UK set to gain an additional 236,000 jobs by 2050 as a result of new and expanding low carbon industries
Job gains to be driven by growth in low carbon energy and electric vehicles
Rathbone Greenbank Investments publishes series of recommendations for the investment community to help ensure a just transition for all, leaving no region, community or workforce behind, or risk an incomplete strategy
The transition to a net zero carbon economy offers the prospect of bolstering UK jobs by nearly a quarter of a million, reveals new research commissioned by Rathbone Greenbank Investments.
The new report, ‘Financing a Just Transition: Putting people and communities at the heart of sustainable investment’, assesses the potential for direct job losses as a result of the transition away from the production of greenhouse gases, as well as job gains in sectors that have the potential to expand as a result of the transition.
The findings show that by 2025, the job changes across these industries mean that the UK is projected to see a net change of an additional 15,900 jobs as a result of the shift to a net zero carbon economy, rising to 120,100 by 2030, and 236,000 by 2050.
In response, Greenbank has developed a series of recommendations for the investment community to act upon.
Low carbon energy powering jobs growth
Driving this overall net change are over 574,000 new jobs set to be created by new and expanding green sectors by 2050, including 254,000 jobs in low carbon electricity and energy, with 167,000 in the development and operation of transport infrastructure and low carbon vehicles.
Other growth sectors include energy efficiency (including the production and installation of improved insulation and lighting systems in commercial and residential buildings), which will see 99,900 new jobs. The report also predicts 53,800 new jobs in professional services linked to the low carbon economy, which includes building consultancy services and environmental testing and monitoring.
As these low carbon industries expand, it is expected that there will be a loss of nearly 338,000 jobs in greenhouse gas (GHG) intensive industries by 2050 as a direct result of transitioning to net zero. The largest contributor to this is from the distribution of fossil fuels, with 97,000 fewer jobs expected. However, the largest proportional change is in high-GHG Manufacturing activities (such as production of fuels, petrochemicals, iron/steel, and cement), where jobs are expected to decline by nearly 61,000, equating to 44% of the baseline total for this sector.
Regional differences across the UK
At a regional level, not all local areas across the UK will enjoy this success to the same extent, nor at the same time, meaning it is vital to consider the wider social impact of the transition on each community. By 2025, three areas of the UK will experience a net decline in the number of jobs: Wales (net losses of 1,600 jobs), London (- 2,800 jobs) and Scotland (-3,800 jobs).
By 2030, however, all regions of the UK can expect to see a positive net change in job growth – including Scotland, Wales and London – as the effects of growth in low carbon industries overtake the contraction of high GHG industries. This continues to rise into 2050.
Despite this overall growth in every region of the UK, there are set to be stark differences at a local authority level, even by 2050. For example, Barrow-in-Furness, in Cumbria, can expect to see net gains of 3,992 jobs, equivalent to 12.7% of the area’s employment baseline. These jobs are associated with the construction of offshore renewable energy, as well as vessels and structures needed by this industry (for example, floating wind farms, and marine energy structures and devices, such as tidal kites and submerged turbines).
At the other end of the scale, Hounslow, in West London, is expected to see a net loss of 11,439 jobs, equivalent to 7% of the baseline level of employment for this area. Many of the jobs expected to be lost are associated with operations at Heathrow Airport, and associated activities (such as the onward movement of air freight).
In response, Greenbank has developed recommendations for the investment community, to ensure that investment in the UK’s green future is focused on promoting a just transition that leaves no region, community or workforce behind. These recommendations include:
- Make the just transition central to all investment strategies.
- Allocate capital to communities that need it most.
- Use investor action to challenge companies on their just transition strategy.
- Bolster due diligence into fast-growing sectors.
- Continue to monitor and reassess the just transition.
Greenbank’s recommendations follow its announcement on plans to become a net zero emissions business by 2040, covering emissions associated with its operations, supply chain and investments. This includes a commitment to reach net zero carbon emissions from its own operations and supply chain by 2030, using the Science-Based Targets Initiative (SBTi) framework, an internationally recognised methodology.
John David, head of Rathbone Greenbank Investments, said: “There has never been a more pressing time to adapt our economy to a low carbon future. As well as being vital to building a more sustainable future for us all, the transition to net zero offers the prospect of bolstering the UK jobs landscape. However, with around 7 million direct jobs found in UK industries that account for a high proportion of greenhouse gas emissions, we cannot ignore the social impact of the transition, which is why we have commissioned this new research.”
Kate Elliot, head of Ethical, Sustainable and Impact Research at Rathbone Greenbank Investments, said: “If we are to achieve a ‘just transition’ to net zero in the UK, we must prioritise long-term social inclusion and resilience, through education, reskilling and retraining for workers, otherwise we risk an incomplete strategy. Unsurprisingly, this is especially vital in the areas of the UK that are most reliant on greenhouse gas intensive industries, so that as we decarbonise the economy, this does not come at a human cost. As investors, we can translate these just transition ambitions into action. Through collective action, we have a critical role to play in securing a more sustainable future for both people and planet.”
Greenbank has a long history of climate-aligned investing, integrating climate risk into its investment decisions and increasing investments in industries and companies that are contributing to climate change mitigation and adaptation. Earlier this year, Greenbank became a signatory to the Net Zero Asset Managers initiative, through which it has recently announced short and long-term net zero emissions targets, and the Financing a Just Transition Alliance, strengthening its commitment to climate-aligned investing and active engagement with companies and policy-makers to encourage positive change.