Financing the just transition beyond coal
The transition to a global net-zero economy will bring profound changes in the energy sector, not least in the emissions-intensive coal industry. This policy brief looks at actions the energy sector and finance are starting take to ensure there is a just transition for affected workers and communities, and how those actions can be scaled up.
- Coal phase-out is essential to decarbonisation but brings transitional problems unless managed well.
- To manage risks and deliver positive social impact, climate action in the coal sector will need to be inclusive and consider place-based realities. This is recognised increasingly by governments as well as financial institutions and energy companies, with the momentum around the just transition growing rapidly.
- Energy companies have begun to formalise their responses as part of wider climate change strategies. Examples include EDF and Ørsted, who have been working with trade unions.
- The financial sector is also taking first steps to deliver a just transition away from coal. First company assessment initiatives are being developed, which will help financial institutions integrate the just transition into due diligence processes.
- To date, engagement with portfolio companies and clients has led to the most tangible results in corporate action. Incorporating the just transition into capital allocation is also gaining traction.
- High-level commitments must now be translated into tangible social outcomes and focus on local realities, particularly in emerging markets and developing countries.
- It will be essential that financial institutions make the just transition a key part of their net-zero plans, adopt a place-based angle, and focus particularly on emerging and developing economies.
Produced with the Powering Past Coal Alliance.