Why a just transition is crucial for transformative climate action

Worldwide 1.2 billion jobs closely depend on natural systems and environmental services. A recent study finds that climate change could cost the world 10% of total economic value by 2050. Virtually no country is exempt, but developing countries bear the brunt of the impacts of climate change and other environmental crises.

When it comes to climate action, inaction is not an option – be it from an environmental standpoint or an economic and social one. A 29.4 USD trillion climate investment opportunity lies in green building, electric vehicles, improved management of water resources, renewable energy and waste management in cities in emerging markets. Measures related to renewable energy and energy efficiency alone are projected to deliver a net positive impact of 18 million jobs globally by 2030. Clean energy access, sustainable agricultural practices and payments for environmental services can benefit disadvantaged rural areas.

Stabilizing the climate and tackling other environmental emergencies can power job creation and inclusive growth. But the shift to sustainability is a far-reaching one. There will be job losses in certain carbon-intensive sectors and newly created opportunities may not be available in the same place or at the same time as those lost. Ill-designed and managed green infrastructure projects can pose threats to the rights of workers and communities and risks to enterprises and investors.

Positive social and economic outcomes that are distributed fairly are not a given for the time after the transition. It is policy, investment choices and business practices that determine whether workers, companies and economies will be stranded or thriving.

It is about achieving net zero and a healthier natural environment while ensuring development with decent work and social justice. It also guides the process, helping to reorient our economies, labour markets and workplaces.

The world faces multiple challenges: from economic vulnerabilities, to widening inequalities, to rising emissions. Narrow, siloed approaches to growth or to environmental protection cannot solve them. At the core of a just transition is the recognition of the complexity of system changes that are called for to deliver on climate and sustainability goals.

Getting to net zero calls for a large-scale transformation of economies and businesses. It will affect labour, consumers and local populations. Ignoring impacts poses serious risks also for governments and companies. It can result in backlash and pushback that derail decarbonisation plans. It can alienate financiers and customers put off by unmitigated social impacts. It can compromise relations in the supply chain.

It helps delivering on climate and other environmental goals while holding true to promises on quality jobs and on economies that work for the many. It is a way to tap into the skills and the support needed to navigate change.

Interest on just transition has been growing and not only among workers’ organisations and civil society, but also among governments, companies and investors. This is a leap forward. We need all hands on deck. Multiplying commitments should not turn into a proliferation of understandings, particularly if it means watering down the notion of just transition and compromising its effectiveness.

The International Labour Organization’s (ILO) Just Transition Guidelines for a just transition towards environmentally sustainable economies and societies for all are of critical importance in this context. They are the key international reference providing a framework with principles and entry points for a just transition. They were agreed by representatives of governments and social partners across the world. Here is a five-step plan:

1. An inclusive and fair process

The process has to be inclusive and fair for the outcome to be inclusive and fair. Given the centrality of decent work, social dialogue involving workers’ and employers’ representatives is a foundation of just transition. Shifting to net zero affects a range of stakeholders: consultations with indigenous peoples and civil society groups should be in place from the onset. Social dialogue and stakeholder engagement enable ambitious climate action by mobilising broad-based support. They also help to design measures that are relevant to the needs on the ground.

2. Respect for fundamental principles and rights at work

Workers' rights need to be ensured: core labour rights are critical to a do-no-harm approach and a condition to achieve decent work goals.

3. Monitoring and evaluation

Qualifying and quantifying impacts is necessary for evidence-based decision-making, sound policies and solid investment projects. They are also essential for monitoring and evaluation and for accountability.

4. Planning

Some of the worst outcomes come from changes that are unanticipated and unmanaged. A just transition is based on planning. Just transition plans serve to set goals and priorities and to bring about alignment across different fields and actors. Robust government plans backed by financing are also vital to provide clear policy signals and stimulate investments and action by the private sector.

5. Policy coherence

Measures in different policy areas are needed, ranging from macroeconomic and growth policies, to climate and sectoral strategies, employment, skills and other labour market policies, enterprise development, social protection, rights and social dialogue, with gender running across them. Policy coherence is key. Infrastructure investments can be designed to support climate goals while delivering decent work and maximising economic gains along supply chains. Universal social protection systems fit to respond to climate risks and climate measures are vital to the resilience of workers and communities. Skills and retraining responsive to the transition can support employment of potentially displaced workers, equip youth with the right competencies for emerging green jobs, and help attract investments.

The Paris agreement preamble acknowledges the need for just transition and decent work and the ILO's just transitions provide a framework to put those commitment into practice. The international sphere should also facilitate technical assistance and financing for a just transition for developing countries, which urgently need to be stepped up.

National plans need to take into account the structure of economies and labour markets, vulnerabilities, climate goals and transition impacts. They will require a concerted effort across line ministries, workers’ and employers’ organisations through social dialogue and engagement with other stakeholders. As different regions within countries are typically impacted in distinct ways, just transition pathways will need a localised dimension. Just transition plans at regional level and placed-based investments allow greater granularity and a prioritisation of measures highly responsive to specific economic, social and environmental factors.

A just transition at company level means addressing risks and tapping into opportunities. It is about ensuring labour and human rights as businesses enter green sectors. It is the ethical thing to do and it will help retaining consumers and financiers, as green sectors are increasingly scrutinised from a broader sustainability standpoint. Companies can play a role in maximising social and employment dividends. This will support their license to operate and position them to benefit from incentives and emerging financing.

Just transition applies to changes in processes and business models related to emission intensive activities or the phase down of fossil fuels. It is about minimising and mitigating negative labour impacts through redeployment, reskilling or early retirement based on social dialogue and about exploring ways to contribute to a conversion of assets and regeneration of the local economy. Company-level just transition plans are a powerful instrument to drive this process: they can help to avoid standoffs and navigate change through trust and cooperation.

We need to chart bold new courses of action to secure a stable climate and natural systems. Using just transition as a compass is key to get us there leaving no one behind.