"We believe that investing in and engaging with companies in traditionally carbon-intensive sectors is important, and these sectors also offer the most opportunity for change, innovation, and a true transition to a less carbon-intense world.”
Nicola Day, deputy head of Rathbone Greenbank Investments, says part of the focus should be on ensuring that any negative consequences of the transition are addressed. Negative consequences may include job losses in specific sectors of the economy and also new taxes.
With this in mind, she says government policy in future, if the transition is to be just, must not simply focus on achieving sustainability targets but also should involve looking at wider economic policies to ensure that the transition does not punish those who are trying to do the right thing.
She adds that many taxes should follow the "polluter pays" principle, that is, they are laid on those who cause the harm, rather than from general taxation.
Day says the risks in the first instance are that agricultural communities may suffer losses, as could communities in the north of England which are more focused on industrial production for their economic activity, rather than the services sector. The latter is more easily adaptable to a low-carbon future.
Day adds that this issue can then be extrapolated to the wider world, where many emerging market economies are focused on agriculture, commodity production or manufacturing – all areas of economic activity that may suffer from the emergence of the new economic model.
She cites the example of Gabon, Africa. She says: “Gabon is a country that has benefited enormously from fossil fuel production. Now that is coming to an end. Gabon has vast, beautiful forests, and that could be an area of future economic activity for them. But the issue is, of course, that wouldn’t be very helpful for the rest of the world. I think that is an example of an area where more needs to be done to help economies in the emerging world.”
David Thorpe is special projects editor at FTAdviser
