Exploring solutions to help finance a Just Transition

The scale of change required for net zero will depend on sustained, collective action across our society, which is only possible if the transition is managed in a way that is fair and offers something positive to people already experiencing disadvantage. Close to a third of Big Society Capital’s investments have had dual environmental and social impact goals – what we’d class as ‘Just Transition Investments’. We see rapid growth under this theme and are keen to collaborate with partners who are also looking at solutions/ business models for investing in a Just Transition.


Written by

Joe Shamash, Investment Director

Gaining momentum

The transition to an environmentally sustainable society is the defining challenge of the 21st Century. In the UK alone, an estimated £1.4 trillion investment is needed to get to net zero emissions by 2050.

The concept of a Just Transition - referring to a transition to a world of net zero carbon that is inclusive and beneficial to society – has gained momentum over the last 10 years, becoming a priority for Governments, social organisations, businesses, and investors.

The role of social investment

The UK’s social investment market has grown rapidly over the last decade to play a crucial role in connecting government, private capital, enterprises, and communities to tackle entrenched social issues. This role is a near perfect match for the challenges we face in transitioning to net zero emissions. First and most obvious, the massive investment needed to upgrade infrastructure, retrofit homes, develop new technologies and help nature recover. It is estimated that the UK needs at least an extra £1.4 trillion in the next 25 years, which will depend on coordinated investment across the public and private sectors.

Secondly, delivery. New business models, jobs and skills are needed to put this capital to good use. Social organisations are leading the way on developing businesses that tackle some of the hardest challenges within decarbonisation, for example retrofitting social housing, and have a strong track record of doing so in a way that builds a skilled, local workforce.

Thirdly, community buy-in. Net-zero relies on widespread behaviour change, and on communities being willing participants. Community ownership and embedding user voice – ensuring businesses are shaped by the needs of end users and are accountable to communities – have been fundamental within social investment and provide an important foundation for building the trust and buy-in needed for net zero.

Enabling opportunity

Lower income people in the UK and globally are most at risk of the negative effects of climate change, including losing jobs in higher emissions sectors like mining and construction, being more exposed to extreme weather, and bearing higher costs of essential goods.

With the right investment, there are also major opportunities to reduce inequality and generate benefits that far outweigh the costs, including through new decent green jobs, lowering energy bills and reducing the strain on health services caused by air pollution and damp, cold homes.

We are looking across a very wide range of issues and investment models. The below is a starting list, based on some of the areas we are already investing, which will expand over time.

Energy efficient communities and warm homes

57% of England’s population live in 15m homes rated EPC D or worse, resulting in fuel poverty for over 3 million households. Private capital must step in to help meet the £104b required to upgrade homes to a minimum energy efficiency level.

Our recent investments include AgilityEco, which Bridges Evergreen invested in to help grow in to a leading national provider of energy efficiency services, delivering for 37,000 households who were at risk of fuel poverty last year and helping them save £2,600 each on their lifetime energy bills.

The Energy Resilience Fund, meanwhile, provides low-cost loans and support to community businesses to retrofit or install energy generating technology, helping reduce energy costs.

People power

Community energy schemes generate x12 times the local economic value of commercial energy and have funded fuel poverty work yielding at a 9:1 social return on investment. However, community energy generates only 0.5% of the UK’s electricity. We see a unique opportunity to put communities at the heart of the UK’s net zero infrastructure, which could create a legacy of community wealth and climate action lasting decades. BSC’s investment in CORE (Community Owned Energy) helped bring 40mw of solar farms into community ownership by working closely in partnership with community groups across England and Wales, Power to Change, and Finance Earth. Natural capital- which refers how we manage the world’s land, trees, water and biodiversity - is an emerging area for investment in the UK. BSC has so far invested £23m in social organisations supporting conservation and the natural environment. We are also seeing leadership from environmental charities and community-based organisations in the UKs new market for biodiversity net gains.

Green skills and jobs

Progress on net zero in the UK is being held back by a national skills shortage. An estimated 400,000 builders and skilled retrofit professionals are needed in the UK, but just 200,000 people currently work on maintaining existing homes. Meanwhile, lower income communities in the midlands and the Northeast are at risk of job losses as the UK shifts away from carbon intensive industries.

We are exploring investment models that integrate green skills development to tackle the delivery challenge and support vulnerable, lower income and underserved people to access good quality green jobs. One leading example from BSC’s portfolio is Greenworkx, a start-up that provides a green skills and jobs matching platform, which it is growing with investment from Ada Ventures.

Get in touch

We are looking for ideas and insights in all these areas, and also seeking feedback on other issues that the social investment market should be prioritising. Please get in touch with the team if you would like to find out more, share your thoughts, or explore ways to partner with us.