New guidance aims to close just transition gap in $7 trillion sustainable bond market

New market-tested guidance published today by the Just Transition in GSS+ Bonds Community of Practice aims to close the gap between issuers’ commitments to a just transition and what their sustainable bonds actually finance and report.

The Community of Practice is co-convened by 103 Ventures and the Grantham Research Institute-hosted Just Transition Finance Lab.

With cumulative green, social, sustainability and climate transition (GSS+) bond issuance reaching nearly US$7 trillion in 2025, the new guidance sets out a practical approach to integrating just transition considerations into existing bond markets, helping channel investment towards climate action that also delivers positive outcomes for people.

The just transition is recognised by governments, business, investors and trade unions as crucial to ensure that climate action brings positive benefits for workers and communities. Over 79% of governments have referenced just transition in their climate transition plans, according to an International Labour Organization study of nationally determined contribution submissions (NDC 3.0), but this is not yet being translated into investment action – only about a quarter of these submissions say how it will be resourced. 

The guidance shows how this gap can be closed through the bond market. It is the outcome of the year-long global Community of Practice, which brought together an international group of more than 12 organisations spanning multilateral development banks (MDBs), investors, standard setters, businesses and organisations representing labour and human rights perspectives. A further 50 experts from 33 organisations contributed through a wider consultation.

Rather than proposing a new ‘just transition’ bond label, the guidance builds on established sustainable finance principles and frameworks to show how issuers, including corporates, development banks and sovereigns, can incorporate just transition considerations into existing bond structures. Its aim is to stimulate ambitious and credible just transition-aligned issuance across market segments in 2027 and beyond.

Nick Robins, Senior Director for Finance at the World Resources Institute and Co-Chair of the Community of Practice, said:
“This guidance will make a real difference by enabling bond markets to play their part in the allocation of capital for the just transition. This guidance builds on existing frameworks from the International Capital Market Association (ICMA) and the Climate Bonds Initiative, responding directly to market needs rather than reinventing the wheel.”

Closing the gap between just transition commitments and investment

As the transition away from fossil fuels to clean energy accelerates, ensuring that workers and communities share in its benefits is increasingly recognised as critical to delivering effective and lasting climate action. Yet despite growing high-level commitments by governments, corporates and development banks to a just transition, these considerations are not being reflected in what sustainable bonds finance or how their impacts are reported. 

Research underpinning the guidance highlights the disconnect between commitment and funded outcomes in sustainable bonds. Of 90 sovereign and MDB bond frameworks reviewed by the Just Transition Finance Lab, only 29 referenced just transition in their bond frameworks. Among these, approximately 83% included just transition in their narrative framing, but only 41% directed eligible use of proceeds towards identifiable just transition issues, and just 31% included related reporting metrics.

The guidance identifies four key elements for credible just transition-aligned bond issuance:

• Intent: demonstrating a clear intent to address just transition-related risks and opportunities.
• Interlinkage: recognising just transition as cross-cutting and intersectional, integrated into existing sustainable and transition financing to directly enable a just response to context-specific transition needs
• Involvement: incorporating community voice and meaningful engagement and participation from affected parties into just transition strategies, plans and targets.
• Improvement: delivering demonstrable positive outcomes for affected populations across environmental and social criteria.

Together, these elements provide a framework for translating entity-level just transition commitments into bond-level financing and reporting. Crucially, the guidance emphasises that credible just transition-aligned bonds should deliver positive improvements for affected workers and communities, rather than simply avoiding harm.

The paper also provides practical guidance and illustrative examples for green, social, sustainability and climate transition bonds, helping issuers apply these principles through project selection, use of proceeds and impact reporting.

Turning guidance into market action

Published as COP31 commences in Türkiye, the guidance seeks to turn growing international commitments to a just transition into practical financial market action.

The publication calls on issuers, investors, underwriters, external reviewers and standard-setting bodies to help translate the guidance into market activity. Pioneering just transition-aligned issuance and early transactions could demonstrate how environmental and social objectives can be delivered together, building market confidence and generating evidence to inform future standards and wider adoption.

Simon Bond, Co-Chair of the Community of Practice, said:
“I’m really struck by the commitment and dedication from corporates and sovereigns, investors and labour organisations, to make sure that this guidance will really help underpin meaningful issuance. There’s a real momentum underway and investors know that faster climate action is urgently needed to protect their portfolios. This guidance will help make this happen by connecting these investments with people, their needs and their voice.”

Charmaine Che, co-author of the paper and secretariat lead of the Community of Practice, said:
“It’s been a privilege to convene experts on just transition across the sustainable finance, labour and human rights ecosystem to advance the frontier of credible guidance on just transition in the bond market. The lively engagement and rich feedback we’ve received from market actors over the past year suggest that this guidance addresses a critical gap. We will continue to support and encourage governments and organisations who are interested in just transition-aligned issuance to get in touch and be part of this movement.”

Arka Chanda, co-author of the paper and Policy Analyst at the Just Transition Finance Lab, said:
“The bond market is increasingly financing climate action and this guidance provides a way to better connect these investments to their impacts on people and places. Just transition is about linking the ‘green’ and the ‘transition’ to the ‘social’  and from our engagement with market actors throughout the year, it is clear that providing a way to do this credibly fills an important gap in the market today.” 

The full guidance is available here.

Notes to editors 

The Just Transition in GSS+ Bonds Community of Practice is co-chaired by Nick Robins, Senior Director for Finance at the World Resources Institute, and Simon Bond, Visiting Senior Fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science. The initiative is supported by 103 Ventures and the Grantham Research Institute-hosted Just Transition Finance Lab. 

About the Just Transition Finance Lab

The Just Transition Finance Lab is a centre for experimentation and excellence in the financial solutions needed for a just transition. It is hosted by the Grantham Research Institute on Climate Change and the Environment and the Global School of Sustainability at the London School of Economics and Political Science.
www.justtransitionfinance.org

About 103 Ventures

103 Ventures (103) is a climate action consultancy specialising in systems and transformation. It works at the intersection of climate action and social equity, across business transformation and financial innovation in pursuit of sector-level change.
www.103.ventures