Our CEO has emphasized the importance of transition finance — financial support that helps decarbonize high-emitting activities or enables the decarbonization of other economic activities.1 Managing the human element of this massive climate transition appears as important as technical innovation or development of new physical infrastructure.

Stranded human capital and human rights abuses can generate public resistance to the transition; in contrast, investment in the retraining of people, and demonstrating respect and partnership with communities can ease and accelerate the transition. Whether coal miners losing their jobs in Appalachia or land use and pollution conflict in communities targeted for lithium mining, climate transition faces backlash where the human element is ignored.2 A study of the Environmental Justice Atlas database found that one quarter of projects opposed by environmental defenders were stopped through protest, litigation and other forms of popular mobilization.3

According to the World Economic Forum (WEF)4 “[t]he green transition… could concentrate job creation in already tight labour markets… deepen[ing] unemployment in some regions while causing labour shortages in others…” WEF notes that this “could fuel social and political upheaval.”

Thus, part of the work of transition finance is to support finance, public policy or other provisions for worker transition such as job retraining and skill development, income support in job transitions, creating new green jobs, and actively planning for economic diversification in affected communities.

The rights of communities are also at stake, such as in regions where mining of minerals critical to the green transition threatens human rights and the environment. Transition strategies must respect human rights, public health and the environment, or they risk community resistance and supply chain disruption.

A 2021 interview with STT’s global head of asset stewardship noted that clarity of expectations around investees’ climate transition plans, including how they take Just Transition into consideration, is an area where STT can improve.5 Yet there is precious little in STT’s disclosures on this topic, other than mention of a Just Transition engagement with 24 companies in 2022.6 STT’s 2023 Sustainability Report does not mention Just Transition, climate justice, or environmental justice.7 This omission is doubly concerning as STT has reduced its support for environmental shareholder resolutions8 and has terminated its membership in the stewardship coalition Climate Action 100+. STT’s inadequate disclosure impairs investors’ ability to understand how its transition finance plans safeguard shareholder returns.