What will it take for the UK to deliver a Just Transition?

Read time: 5 mins    |    Added date: 09/10/2023

Lloyds Bank recently brought together experts from business and finance for a landmark conference to explore the principles, processes and practices of delivering a Just Transition to a net zero economy in the UK. Explore the discussion below.

As government policymakers, companies, investors and others continue to formulate their net zero initiatives, a Just Transition – the idea that the shift to a green economy should benefit all – will be considered. But what would it take to make a Just Transition a reality in the UK?

“First and foremost, it requires joined-up thinking, so that climate, nature and people are considered at the same time,” says Emily Martin, Director, Sustainability & ESG Finance at Lloyds Bank. “We also need the broadest possible debate so that the UK’s strategy of transition to net zero reflects the views of those who will be impacted by it.”

So, while government must lead the way with the right policies and economic signals to ensure that net zero technologies are an attractive investment for private capital, Martin believes that discussion and collaboration between the public and private sectors and across society is critical: “Engagement and buy-in must be at the heart of the UK’s efforts to achieve a Just Transition for all.”

Achieving buy-in among the public and across organisations

According to Dr Sam Gardner, Head of Climate Change & Sustainability for ScottishPower, the UK’s only 100% renewable energy integrated utility, “the only way to gain a public mandate for the scale of change that is required to achieve net zero is by delivering a Just Transition at the same time”. He adds: “That requires informed, participatory engagement that doesn't slow the process down, but builds buy-in.”

External engagement

While working at pace to deliver net zero, companies must therefore be more deliberative in their external engagement, according to Gardner. “We have to take consumers and communities with us so that along with investing in renewable electricity generation and the distribution network in the energy sector, for instance, we educate and inform consumers about solar panels, batteries and heat pumps. We need an engaged public conversation.”

Clarity of purpose

At a corporate level, a Just Transition requires integrity. “Any company committing to a Just Transition needs to believe in it and have clarity of purpose,” says Gardner. “You then have to interpret that purpose and apply it through a strategic set of principles. In our case, that’s to align with our communities and offer a fair deal for current and future consumers.”

The application of such principles can have profound implications for business strategy. “For instance, if we were only driven by the market, Electric Vehicle (EV) points would be built at the points of high current use – but that could cut off some communities from future access to EV charging opportunities,” notes Gardner. 

Momentum and credibility

Similarly, a commitment to a Just Transition must permeate throughout the entire company if it is to be effective. “Purpose must be articulated by the leaders in your organisation,” says Gardner. “It also has to be reflected in broader culture change. For instance, our management committee has participated in an Exec level climate programme, we have an online climate programme for all staff and with our partners KSB, we have delivered face to face training for hundreds of our employees.”

To maintain momentum and credibility, it’s important to measure and report on progress. “To some extent, this will be required by the Transition Plan Taskforce and other rules. But to drive change you have to show that you’ve achieved what you intended,” Gardner adds. 

Collaboration can promote innovation to make net zero a reality

While government must set rules and targets to decarbonise the UK economy and ensure a Just Transition, Professor Chris White, Director of the Industrial Policy and Insight Centre at Loughborough University, formed in collaboration with the Manufacturing Technology Centre (MTC), emphasises that the most important solutions are likely to emerge from collaborative ventures.

“My work at the MTC, which commercialises research, is about bringing together academics, industrialists and policymakers to innovate. No single stakeholder has all the answers. Collaboration can promote innovation to make net zero a reality and ensure a Just Transition,” says White.

Given the pressure to innovate rapidly, a new approach is necessary according to Jamie Broderick, Deputy Chair at the non-profit Impact Investing Institute. “The learning process must be more intensive and faster,” he says. “Fortunately, companies are now more open to collaboration and sharing best practices than in the past, partly as a result of their growing sense of social accountability.”

There is also a need to coalesce around new standards. While there are now established sustainable finance products, for example, Broderick says a Just Transition requires new concepts. “We must crystallise products – distinct from both conventional and net zero investing – that promote climate and environmental action, social equity and distribution, and community voice,” Broderick explains.

A more inclusive approach to innovation and the workforce

If the UK is to achieve its net zero targets and deliver both a Just Transition and the technologies that will make the green transition possible, it needs to look much more widely for talent than in the past, according to Gosbert Chagula MBE, Co-founder of Startup Discovery School. “In today’s innovation ecosystem, access to early-stage resources is unequal, with Black, Asian and minority ethnic communities and women typically left out. We need to cultivate an inclusive ecosystem.”

Chagula emphasises that there won’t be “a single ‘hero’ solution” that solves all of our climate problems. “We need multiple solutions to multiple problems and the way to do that is to have a diverse set of voices in the debate. Climate justice, green jobs and net zero are part of the same conversation.”

As well as supporting start-ups, thought has to be given to the impact of the transition on established industries across the UK. “In the West Midlands, for example, many people work in the automotive supply chain but the UK has yet to get to grips with what the shift to electric vehicles will mean,” says White. “We need a clear narrative about the jobs of the future, and about those that will disappear.”

Education and retraining will therefore be critical components of a Just Transition. “Clearly, engineering jobs are going to become more important and the UK needs to do more to encourage people to acquire these skills,” says White.

As a result, employers need to question established business models to ensure they are supporting skills development, opportunities for all and a living wage. “Government, companies and investors, such as pension funds and private equity firms, need to question norms. Partnership, which is essentially what a Just Transition is about, is based on the idea of an exchange of value and we need a fairer exchange going forward,” says Chagula. 

What a Just Transition is starting to look like on the ground

Metro Dynamics is a nine year-old advisory business working with Lloyds Bank and others in the private sector on green infrastructure. Mike Emmerich, Founding Director, says we are effectively at ground zero for the Just Transition. “There are lots of good intentions but we don’t currently have a Just Transition in this country,” he explains. “We haven’t even fixed many of the problems from the 1980s in mining, textile and manufacturing communities outside the south-east, which were left behind while other areas were reinvented.”

The key to avoiding similar mistakes with the transition to net zero is to reach out to communities across the UK, according to Emmerich. “Agency is important. We’ve been able to do some great work with Lloyds Bank on retrofit projects in Leeds, electric vehicle charging in the West Midlands and transport in the Liverpool city region. But we need to constantly remember that many people in these communities feel distant from institutions; we need to find new ways to engage with them.”

One solution is to focus on creativity. “We need to explain complex issues in a way that local actors can recognise their own situation and challenges. And we need creative solutions that make sense on the ground. For example, while Liverpool has an acute housing shortage, it has few large sites for housing. From an investor perspective, small random sites are uneconomic given planning complexities. But there should be a way to bundle disparate sites together and streamline planning so that the economics make sense,” says Emmerich.

Emmerich is equally certain that the private sector will have to take the initiative. “We have to recognise that many local authorities have had their budgets significantly cut and therefore often don’t have the capacity to scale up the sorts of projects that are required for the Just Transition,” he says. “And within Whitehall there appears to be a fundamental disconnect between our stated ambitions for decarbonisation and current planned public funding.”

But in order for the private sector to press ahead with its own initiatives, the government needs to ensure the right frameworks and policies are in place so that, for example, construction on floodplains ceases and green infrastructure is built into new homes, says Emmerich. “People in business are trying to make things happen but we need government to be present at the table.” 

Key messages

  • A Just Transition in the UK requires a buy in from every stakeholder affected by it through a new and deeper level of dialogue between government, companies, investors and communities.
  • The need for innovation to meet net zero targets is so pressing that collaboration, sharing of best practice and the creation of industry standards will be critical.
  • A more diverse and inclusive start-up ecosystem and workforce, as well as targeted education and retraining initiatives, are essential for the UK to meet its potential.

This article, and quotes within, are based on discussions at the Lloyds Bank Just Transition Conference held on 15 June. The views expressed are those of the speakers and do not necessarily reflect the views of Lloyds Bank.

 

Just Transition: The Road Ahead

An expert panel discuss what is possible when starting to think about our collective journey to a net zero economy. How might organisations start to embed Just Transition principles at the heart of their operations?

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