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What is Just Transition?

How do you know that a business has a sustainable business model?

One of the 5 targets of COP27 this November in Egypt is to achieve a managed and just transition to an economic model based on low emission and climate resilience as defined in the Paris Agreement.

But what is a “just transition”?

The principle of just transition is that a healthy economy and a clean environment can and should co-exist. The process for achieving this vision should be a fair one that should not cost workers or community residents their health, environment, jobs, or economic assets. Any losses should be fairly compensated.

An example of how governments may action these “just transitions” is in Scotland.

“We are committed to ending our contribution to climate change in a way that is fair and leaves no one behind.
The actions needed to become net zero by 2045 will transform all sectors of our economy and society and will require rapid structural change
In Scotland, we have seen how unplanned structural changes in the past have left inter-generational scarring and deprivation, most notably in our former coal mining communities. Our transition to net zero must be managed differently. If we plan ahead and take action, ending our contribution to climate change presents a unique opportunity to improve the collective wellbeing of our nation. The Climate Change Act 2019 embeds the principles of a just transition. This means as we reduce our emissions and respond to a changing climate, our journey is fair and creates a better future for everyone – regardless of where they live, what they do, and who they are. By utilising our efforts towards emissions reductions and adaptation to tackle existing inequalities, we can deliver an economy and society which is centred on people’s wellbeing.”

And to achieve a “just transition” finance will play a crucial role!

During COP26 in Glasgow governments focused on a just transition away from coal. Following the G7 meeting in Cornwall the governments of South Africa, France, Germany, the United Kingdom and the United States of America, along with the European Union, announced a new ambitious, long-term Just Energy Transition Partnership to support South Africa’s decarbonisation efforts. The Partnership aims to accelerate the decarbonisation of South Africa’s economy, with a focus on the electricity system, to help it achieve the ambitious goals set out in its updated Nationally Determined Contribution emissions goals. It will mobilise an initial commitment of $8.5 billion for the first phase of financing, through various mechanisms. The Partnership is expected to prevent up to 1-1.5 gigatonnes of emissions over the next 20 years and support South Africa to move away from coal and to accelerate its transition to a low emission, climate resilient economy.

Should we all aim for just transition?

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