Decisions made about how we address climate change and its impacts have justice implications across many different dimensions. A decision made today on mitigating climate change and investing in adaptation and resilience will have a major impact on the ability of people to enjoy a clean, healthy and sustainable environment now and in the future.

However, without proactive and inclusive transition planning, a decision today to phase out fossil fuels and transition to a climate-resilient society may also disproportionately affect the interests of certain workers, communities and other vulnerable groups. Those who are already acutely affected by climate change impacts are also likely to experience greater negative impacts from policy interventions targeted at combatting climate change.

The agenda of a just transition first emerged out of the trade union movement and is now mainstreamed in multilateral climate negotiations, most recently culminating in the new United Nations Framework Convention on Climate Change (UNFCCC) Work Programme on Just Transition Pathways. The 2015 Paris Agreement and 2015 International Labour Organization (ILO) Just Transition Guidelines have underscored the concept’s significance at a high level. The Paris Agreement acknowledges the ‘imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities’. The 2021 Glasgow Pact expanded the definition to include ‘promoting sustainable development and eradication of poverty’.

At the national level, there is a need to unpack how a ‘just transition’ is now being integrated into domestic climate policy. In practice, the ways in which countries choose to articulate and integrate ideas of justice into domestic climate policy are likely to differ.

How a country shapes its just transition pathway is based on many factors, including its nationally-defined development priorities, historical contributions to the climate crisis, vulnerabilities, key sectors and demographic characteristics.

We explore this important diversity below and conclude with insights for climate finance providers, drawing on our recent empirical review (with Catherine Higham) of 159 just transition policies across 61 countries and the European Union (EU).

What justice in whose just transition?
How justice applies to, and is perceived by, diverse stakeholders is influenced by their lived experiences and contextual realities. Our review found that the majority of policies focus on ‘distributive justice’, appearing in 128 assessed documents from 59 countries. This means they are primarily concerned with ensuring the fair distribution of risks and opportunities arising from the transition, taking into account gender, race, class and other existing inequalities. We are also starting to see ‘procedural justice’ feature relatively strongly across transition policies. This concerns the agency of affected groups in decision-making and ensuring they have avenues to co-create policies that affect them most.

Historically, these distributional and procedural concerns focused on the workforce. This is no longer the case. Workers and their communities are intrinsically linked. Many policies (98 out of 159 assessed documents) seek to address disparities within communities. In some cases, policies highlight specific groups affected by the transition.

In our sample of policies, women and youth or children were most commonly identified. For example, Zambia’s Climate Change Gender Action Plan emphasises the role of women in the transition, noting that: ‘Disregarding women’s role as energy managers… particularly with renewable energies, including their participation in the production, development, marketing and servicing of new low-emission energy fuels and technologies, limits the uptake and success of implementing these mitigation strategies.’

We also see an increased focus on impacts on individual households and consumers, particularly regarding the costs of and access to energy, in light of the recent energy crisis. Consumers and households were addressed in 38% of the policies reviewed (61 of 159), which particularly represent policies from Europe. In part, this appears driven by the requirement to assess macroeconomic impacts and just transition aspects, defined as the costs, benefits and cost effectiveness, of planned policies under National Energy and Climate Plans (documents which are required under the EU regulatory framework).

Identifying the ‘affected group’ is influenced by contextual demographic characteristics and development priorities. In one region, the focus may be on rural communities and farmers who are being asked to implement climate-smart agricultural practices and adapt their businesses. In another, it may be ‘indigenous peoples’ whose livelihoods are threatened by carbon offsetting projects on their land. A context-specific and place-based approach to just transition policy is crucial.

Those who are already acutely affected by climate change impacts are also likely to experience greater negative impacts from policy interventions targeted at combatting climate change.

No one-size-fits-all judgement or policy
The type of justice contemplated in a law or policy, and the intended beneficiary, will have significant implications for its implementation. There is no one-size-fits-all approach to implementing the just transition. A range of policy levers can be applied to manage the risks and impacts of the transition, and to create opportunities and maximise positive social benefits.

Our analysis identified four prominent policy levers: public and private finance, found in 149 assessed documents; institutions and strategy articulation in 92 documents; labour market policies and skills development in 73 documents; and participation, stakeholder engagement and social dialogue mechanisms in 67 documents.

Clearly, identifying a policy lever in a policy document does not guarantee implementation. However, clear communication is crucial to avoid the perception of failing to consider the justice implications of the transition. These perceptions will also pose higher risks of social backlash and delay, both of which can translate into financial risks, with varying implications for financial institutions.

Each policy lever is not a homogenous group. Taking the most prominent lever, public finance, as an example, addressing distributive justice concerns of low-income households and workers could involve consumer tax rebates, targeted social protected interventions, or reforms to employment insurances systems to cover informal workers (for example, South Korea’s Korean New Deal), but it could also be green tax reforms to help mitigate impacts on the competitiveness of small and medium-sized enterprises (SMEs).

Public finance can also be deployed to mobilise private finance towards the energy transition and, importantly, encouraging quality finance that supports environmental justice. For example, two US energy policies – the US National Clean Hydrogen Strategy and Roadmap and the Federal Sustainability Plan: Catalyzing America’s Clean Energy Industries and Jobs – refer to ‘stimulating’ and ‘jumpstarting’ private sector investment as a priority, and also to acting ‘as a model for the private sector’ by supporting high-quality employment strategies, guiding the incorporation of community conditions into operations planning. Countries exercising these finance levers often use several in complementarity rather than individual levers separately.

Policies can also be designed to induce different types of change. This can range from entry-level retraining programmes for affected workers that focus on changes in the status quo (for example, avoid worsening the situation), to policies with more transformative visions of redressing historical power imbalances (for example, reforming international debt architecture).

Within our review, while 107 policy documents contain some form of status quo mechanism, only six have a transformative agenda. Understandably, these more transformative visions require global policy coordination and cooperation and modification of existing governance structures, including understanding the knock-on effects and up- and downstream implications of one country’s policy implementation on other locations. Policymakers, researchers and practitioners should work together to better map and decipher potential benefits, drawbacks and mechanisms of implementing a more transformative approach, considering its feasibility.

What does this mean for climate finance? 
To have justice at all, there first needs to be a commitment from public and private actors to transition to a low GHG emissions economy and climate-resilient society. This is not ‘free’ in financial terms. The Independent High-Level Expert Group on Climate Finance estimates that annually, $2.4tn public and private investment needs to be mobilised by 2030 to emerging markets and developing countries, of which an annual $75bn should be dedicated to just transition activities (Bhattacharya et al, 2023). ‘Finance as usual’ approaches will not address the linked climate action and justice agenda, and may contribute to deepening social inequities.

To induce change, financial institutions not only need to set their own ambitious plans for transition, but they also require interventions from governments on policy and legal frameworks to support them to redirect existing financial flows and generate new financing towards green technologies and innovations, climate change adaptation solutions, social protection mechanisms and community benefit schemes, as appropriate.

As shown above, there is no single just transition pathway and financial institutions need support to navigate this evolving policy landscape.

One clear short-term action is thus for countries to use the next round of Nationally Determined Contributions (NDCs), due by February 2025, as a timely opportunity to signpost and detail planned just transition measures, setting out what injustices they seek to address. Investment planning processes must be adapted to countries’ distinctive realities in terms of their fiscal circumstances, access to resources and capabilities, and climate ambitions. Signposting these in countries’ NDCs will help provide some clarity and confidence for finance providers in structuring financial solutions, helping them translate these measures into a pipeline of investable or investment-ready projects.

• Further reading: ‘How we can be sure of a just energy transformation, and why it matters’. The concept of a ‘just transition’ has increasingly become a compulsory issue for discussion amongst climate policymakers. But what does this mean, and will it really make any difference? How can any organisation or individual align with this process, asks Dean Cooper, Global Energy Lead at WWF.
• Sam Fankhauser, Professor of Climate Economics and Policy at the Smith School of Enterprise and the Environment, University of Oxford, and a Co-Investigator of the FCDO-sponsored Climate Compatible Growth programme, outlines 10 measures recommended to roll out a just transition and triple renewables capacity by 2030 in accordance with the recent COP28 Agreement.