors will need to play to deliver a just transition. Here’s a transcript of the interview, edited for clarity.

– Can you give us an overview of your career and your journey to how you’ve ended up doing the work you’re doing now around ‘just transition’?

I’ve been working on sustainable development actually for far too long! Since the 20th Century! I did my Masters thesis on the Brundtland Report when it came out in 1987, so all my career has been in the context of sustainable development. In other words, how we can deliver ecological regeneration, social justice and economic development simultaneously.

I’ve done this in a variety of different places. I worked for the European Commission in international policy-making for the Rio Earth Summit back in 1992 and then I’ve worked on sustainability in international development issues. From 2000, I’ve shifted to focus very much on sustainable finance, first in fund management where I worked at Henderson Global Investors, eventually running the SRI funds team in the early part of the 2000s. Thinking about where we are now with the COVID-19 crisis, I went into the equity markets in December 2000 just as the dotcom bubble was bursting. For me, the experience about how markets respond to crises, how markets can be way out of line with economic fundamentals and indeed ecological and social fundamentals, has been a core part of these last 20 years.

…that sense of change, that you can innovate, something new happens and then nothing happens, nothing happens and then everything happens. I think that’s the experience with ESG at the moment.

At Henderson, we did the first carbon footprint of an investment fund in 2005, so quite early. We thought every fund manager would do a carbon footprint of their fund. But nothing happened! Five years later it started moving and then, by the time of Paris in 2015, carbon footprints had become more mainstream and are now included in the TCFD reporting recommendations. Now, carbon footprints are considered to be insufficient and too backward-looking. But at the time, they were a breakthrough in measuring the environmental performance of funds.

So that sense of change, that you can innovate, something new happens and then nothing happens, nothing happens and then everything happens. I think that’s the experience with ESG at the moment.

After Henderson, I went to HSBC in a more global role, working on the sell-side in investment research. And at the same time, with my friend Mark Campanale, we set up Carbon Tracker which gave birth to the idea of unburnable carbon, that fossil fuels could be stranded assets. Back in 2011, this was a narrative that was far from the mainstream. Now we have central banks, leaders, chief investment officers, and so on, really understanding the stranded assets thesis and the systemic risk of fossil fuels in a sustainable economy. It’s a simple three-part logic: first, we have a limited capacity of the atmosphere for carbon pollution; second, fossil fuel reserves under the ground have more carbon in them than the atmosphere can safely hold without triggering dangerous climate change; and step three, ergo, these assets can’t be burned. It’s very simple but also very rigorous. This thesis is very alive as we’ve seen in the coal sector and in the way that COVID-19 has telescoped forward peak oil.

My next move was to shift into financial policymaking with the UN. The reason for that was again linked to crisis. This time it was the global financial crisis; the credit crunch in 2007. This opened people’s eyes to systemic financial risk. And the links started to be made between the financial system, climate change and wider sustainability issues, not least via the ‘carbon bubble’ thesis.

So the question I had was how to move beyond understanding climate and ESG factors at the company and portfolio level and think about the system as a whole. At the UN’s environment programme, I co-directed the Inquiry into the Design of a Sustainable Financial System from 2014. This was the time of the first serious discussions about the role of central banks and sustainability. Mark Carney was starting his work at the Bank of England. And we worked very closely with the People’s Bank of China which was starting to work through how to promote green finance.

When China took over the G20 for the first time in 2016 they put one new item on their financial agenda for the G20: it was green finance. What was so interesting was seeing how that changed ESG, something that had largely been a sort of ‘North Atlantic’ concept. I think what China did in that year was really say that green finance was a global phenomenon. And that green finance was going to be part of China’s route to becoming the world’s largest economy and that it was key to that country’s desire to be an eco-civilisation. It pushed a very ‘North Atlantic’ conversation to a much more global level.

I was very struck that the transition was not going to be a marginal green thing, but the whole economy has to change fundamentally. And this makes the social dimension, how the transition affects people, absolutely central. We can’t think of ‘ESG’ any more as three separate pillars, where climate is an ‘E’ issue and worker rights is an ‘S’ issue. We have to bring these things together.

It was while I was focused on the regulatory frameworks for a sustainable financial system that I first became aware of the need for a just transition. The same year as China put green finance on the agenda and, in the wake of the global financial crisis, President Trump was elected US President, taking America out of the Paris Agreement, claiming that it would cost jobs. For me, it became crystal clear that the climate community and responsible investors too needed to think about the transition in ways that made sure that no-one was going to be left out or left behind.

And therefore I was very struck that the transition was not going to be a marginal green thing, but the whole economy has to change fundamentally. And this makes the social dimension, how the transition affects people, absolutely central. We can’t think of ‘ESG’ any more as three separate pillars, where climate is an ‘E’ issue and worker rights is an ‘S’ issue. We have to bring these things together. So the question I had for myself was ‘how can I, in my work on finance and climate, how can I work to deal with this social blind spot in the climate finance arena?’

This is how I came to be at the LSE where I’m now based to lead work on sustainable finance. The just transition has been at the core of what we do. At first, this was seen as a very marginal issue. But what was happening with Trump in the USA and the gilets jaunes in France, people recognised that we’re simply not going to ‘win’ on climate unless the process is fair and seen to be fair — in other words, a ‘just transition’.

we’re simply not going to ‘win’ on climate unless the process is fair, and seen to be fair — in other words, a ‘just transition’.

There’s clearly a role for trade unions and companies and governments in delivering the just transition. My question was: what could be the role for investors? So, at the LSE together with colleagues at Harvard, the Principles for Responsible Investment and the International Trade Union Confederation, we developed a guide in 2018 showing why investors should support the just transition and what they could do in terms of shareholder action, changing their portfolios and policy dialogue.

We were really struck about the response. Over 160 institutions signed up to an investor statement of support for the just transition and it’s snowballed from there. To take one example, in the UK, we’ve developed an investor roadmap with pension funds and asset managers.

Looking back over these last 20 years working in sustainable finance, one thing stands out: how sustainability issues and ESG have actually been propelled forward through successive crises. And COVID-19 is only going to change these further.

– How has COVID-19 changed things?

In the past, people thought that dealing with sustainability issues was just for good times, when the sun was shining and, when a crisis hits, action is delayed until normality returns. What’s been very striking with COVID-19 is that it’s really deepened, rather than deflected, investor commitment to ESG.

Partly this is because of performance, with ESG strategies performing better than conventional funds. More than this, COVID has also brought the social dimension to the forefront in terms of health, inequality and workplace practices. It’s in a crisis where your social performance, the ‘S’, is tested.

And then COVID-19 has also heightened awareness of ecological risks. It’s been a live stress test. As one observer has commented, it’s the first crisis of the Anthropocene. It’s a zoonotic disease; it comes from animals. The degradation of biodiversity exacerbated by climate change is one of the underlying causes of the rise of zoonotic diseases like this pandemic and this is something that was predicted, but ignored. So, COVID-19 is not separate from the sustainability agenda but is fundamentally part of the whole planetary emergency.

– So what does this all mean for 2021?

The good news is that we have the recognition from prime ministers, central bankers, financiers and the wider public that we need a green recovery from COVID-19. Clearly the recovery plans delivered by governments so far aren’t up to scratch yet. But I think the intent is there and in the run-up to the COP26 Climate Summit, we need to make sure that the recovery plans are 100% aligned to net-zero, resilience and a just transition. The net-zero economy is the economy of the future and offers fantastic opportunities in terms of jobs and innovation and so on. We need to deliver it and that process of change needs to be fair.

What’s also happened is the end of the false distinction between the climate and nature agendas. We have seen a surge of interest in biodiversity and nature this year among investors. Investing in nature is a great way of getting the recovery underway through job creation. There’s lots of linkages: stopping deforestation is essential for climate security and the health of ecosystems. It’s been a real breakthrough and that’s going to get even more exposure at the Kunming Biodiversity Summit in 2021.

– What should institutional investors be doing to work towards a just transition?

The first thing to do is to focus on strategy: make sure that the just transition is part of your investment strategy. Investors recognise that climate is an existential threat. But it is often seen only as an environmental issue, so part of the ‘E’ of ESG. But the transition to a net-zero economy is a process of structural economic change and intrinsically has a social dimension. So, the just transition needs to be an integrated part of how investors think about getting to net-zero. Obviously asset owners as well as individual investors, can signal to their fund managers the importance of the just transition.

Secondly, investors need to signal their expectations about the just transition to the companies that they own. This is very much the shareholder engagement dimension. In 2020, the Climate Action 100+ process incorporated the just transition as part of their ‘net-zero company benchmark’, sending a really important signal to the world’s biggest carbon polluters.

We’re starting to see companies respond. In the UK, there’s been engagement by investors with a number of companies starting with the utility sector. SSE, one of the leading utilities in the UK, was asked by investors at its AGM what they were doing on the just transition to complement their drive for net-zero and renewable energy. The company accepted the challenge and in November 2020, SSE came out with a strategy with 20 principles setting out how it would deliver the just transition. This involved how they were transitioning out of high-carbon areas and what that meant for workers and communities. And then how they were transitioning into the green economy and what that meant for workers, communities and indeed their consumers. One thing that struck me was the opportunity in the transition to develop a more inclusive and diverse workforce, more gender balanced, more reflective of black and ethnic minority communities and so on.

The third area for action by investors is how to change their capital allocation so that their assets support a just transition. The transition is very location specific and there is a big interest and opportunity around place-based assets, such as infrastructure and real estate, which are responding to particular needs of critical regions.

This points to one of the big flaws in the current financial system, which you could call the tension between Wall Street and Main Street. The financial centres where all ESG is taking place are the cities — whether it’s Zürich or Frankfurt or London or New York or Paris. But the transition is often taking place elsewhere, affecting the livelihoods of people in the so-called ‘hinterland’.

We have no name for the moment we are in. Globalisation is finished…. [and] we lack a clear sense of the new regime that will follow.

What is striking about the just transition agenda is that it speaks to the uncertain phase we’re now in. We have no name for the moment we are in. Globalisation is finished in terms of ever-increasing liberalisation and reduction of barriers between countries. Clearly international interactions continue, but we lack a clear sense of the new regime that will follow.

– Do you think that is accepted within the financial industry yet?

I don’t know. Maybe some people think we’re going to revert to the norm. But are we really going to have a new wave of trade liberalisation? I can’t see it happening. I think that’s a big challenge.

The issues around ‘place-based’ investing really go to the heart of the purpose of finance.

I think the issues around ‘place-based’ investing really go to the heart of the purpose of finance. If you’re an investor, either with your own assets or managing money on behalf of other people, the traditional focus has been on how you can generate a good return. But we now need to consider how does this money have a wider purpose in terms of contributing to healthy economies. And one of the big fracture points, almost in any country, is this imbalance between those cosmopolitan centres where wealth and innovation congregate and how we can ensure we have flows of finance across the whole economy so that it’s much more balanced.

So something investors could think about is how to invest with a regional-lens. Municipal bonds offer one route in many countries such as France, Sweden and the USA.

And then the fourth thing for investors to be doing around the just transition is dialogue with policy makers. Investors recognise that climate change is a catastrophic market failure and policy reform is needed so that markets price carbon. And on the just transition there’s clearly a lot that investors can do in their relations with companies as stewards, and in the way they allocate their capital. But clearly there are many things that only government can do, in terms of skills development or regional policy. So just as investors are asking governments to put in place net-zero plans, they also need to make sure that these include the human dimension.

One key part of this policy dialogue is the role of public finance. Here, I think the relationship between investors and development banks (national development banks and international development banks) becomes very creative. This in a sense is the green bond story, where development banks such as the EIB and the IFC were at the forefront of responding to investor demand for green bonds.

I think that it will also be the development banks who are probably going to be at the cutting edge of financing the just transition. And therefore the bond issuance by these development banks could help to seed a new strain of green bonds focusing on the just transition. So you could see more and more green bonds which have a social dimension to them. We’ve pushed this forward in the UK with the proposal for a Green+ sovereign bond.

– Do you think that the financial industry is doing enough?

Let’s reflect on the moment we’re in. We have this terrible crisis, a human health crisis, an economic crisis, the risk of the worst global downturn for decades. As well as the great acceptance about ESG and ESG products, I think there is a profound question about what the financial community is going to do to actually help get us out of this crisis in a positive way, in a way that helps solve some of the world’s biggest challenges environmentally, but also in a way that helps solve some of the biggest challenges socially.

The potential, and indeed the duty of finance, is very different to where we were in the last decade with the credit crunch. Back in 2007, impact investing hadn’t been invented and no governments were promoting sustainable finance like the EU is doing today. Now we have these tens of trillions signed up to ESG. The task now is to move beyond ESG screening and focus on how these funds are going to help fix these really pressing and urgent global issues. And I think a number of funds are thinking about that. But that’s the challenge for the year ahead in 2021. A lot will be expected of the financial community in terms of being solution providers as we come out of COVID-19.

– What do you see ahead for 2021?

I think on climate there is an extraordinary amount of consensus in terms of disclosure and reporting, risk management and the alignment with net zero. This is all put together in the work that Mark Carney is leading in terms of the of role of private finance in getting success at the COP26 Summit.

The big challenge now is getting this consensus to move money. In the UK, a report I authored for the Climate Change Committee showed we need a five-fold increase in net-zero investment in the next decade to hit the country’s climate targets. And of course all of this needs to be connected to the social dimension in terms of workers and communities.

One concern I have is that we create two satellite worlds; one focused on climate and one focused on nature, with these two priorities not speaking to each other.

One concern I have is that we create two satellite worlds; one focused on climate and one focused on nature, with these two priorities not speaking to each other. There are huge inter linkages. Climate is linked to forests and land use. And strengthening biodiversity is key to resilience to physical shocks. And both have powerful social linkages. So the question is how to develop those systemic, holistic solutions without being over-complicated, so that people’s brains don’t explode with the complexity!

Another big focus is on the role of central banks and financial supervisors. Central banks are increasingly recognising that they have a key role as guardians of the financial system and dealing with real systemic risks like climate. But so far they haven’t connected this with what they are doing in terms of responding to the COVID crisis. So we’ve designed a ‘toolbox of sustainable crisis response’ in terms of what they can do to connect prudential and monetary policy with a green recovery. One of the big themes for next year is how central banks, such as the ECB and the Bank of England, are going to start joining the dots between their role supporting economies in crisis with their potential to support the type of economy we want, and we need, to see coming out of this which is greener and much more inclusive.

This has huge implications for investors. When the governor of your central bank speaks of climate, you listen. You’ve got Greta Thunberg in one ear and Christine Lagarde in the other; there’s nowhere to turn is there really?

Of course in 2021 we will have the new Biden administration. When I started thinking about climate and just transition and the role of investors the things that really motivated me were Trump and the gilet jaunes. Now, we’ve had a sea-change with the European Green Deal with the just transition embedded in it and, secondly, Joe Biden’s climate plan. If you read the plan it’s striking how much of the themes of environmental justice and generating good, decent jobs it contains; it’s really at the heart. So in a sense we’ve moved on from those crises to policymakers starting to come up with responses.

– Is the approach to economics that is taught in universities adapting to address these challenges?

I think that that’s a huge issue. And you’re seeing it in the incorporation of ESG issues into the CFA and other professional educational courses; that’s really key. All of this points to the need to rethink the skill set for the 21st century financial professional. This is not just in technical matters, but about being able to really understand the sustainability needs and priorities of customers and clients. How do you evaluate it from a risk and return point of view but also how do you think about what people are trying to do with their money? So that customer relationship point is going to be very important.

– So you are optimistic about the future?

What’s so interesting now is that there is a lot of potential. And there’s also a lot of onus on us in the financial community to really deliver on the opportunity we have and the responsibility we have. ESG is not just about screening criteria. It has a purpose. To deliver good returns, but also to contribute to solving some of the world’s biggest problems.

This interview took place in December 2020. Find out more about Nick’s work on the just transition here.



Sasja Beslik

MD, Head of Sustainable Finance Dev. at J. Safra Sarasin, the world’s leading private bank on sustainable finance. Author of “Guld och gröna skogar” (2019).