The transition to low-carbon energy sources will affect jobs, livelihoods and communities, particularly in the US. The oil and gas, and coal-mining industries are relatively well paid, not least because of union organisation. These jobs will gradually disappear during the energy transition, with a potentially long-lasting impact on individuals, their families and local communities.
The renewable nature of energy sources such as wind and solar, means that there may be fewer permanent jobs once these facilities have been constructed. There will be jobs in the initial construction phase, and in decommissioning the fossil fuel infrastructure that will become redundant over time, but maintaining solar and wind farms requires far fewer employees than fossil fuel extraction.
Anyone who remembers the extent of the UK coalfields will recognise the long-lasting impact of well paid, albeit dangerous and unhealthy, jobs leaving communities that were built around the mines. A just transition to a low-carbon economy envisages making this fundamental change fairer and more acceptable to those whose livelihoods will be affected. EOS works on behalf of long-term investors who can help to play a role in such a transition. Federated Hermes is a signatory to the investor statement on the just transition project, which aims to link investors to the policy, community, labour and business efforts to deliver a just transition.
Our network can also help to catalyse change. One of the best things about working in EOS is the relationships that I have built over the last 12 years, with interesting and talented people and important organisations. I have learned so much from so many in my years on the team. These relationships are vital to influencing positive change at the companies in which our clients are invested.
When I first started focusing on engagement in the US back in 2013, one of my colleagues put me in touch with a number of people before I attended my first US Council of Institutional Investors’ conference. One of these was Jennifer O’Dell, who works for LIUNA, the US construction workers’ union. We have become friends over the years as well as collaborating on engagements from time to time.
During the summer of 2019, Jennifer phoned me to see if she could be put in touch with one of our clients, PensionDanmark, a large not-for-profit fund, co-owned by labour unions and employer organisations. She was seeking contacts at Copenhagen Infrastructure Partners, in which PensionDanmark is a leading investor. After a couple of quick emails, we were able to connect her with a contact at its New York office
Thanks to the connection we made for her, LIUNA confirmed the renewable energy projects we discussed should have a Project Labor Agreement in place when the construction work begins - meaning work will be done by unionised labour and so should be fair and just.
As we continue to engage with US companies on climate change, and as they are increasingly building or financing their own energy generation projects, we will see if we can use this case as a precedent for future discussions elsewhere. We continue to talk to LIUNA to see how we can collaborate further on the just transition.