Introduction

The paper outlines definitions, fiduciary considerations, and investment frameworks that link climate justice with long-term value protection. It highlights that climate change, inequality, and social equity are interconnected system-level issues. Marginalised communities are disproportionately exposed to climate impacts yet often contribute locally driven solutions.

Climate risk is considered a financial risk for fiduciaries, as physical and social impacts can lead to political instability, civil unrest, and weaker economic conditions. The paper notes significant investment opportunities: renewable energy investment now outpaces fossil electricity investment by 10 to 1, with more capital flowing into solar than all other energy sources combined. Global energy investment opportunities are estimated to reach US$60 trillion by 2050. The report aims to support investors in taking informed and prudent action within these dynamics.

Implementable definitions

Climate justice is defined as a rights-based and social justice-oriented approach to climate action that centres those most affected. The report distinguishes climate justice, environmental justice, and the just transition. It notes that definitions vary across sectors, and no single description captures the full scope of these concepts.

Climate Action 100+ guidance on just transition measurement is referenced, with indicators covering commitments to just transition principles and disclosure of KPIs that track progress. Examples of just transition considerations include recognition of social impacts from decarbonisation, support for vulnerable communities, and processes that embed Indigenous-led and decolonial approaches.

System level investing

The report differentiates between systemic investing and system level investing. Systemic investing applies systems thinking to societal problems using diverse capital forms within broader systems-change strategies. System level investing focuses on how institutional investors manage systemic risks by considering how environmental, social, and financial systems influence portfolio outcomes.

Cited resources highlight the need for investors to reduce real-world emissions to mitigate systemic climate risk, as shifting assets alone cannot manage economy-wide impacts. System stewardship is presented as a tool to ensure corporate behaviour aligns with the long-term health of the broader economy. Additional guidance outlines how investors can evaluate system-level progress, recognising that issues such as climate change, income inequality, and racial inequity require coordinated solutions.

The fiduciary duty case for climate justice

The report argues that climate justice is integral to fiduciary duty. Climate and inequality risks are interconnected and create compounding portfolio exposures for universal owners. Transition risks are also significant, with global national climate commitments expected to evolve. The UK’s target to reduce greenhouse gas emissions by 81% from 1990 levels by 2035 illustrates varied global policy momentum.

A just transition will involve challenges for directly impacted communities and sectors. Integrating climate justice ensures social implications are accounted for as economies shift from extractive to regenerative models.

Legal resources emphasise that failing to consider ESG factors constitutes a failure of fiduciary duty. Fiduciaries must act to minimise systemic risks, including through collective action. Inequality is identified in the Global Risks Report 2025 as the most central risk due to its influence on other system-level threats.

Frameworks: How to invest in climate justice

Investment approaches include integrating climate justice across asset classes and identifying fund managers with climate-focused or socially focused strategies. The report highlights available financial instruments across public, private, and blended finance that align with just transition principles, noting that at least 30 examples were mapped.

The Veris framework outlines eight principles for just transition investing, including community participation, gender and racial equity, worker support, blended finance, community wealth-building, policy engagement, and impact measurement.

Next steps: Advancing climate justice

Investors are encouraged to join the IEN Fiduciary Duty for Climate Justice Initiative and participate in networks such as IIGCC, Climate Justice Alliance, and Nature Action 100. Suggested actions include embedding climate justice principles into investment policy statements, assessing manager alignment with institutional objectives, and selecting benchmarks that reflect climate justice risks.

Additional steps include signing the Due Diligence 2.0 Commitment, using diverse philanthropic tools to support community-led climate justice organisations, and selecting values-aligned financial institutions for cash management.