Just Transition
Executive Summary
Key Takeaways
- ✓ Just transition is the principle that decarbonisation should not disproportionately burden vulnerable workers or communities, most directly those dependent on carbon-intensive industries facing displacement.
- ✓ Just transition increasingly appears as an explicit criterion in transition finance and transition plan assessment, alongside the purely technical decarbonisation pathway a transition plan otherwise sets out.
- ✓ A transition plan that addresses only the technical decarbonisation pathway, without addressing workforce and community impact, is increasingly viewed as an incomplete basis for transition finance by institutional lenders and investors applying just transition criteria.
Definition¶
Just transition is the principle that the shift toward a lower-carbon economy should not disproportionately burden vulnerable workers or communities, most directly those dependent on carbon-intensive industries facing displacement.
Why It Matters to the Financial Model¶
Just transition increasingly appears as an explicit criterion in transition finance and transition plan assessment, alongside the purely technical decarbonisation pathway a transition plan otherwise sets out. A plan addressing only the technical pathway, without workforce and community impact, is increasingly viewed as an incomplete basis for transition finance by institutional lenders and investors.
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Frequently Asked Questions
What is just transition?
The principle that the shift toward a lower-carbon economy should not disproportionately burden vulnerable workers or communities, most directly those dependent on carbon-intensive industries facing displacement as the transition proceeds.
How does just transition relate to transition finance?
It increasingly appears as an explicit criterion in transition finance and transition plan assessment, alongside the purely technical decarbonisation pathway a transition plan otherwise sets out, reflecting a broader institutional expectation that credible transition plans address workforce and community impact as well as emissions reduction.
Why might a technically sound transition plan still be considered incomplete?
Because a plan that addresses only the technical decarbonisation pathway, without addressing workforce and community impact, is increasingly viewed as an incomplete basis for transition finance by institutional lenders and investors applying just transition criteria alongside the technical assessment.
References
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