COP27: Building a Regenerative Economy Through a Just Transition

As the sustainability world drowns in an alphabet soup of ESG, CSR, and a multitude of other industry acronyms, at COP27, one concept that the international trade union movement has long developed and promoted is now being embraced by businesses, NGOs and governments to describe climate action plans that are socially equitable, financially viable and environmentally regenerative: a just transition. 

A just transition seeks to encompass the concepts of human rights, circularity, poverty alleviation and the environment. One of the only six high-level round tables for world leaders was dedicated solely to discussing such a transformation, as well as an entire COP27 event pavilion. During the conference, representatives from financial institutions, industry and NGOs have been discussing their organizations’ contributions to a just transition in an array of panels and lectures. 

More governments and businesses are embracing the shift to a just transition

At COP26, over 30 countries including the United States, Canada and the European Union signed the Glasgow Just Transition Declaration, which aimed to “deliver sustainable, green and inclusive economic growth to meet the challenge of decarbonizing our economies, in line with limiting the global average temperature increase to 1.5°C above the preindustrial levels.”

Countries that signed the declaration committed to supporting workers vulnerable to the economic effects of decarbonization, increasing engagement among governments, employers, and workers’ groups affected by a green energy transition, and implementing policies to expand clean energy and foster inclusive economic growth that respects human rights. Many corporations have followed their national governments’ lead to include such policies and procedures into their overall business strategies.

Haley St. Denis, whose title is head of just transition at the Institute for Human Rights and Business (IHRB), is encouraged by the number of companies embracing the concept of a just transition. During one side event, St. Denis said, “A lot of the guides on just transition are targeting governments to help them establish just transition frameworks. It’s not clear what’s expected of businesses yet, and it can be scary to stick your head above the parapet.” She noted that engaging the private sector is key to ensuring inclusive economic growth.

Why finance must support this movement

Maria Simonson is the Head of Sustainability at Swedish Export Credit Company (SEK), a state-owned company that finances Swedish exporters. She believes that a just transition model will soon be the norm in the European Union. During an event about this focus at COP27, she said, “Increasingly, the just transition is coming in through regulation in the E.U., and it’s going to be hard-wired into the financial system.” 

Discussions at a just transition roundtable on November 7 echoed Simonson’s ideas. Discussions centered on working to ensure consistent finance for this shift, exploring finance opportunities available from the private sector, and what financial institutions need in order to increase funding availability for such programs.

Simonson said, “The just transition is about recognizing our values, and we are working to integrate them into our analyses and policies, and also into our financial products. For example, we finance a lot of infrastructure projects, and human rights are relevant to that. Pollution is relevant, because pollution is a human rights issue. Our starting point is that we work with sustainability from a holistic perspective. This is part of our due diligence process.”

Moving forward with a just transition

St. Denis believes that moving forward, it is important for businesses and governments to ensure that a movement to a just transition does not lose its meaning. She warned, “We are seeing an increase in misuse of this visionary concept. Just transition has already become an acronym. The term could become meaningless, because if ‘JT’ can mean everything to everyone, then it will mean nothing at all. We challenge everyone in the room: if ‘JT’ is not going to go the way of CSR and ESG, then we have to develop means of quality control for what ‘just’ in just transition means.”

Talks and events about this framework are expected to continue throughout the remainder of COP27, which runs from Sunday, November 6 to Friday, November 18. 

Image credit: UNFCCC