Rebooting the just transition for the long haul
At this time of international turmoil, the just transition cannot afford to be seen simply as a high-level aspiration: it needs to be translated into investable action plans by governments, business and communities. Nick Robins presents three priorities to move things forward in 2025.
“It’s time to restate the business case for the just transition,” says Crispian Olver, deputy chair of South Africa’s Presidential Climate Commission. South Africa has long been a pioneer of the need for a ‘whole of society’ approach to climate action, making sure that principles of justice and fairness shape the greening of an economy facing high unemployment, inequality and poverty. For Olver, workers and communities affected by the low-carbon shift need a voice in decision-making along with secure, sustainable livelihoods and skills to match. This will help to build the political case for transition and avoid climate policies being overturned. Achieving this inevitably requires money, and speaking at the Finance in Common Summit of the world’s 500-plus public development banks this February, Olver was insistent that the justice component has to be part of investment for climate action.
Olver’s call to arms is particularly relevant in the face of the headwinds blowing from the United States. The second Trump Administration has moved rapidly to remove key pillars of domestic climate action and withdraw from international cooperation: leaving the Paris Agreement once again, cutting climate finance, and seeking to put an end to USAID. Policies supporting the just transition at home and abroad have been hit. Internationally, South Africa’s Just Energy Transition Partnership (JETP) is among the many affected initiatives. Promised US financing has been stopped and the US has also withdrawn support for JETPs in Indonesia and Vietnam, removing some $4bn, about 10% of total international public financing for these programmes. All other JETP backers such as the EU and Japan have remained fully committed and some additional funding has been announced, but so far this is insufficient to close the gap.
Within the US, the Biden Administration’s strategy to make clean energy a driver of good quality jobs and community renewal has also been torn up. Among Trump’s anti-climate actions has been scrapping the Justice40 programme which was designed to ensure that 40% of certain federal environmental and energy spending would be targeted at “disadvantaged communities that have been historically marginalized and overburdened by pollution and underinvestment”. This domestic pullback is causing severe disruption, for example, to the recipients of the now closed $20 billion Greenhouse Gas Reduction Fund.
Taking stock
These backward steps in the US are certainly a blow to expanding international efforts to build strong social contracts for climate action. It will remove the US from the ranks of just transition advocates in international decision-making, whether at the OECD, in the G20 or the UN. But the US is only one country, and other jurisdictions are intensifying their efforts, such as the EU in its recent Clean Industrial Deal. In addition, many of the raw economic drivers behind the transition are now “unstoppable” (notably for renewables and electric vehicles) as technology costs fall. These welcome trends will not of course deliver the net zero goal by 2050 or necessarily do so in an inclusive way.
The just transition was born from the recognition that economic transformations are not automatically fair for those impacted by the rise and fall of sectors and technologies. Furthermore, poverty and inequality constrain the ability to deliver net zero and resilience across all countries. That is why, back in 2015, the oft-repeated slogan to ‘leave no-one behind’ stood at the heart of the Sustainable Development Goals (another bugbear of the Trump Administration) and a just transition for workers was incorporated into the Paris Agreement, alongside a wider focus on human rights and climate justice. As well as the JETPs, other international efforts are now underway to translate this into practice, such as the group of 17 pathfinder countries who are part of the UN’s Global Accelerator on Jobs, Social Protection for Just Transitions.
Ten years on, it is time to take stock of just transition strategies to see how they can become more effective both in enabling net zero and improving social performance. In the world of government policy, only a third of countries now state in their climate plans (NDCs) submitted to the UN in 2024 that they will tackle the social and economic impacts of climate action through just transition measures. Data is lacking on how these high-level commitments are delivered on the ground, however. To take one key measure, globally, clean energy jobs have outstripped fossil jobs in their number since 2020 and the gap continues to widen. Yet major transition skills shortages prevail in most countries and operational programmes are not in place to bring a phaseout of fossil fuels in a “just, orderly and equitable manner” as agreed at COP28 in 2023.
Turning to business, 30% of 168 of the world’s most carbon-intensive companies are committing to a just transition with defined principles, according to the Climate Action 100+ initiative. That share is up from 10% in 2023, but the proportion of companies with concrete plans designed in consultation with stakeholders is still tiny. A small, but growing number of public financial institutions, commercial banks and investors are also making the just transition part of their climate strategies. Case studies produced by the Just Transition Finance Lab profile leading examples of financial innovation for the just transition in Chile, India, the Philippines, Spain and the UK, with more to come this year.
Alongside this growing recognition, the scope of just transition has also broadened from the initial focus on workers in the Paris Agreement to a more comprehensive set of stakeholders – from local communities and Indigenous Peoples to entrepreneurs in the formal and informal economies, consumers, and those excluded by income, gender, age and race. Sectoral attention has also extended from the energy system to an economywide perspective (incorporating agriculture and nature, critical minerals, housing, steel and transport), and covering both net zero and resilience. Much of the just transition response is necessarily place-based and contextual, but there is also a need to promote interconnected justice in cross-border investment flows and value chains, particularly at a time of carbon border mechanisms and the resurgence of tariffs.
This systemic nature of the just transition makes it ever more important to view it as a key pillar of climate action, integrated across government, private sector and civil society decision-making. The annual UN summits have been the place where just transition has been most prominent. But although ministers met during COP29 in November 2024 at Baku, governments failed to agree an updated just transition work programme. This was in large part due to a mismatch of objectives between industrialised and developing countries, particularly over levels of ambition and provision of climate finance. This vacuum needs to be filled.
Three priorities for 2025
Urgent action is needed to translate the just transition into investable plans by governments, business and communities. In the run-up to COP30 in Belem, the Brazilian hosts have signalled that “just transitions are central for leveraging climate action,” in the words of incoming COP President André Aranha Corrêa do Lago. To make a difference, leadership and careful prioritisation are essential.
First, governments need to take the lead in setting out their policy commitments for just transitions in their updated NDCs ahead of the COP: we need to increase the number of countries with just transition policies as well as their depth. This is where countries can take a strategic view and show the systemic nature of the just transition. The bad news is that the bulk of countries missed the original February deadline for filing their NDCs. But among the countries that have already submitted their plans, Brazil’s NDC shows how it can be done. It sets out that “our vision for the country in 2035 is one of Climate Justice”, with issues of social, racial and gender inequalities, as well as human rights (in particular the rights of Indigenous Peoples) woven throughout the country’s Ecological Transformation Plan. The UK’s NDC focuses on how domestic clean energy jobs can be abundant and of high quality, with fair pay and good working conditions, as well as ensuring that climate action is gender-responsive and international cooperation advances the just transition (for example, through the JETPs). A crucial test will be how many high-quality NDCs are delivered by September in time for assessment before the COP.
Having a hardcore of countries presenting NDCs with ambitious climate targets backed by credible just transition programmes and financing will boost international confidence and momentum. Showing that finance for just transitions in the Global South is available, affordable and adequate will also be a key to the design of the plan to scale up flows into developing countries more than eightfold to US$1.3 trillion by 2035 (the so-called ‘Baku to Belém Roadmap to 1.3T’). This roadmap will need to confront the ‘systemic inequities’ identified at COP29 which hold back developing country access to climate finance.
Second, leading businesses and financial institutions should also incorporate social impacts, risks and opportunities into their own climate transition plans, and include social dialogue with workers and broader stakeholder engagement as part of the process. Frameworks for doing this now exist, for example through the guidance provided by the UK’s erstwhile Transition Plan Taskforce, which is being taken forward by the International Sustainability Standards Board. The EU’s Sustainable Finance Platform has also recently published guidance on how a people-centred and human rights-based approach can be applied in transition plans. One threat is that the just transition could become a casualty of the current pushback against sustainable finance regulations across several regions, including in the EU through the Omnibus reform process. To counter this, it is important that leaders in business and finance, trade unions and civil society as well as governments themselves, not only show why transition plans need to be both robust and just, but also demonstrate the practical benefits in terms of risk reduction and value creation for companies as well as measurable social outcomes for people. Embedding the just transition in the EU’s sustainable finance framework as well as the ISSB and making practical progress with the new Task Force on Inequality and Socially Related Financial Disclosures (TISFD) are critical steps for the year ahead.
Third, further action is needed from financial system leaders to show how the current spectrum of just transition instruments across public, private and blended finance can be deployed and extended, particularly in the Global South. These include government spending and incentive schemes, sustainable lending, impact investing and microfinance, as well as public–private partnerships along with guarantees and new funding models. Convergence on just transition definitions, principles and metrics is one high-priority task to be cracked. The global bond market holds promise as an arena where well-established approaches to green, social, sustainable and sustainability-linked bonds can be applied to the just transition.
In terms of the Baku to Belém financing roadmap, a two-step approach will be required: first, making sure that all these financial flows are aligned with just transition principles, building on existing human rights and sustainable development standards, and second, expanding dedicated just transition funding for the social investment that is essential for specific sectors and regions (such as fossil fuel phase-out and ending deforestation). The role of multilateral development banks (MDBs) will be crucial as they have often been early movers in terms of how finance can be mobilised behind the just transition (for example in Eastern Europe) and can stimulate further efforts by governments, the private sector and civil society. Ultimately, the just transition is delivered in particular places and the expansion of community-level funding vehicles can show how bottom-up efforts marry the green economy with local-level inclusion. The US Just Transition Fund is one example, which was established in 2015 and continues to work with coal-dependent communities, supported by philanthropy and mobilising public and private finance.
The just transition is an agenda for the long-haul and 2025 is a year when its core purpose must be restated and renewed. Making tangible progress on national and corporate plans along with the finance to implement them is crucial to get beyond the current turbulence. A dynamic Just Transition Work Programme agreed at COP30 would also provide a new sense of direction. In the words of Crispian Olver, one of the secrets of a just transition done well is that it can “unlock the capacity of stakeholders” to mobilise for accelerated climate action achieved through social progress. This is exactly what is needed now.
The author would like to thank Rowan Conway, Rob Macquarie and Jodi-Ann Wang for their comments on a draft version of this commentary.