Just Transition – Funding the Solutions

Following Footsteps’ 2020 Earth Day gathering, this workshop provided an opportunity to hear contributions from a number of experts and to learn from each other about funding Birmingham’s just transition to net zero carbon.   The workshop was also to provide the Birmingham City Council Taskforce with a view from a community perspective.

Some 18 people, mainly with a specialist interested in public and private sector finance, participated in the workshop.  Mike Clark, Founder Director, Ario Advisory and Fellow of the Institute of Actuaries provided an expert introduction.  Jules Todd, FRSA and CANWM steering group member provided a perspective based on managing large-scale public-sector projects.  Imran Pasha, Chief Operating Officer, Al Rayan Bank and Javed Hussain, Professor of Entrepreneurial Finance, BCU provided an overview of the principles underlying Islamic banking practices and finally Amrick Singh Ubhi, Nishkam Centre Director, provided a community and Sikh faith perspective.    

Contributions from other participants and discussion then resulted in the workshop to reach some broad conclusions and as well as identifying specific actions for individuals and communities.

Workshop Conclusions

Finance and risk are at the centre of a just transition.  Achieving a just transition involves delivering large numbers of projects in the real economy and represents a large-scale programme management challenge. Overall vision is critical and collaboration between stakeholders needed to organise and drive projects forward. Funds need to be invested for wider environmental, social, governance (ESG) impact, as well financial, return.  There is still much to be learned and Islamic banking principles and the Sikh community provide valuable insights into funding a just transition.  Attracting investment requires the compelling vision, developing governance and intermediation structures and removing barriers to investment.  Individuals and local communities need to take action, in relation, for example, to their own savings and pension funds, lobbying councillors and community investment projects.  Faith communities have particular opportunities in terms of building partnerships and mobilising community members.      

Workshop Findings

Expert Introduction

The workshop began with a conversation between Mike Clark and Mahmooda Qureshi (video above) around Mike’s perspectives on the role of finance in a just transition to a net zero carbon city.  Mike is a Non-executive Director of Brunel Pension Partnership, Fellow of the Institute of Actuaries and acknowledged responsible investment expert.  Mahmooda is a community development activist and local radio discussion show host.  The key points from their conversation included:

  • Finance is at the centre of just transition
    • Transport, housing, energy projects requiring finance all are part of real economy.
    • Finance follows identifying project needs
    • Council needs to bring public and private finance together to serve and level up the city
  • Finance is about risk
    • Traditionally finance sector has had a narrow definition of risk  
    • We need to understand wider risks related to failing to mitigate climate change
    • Unlike the Covid virus, there will be no vaccine against climate change impacts 
  • Collaboration critical, need to:
    • Get into and understand the finance ecosystem
    • Get stakeholders together to organise and drive projects forward
    • Pool knowledge of where the finance can come from 
  • Need to bring ‘big’ finance to bear on local sustainability projects
    • This massive challenge involves working together and building networks as resources
    • This is still a new field and everybody learning; nobody really knows how to do it yet
    • Birmingham can learn from other cities e.g. Leeds and Bristol
    • Councillors on local authority pension fund committees and regional pools need to engage with their fund responsible investment strategies to take climate impacts into account
  • Both communities and individuals have important roles
    • Crowd funding and personal savings are sources of finance
    • Individuals need to ask questions about what their savings are doing
    • Also to use their influence as citizens e.g. new Make My Money matter initiative

Viewing just transition as a large-scale project management challenge

Jules Todd, a member of the CANWM steering group, provided a programme management perspective on Birmingham’s transition to net zero carbon (video above).  Jules drew on his 20-years’ experience of managing large-scale public-sector programmes.  Key points included:

  • Implementing a just transition:  
    • Involves delivering hundreds of ‘real economy’ projects around a number of key themes
    • Each project will have outcomes and benefits in the form of impacts
    • A “just transition to net zero carbon” is the desired impact from these projects
    • Public and private money needs to be put to work on these projects
  • Overall vision Is critical and impact is about achieving visions
  • Investing for impact
    • Involves investing for social as well as financial gain
    • Avoids harm and mitigating environmental, social and governance risks
    • Benefits all stakeholders and contributes to solutions
    • Money will only flow if investors see their money adding value
    • Assessing impacts is not as well developed as measuring narrow financial returns
  • Barriers to investment need to be removed to deliver the just transition
    • Capital availability – an estimated £1.5b is required annually across the region
    • Match-making, benefits management and governance programme structures are needed
    • Using money to create impacts requires capacity, capability and confidence

Islamic banking perspective

Imran Pasha, Chief Operating Officer, Al Rayan Bank and Javed Hussain -Professor of Entrepreneurial Finance – BCU provided an overview of the principles underlying Islamic banking practices and how they relate to financing a just transition.  Key points included:

  • How Islamic banking involves social and community concerns
    • Matters of social, economic and environmental justice
    • Ethical, including environmental, investment
    • The provision of a bridge between community saving and community borrowing
  • Islamic banking practices include:
    • Sharing of risk between borrower and lender – equity not interest
    • Avoidance of the risks associated with bank debt burdens, as in 2008
    • Care for customers so few bankruptcies
    • A link between finance at local and national level

Sikh perspective

Amrick Singh Ubhi, Nishkam Centre Director, provided a faith perspective on just transition saying that Sikhs make religious doctrine part of daily living and believe they are on journey.  Key points included: 

  • The context and the bigger picture around just transition is important:
    • Individuals, communities and nations are now all inter-connected – what we do has an effect on others around us
    • Inter-dependencies mean everybody is in the climate emergency together
    • All have to take individual and collective responsibility
  • Collaborative approaches are important
    • Need to bring stakeholders together – Sikhs have a concept of ‘kar seva’ (labour of love; serving the Creator and the creation; selflessly working together for the common good)
    • Wisdom coming from many different sources and also shared ownership / responsibilities
    • Need for focussed conversations
  • Compelling visions and strong leadership are needed
    • Then they have to hold people to account
    • The seventeen UN Sustainable Development Goals provide a ready-made framework
    • This approach has enabled the Sikh community to establish schools, a health trust and other community assets here in Birmingham and overseas

Broad conclusions

Our broad conclusions are drawn from the key contributor presentations, the ensuing discussion, contributions from other knowledgeable participants and chat box comments.  We need to:

  • Create a compelling vision of the just transition to a low carbon future that
    • Is a positive vision and will attract investment and popular support
    • also identifies the timeframe and urgency
  • Develop a very different view of wealth, with indicators of success other than GDP.
    • Involve communities and refocus on local economies
  • Move away from the traditional return on investment model to approaches that
    • Embrace health & wellbeing
    • Reflect the needs of Birmingham communities
    • Measure impacts against UN sustainable development goals
  • Collaborate – this is critical
    • Across the city, across the West Midlands and with other UK cities
    • Be connected with the big picture, but not let the larger scale cause inertia
  • ‘Chunk up’ the just transition funding and investment into different aspects as well as energy, housing, transport and economic key areas, e.g.
    • role of the council
    • plural economy
    • building ‘wealthy’ communities
    • protecting community assets
    • generating public income from wealth / assets as well as private income
    • education & mobilisation for change

Specific actions individuals and communities can take

Individuals and local communities need to take individual and collective action and responsibility, including:

  • Individuals can
    • Learn more and equip themselves to advocate for change
    • Contact pension fund or savings provider
    • Lobby councillors & ask questions about where public money has been spent
    • Get involved in community investments projects
  • We need to connect up all the information that is available, as we
    • Are all on a journey and need to keep learning and sharing
    • Need to be in possession of all information to make informed decisions
  • Communities, in particular faith communities, can
    • Build partnerships and work together on local schemes e.g. Power for Good.
    • Form crowd funded community investments
    • Consult with community members and facilitate information sharing / informal education
    • Mobilise community members to lobby e.g. pension funds, the council

Footsteps’ Just Transition – funding Solutions workshop was just one part of the work that Footsteps is involved with trying to find way of getting money into Birmingham projects that will make up the just transition to a net zero carbon city.  

Please read and feel free to provide feedback on the Just Transition paper that we have written for Taskforce and also Chris Martin and Jules Todd’s paper – Financing a Just Transition to a Net-Zero Carbon Birmingham

Watch this space for workshops from Footsteps in the areas of impact investing and funding.

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