The just transition comes of age

Monday 3 December 2018 was the date when the ‘just transition’ emerged onto the global policy scene as a geopolitical priority. On the opening day of the COP24 UN Climate Conference in Katowice, the Polish Presidency steered through the launch of the Solidarity and Just Transition Silesia Declaration, signed by over 50 countries and parties to the climate convention.

The logic behind the declaration was clear: “Considering the social aspect of the transition towards a low-carbon economy is crucial for gaining social approval for the changes taking place,” explained the Presidency. With the conference being held deep in Poland’s coal country, the Declaration crystallised the rising concern about stranded workers and communities as the transition picks up speed, as well as the sense of there being real opportunity for decent work and quality jobs in the growing green economy.

The Declaration could not have been better timed. The centrality of the need for a strong social dimension to climate policy has been displayed on the streets of Paris with the gilets jaunes’ protests against the Macron administration’s increase in carbon taxes in France. Eighteen months earlier, newly elected President Trump pointed to the employment implications of climate action as one of the reasons for pulling out of the Paris Agreement, citing the fate of US coal workers.

The just transition has a much longer history, however, emerging in the US labour movement of the 1970s. To date, the primary focus has been on the impact of environmental change on the world of work, but recently this has been broadened to bring in the spill-over implications for communities and regions. What is now clear is that the just transition has to be embedded into national and international policy frameworks for economic development, climate change and social inclusion. Indeed, the just transition helps to provide the connective tissue between climate policy and the rest of the Sustainable Development Goals (SDGs), not least SDG8 on decent work.

The Silesia Declaration builds on earlier foundations, too. In September 2015, the International Labour Organization adopted a set of just transition guidelines based on dialogue between governments, business and trade unions. Three months later, the Paris Agreement on climate change incorporated the need for governments to take into account “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”.

What are the implications for stakeholders?

What happened at COP24 was to move the just transition centre-stage in climate policy and action. There is no doubt that it remains a relatively new and contested concept across different countries and stakeholders. However, there are at least five major themes worth considering as governments, businesses, trade unions, communities and investors start to work through the consequences.

1. Policymaking

The just transition has clear implications for the formulation and implementation of climate policy. Policymakers, famously, are urged to consider the efficiency, effectiveness and equity of their decisions, but the question of equity has often been side-lined in climate policy. A just transition lens means incorporating the positive (and negative) social implications for workers and communities upfront, tackling both the implications for the quantity as well as the quality of jobs.

2. Governance

The just transition profoundly impacts the governance of the transition, not least with its stress on dialogue in the workplace, in communities and at the national level. Here, the Silesia Declaration emphasises “the importance of a participative and representative process of social dialogue involving all social partners”. A growing number of just transition initiatives have been launched, for example in Canada, Germany, Scotland and Spain, which are pioneering inclusive processes to structural change.

3. Economic strategy

The just transition also means rethinking models of growth and development so that responses to climate change become inclusive by design. The New Climate Economy initiative has estimated that, globally, ambitious climate action could produce a direct economic gain of US$26 trillion through to 2030 compared with business-as-usual, along with a net boost to employment of 37 million jobs. For the UK, a new report for the LSE Growth Commission shows why it makes sense  for environmental sustainability to be at the heart of the country’s growth strategy so that growth is sustainable, balanced and inclusive. These lessons apply to other countries too.

4. Place and space

The just transition requires particular attention to the needs of place and the spatial dimension of the transition. The transition is not and will not happen evenly across countries and the world. Sectors cluster in particular regions. Past industrial transitions left rust-belts in their wake, but a wealth of examples of repositioning and smart specialisation exist, from Pittsburgh in the USA to the Ruhr in Germany. How cities and regions can build a just transition from the bottom up will be critical for place-based climate action.

5. Finance

Finally, finance is always at the heart of climate policy and that is no exception with the just transition. Ensuring that the transition is not only fair but positively contributes to an inclusive economy should lie at the heart of fiscal policy. Development banks at the national and international level will need to have clear strategies for making the just transition real. Commercial banks and investors will also need to link up the environmental, social and governance (ESG) considerations in their financial strategies for climate change.

Here, a new guide for investors has just been released by the Grantham Research Institute and the Initiative on Responsible Investment, in partnership with the Principles for Responsible Investment and the International Trade Union Confederation. This has been backed by an investor statement with more than 100 signatories with US$5.5 trillion in assets under management committed to taking action.

Where now?

Looking ahead, the just transition provides a strategic opportunity for the climate change agenda to become better connected with people’s daily priorities. As the Polish Presidency of COP24 observed: “In the long term, the implementation of a solidarity-based transformation will help to generate and maintain public support for policies to reduce emissions.”

Read more about the Investing in a Just Transition initiative here.

Sign up to receive our Sustainable Finance Leadership Series newsletter here.