Climate Finance Asia, a leading sustainable finance advisory firm, announced today the launch of the Just Transition Working Group to explore practical ways to integrate Just Transition best practices into financing the transition at facility-level to renewable energy. The Working Group will develop and publish facility-level guidelines that banks can use to incorporate Just Transition principles into their financing policies.
The 2023 United Nations Climate Change Conference (COP28) “ended with an agreement that signalled the ‘beginning of the end’ of the fossil fuel era by laying the ground for a swift, just, and equitable transition, underpinned by deep emissions cuts and scaled-up finance”, according to the UNFCCC. Financial institutions are pivotal in mobilizing the necessary financial resources and achieving a carbon-neutral society. The UN’s Independent High-Level Expert Group on Climate Finance has forecasted that “emerging markets and developing countries will need to mobilise $2.4 trillion a year by 2030 for climate and nature spending”, including an estimated $85 billion a year for dedicated just transition activities in terms of workers and communities.
The Just Transition Working Group is comprised of about 15 major global and regional banks and non-profit organizations (NPO). The Working Group was formed following discussions between Climate Finance Asia, Sumitomo Mitsui Banking Corporation (SMBC) and the Growald Climate Fund on emerging best practices for financing a just transition from coal to renewables. Climate Finance Asia will act as the Secretariat of the Working Group.
“A just transition requires that we plan for and support those communities and workers who will be impacted by the transition to a low-carbon economy,” said Alan To, Group CEO of Climate Finance Asia. “Our goal with this Working Group is to determine practical steps that banks and financiers can take to uphold Just Transition principles in renewable energy projects, and emphasize the need for equity, inclusiveness, and fairness in the energy transformation process”
As a leading financial actor of the carbon transition, SMBC is supporting this initiative, which will help guide our own policies towards decarbonization projects that deliver not only environmental, but also social benefits to all stakeholders.” says SMBC.
The outcome of the Working Group will aim to:
- Provide practical guidelines for integrating Just Transition into financial decision-making.
- Enhance collaboration among financial institutions, NGOs, and other stakeholders to ensure a Just Transition.
- Publish clear, actionable recommendations that can be incorporated into member organizations’ financing policies.
The Working Group’s draft recommendations will be released for public consultation at the upcoming COP29 and a finalized report will be published in Q1 2025, to provide guidance for banks on practical steps for upholding Just Transition principles in financing energy transition projects. These recommendations aim to accelerate the energy transition globally, while protecting the livelihoods and well-being of communities involved.