Mainstreaming just transition finance: lessons from emerging best practice

The transition to a green economy is increasingly dependent on private finance, particularly given the fiscal constraints to delivering on the transition to net zero emissions faced by sources of public finance. However, the integration of just transition principles into private financial flows remains limited, narrow in scope and far from mainstream. As private capital plays a growing role in funding climate mitigation and adaptation, it is essential that this financing reflects local sustainable economic and social development needs, while safeguarding principles of equity, inclusion and justice. Progress is currently constrained by practical barriers, notably limited awareness and understanding of how to operationalise just transition principles and a lack of well-developed business cases to advance just transition objectives. This policy brief synthesises the findings of the Just Transition Finance Lab’s research series on ‘Emerging Best Practice for Just Transition Finance’ and identifies a critical gap: the lack of a robust, quantifiable business case for just transition finance. It highlights the need for policy leadership to set clear baselines and expectations for market practice. The authors review current approaches, provide examples of good practice and outline ongoing challenges given recent headwinds and structural issues facing the just transition. They make recommendations for policymakers and financial actors to progress just transition integration within private finance, drawing primarily on insights from engagement with asset managers.