Related areas of work

The financial sector plays a pivotal role in directing capital toward a just transition, ensuring that climate action leads to improved social outcomes. Simultaneously, adopting a just transition lens not only helps financial institutions manage sustainability-related and reputational risks but also enables them to meet regulatory and stakeholder expectations, identify commercial opportunities in sustainable transformation and support inclusive economic development in transitioning regions. However, as the concept remains relatively novel within the financial sector, raising awareness and building capacity among financial actors is essential to empowering them to adopt and implement aligned practices effectively.

In 2025, we partnered with the United Nations Environment Programme Finance Initiative (UNEP FI) and the ITCILO to deliver the first edition of the training course “Financing a just transition” in Turin, Italy. Designed as a hands-on, practice-oriented programme, the course brought together a diverse group of participants from financial institutions, governments, development organisations, civil society and workers’ and employers’ organisations, spanning multiple regions. The diversity of perspectives reflected the very essence of a just transition: bringing all relevant actors to the table.

The course equips professionals with a solid understanding of how finance can simultaneously drive climate action and social equity, explores key international frameworks and demonstrates how different financial actors can apply a just transition lens in their strategies, instruments and operations. Through real-world case studies, tools and partnerships participants examined how sustainable finance can better integrate the social dimension of ESG, ensuring that the scaling up of green, blue and transition finance supports human rights, social inclusion and decent work alongside environmental objectives. The strong engagement of participants and contributors underscored the growing demand for practical knowledge at the intersection of sustainable finance and just transition.

In the Philippines, the ILO is working closely with national stakeholders and with financial sector actors to understand local climate transition dynamics, their economic and social implications and national just transition priorities, develop capacity-building activities for financial service providers, tailored to the countries’ contexts and implement dedicated workshops that bring together representatives from major private and development financial institutions around the topic of financing a just transition. These efforts were complemented by dedicated technical assistance provided to local private sector and development finance institutions helping them identify concrete pathways to embed just transition principles in alignment with their organizations’ activities and footprints.

In Brazil, the ILO is partnering with GIZ, the Institute for Applied Economic Research (Ipea) and Brazil’s Ministry of Finance on a research project focused on just transition finance. The project aims to strengthen both the understanding and the practical application of just transition principles within the Brazilian financial system, supporting the design and implementation of policies, strategies and financial instruments that enable a fair and inclusive transition to a sustainable economy. A collective book compiling the articles will be finalised and published in the first quarter of 2026, contributing to national and international debates on just transition finance.

In the Philippines and in Morocco, the ILO has worked closely with national stakeholders and financial sector actors to better understand local climate transition dynamics, their economic and social implications and national just transition priorities. The insights generated through this engagement were used to design and deliver tailored capacity-building activities for financial service providers, grounded in each country’s specific context. The information and analysis were also shared with national stakeholders, equipping them with practical knowledge and concrete entry points for embedding just transition considerations into financial policies, strategies, instruments and services, in line with national transition objectives.

As part of ongoing efforts to align financial flows with the objectives of a just transition, the ILO’s Social Finance Programme and the ILO Bureau for Employers' Activities (ACT/EMP) are partnering with employers organizations in Colombia (ANDI) and Nigeria (NECA) to better understand the financing needs of enterprises required to achieve an inclusive and sustainable transition to a low-carbon economy.

At the heart of this collaboration are national surveys targeting enterprises across sectors and sizes. The surveys seek to generate direct insights from businesses on their investment needs, whether for adopting low-carbon technologies, enhancing long-term business resilience or supporting workers through reskilling, occupational safety and health measures, and inclusive employment strategies. They also aim to identify the key financial barriers enterprises face and the types of support from the financial sector and from employer organizations that could enable broader and more equitable participation in the transition.

The results will help guide financial institutions and policymakers in designing more responsive sustainable finance frameworks, strategies and financial instruments that enable enterprises to contribute meaningfully to just transition objectives. The findings will also support the employer organisations exploring how business membership organisations can help their members access the finance needed for a just transition. Survey findings are expected to be released in 2026.

Benefitting from a mandate where creation of positive social outcomes impact comes firms, impact investors are a crucial ally for pushing forward both the environmental and social dimensions of a just transition, such as via targeted investments in clean energy, sustainable forestry and sustainable agriculture.

The Africa Agriculture and Trade Investment Fund (AATIF), example of a longstanding ILO collaboration with an impact investor, seeks to finance agricultural businesses that consider environmental sustainability of their activities. Through technical assistance, AATIF supports its investees, businesses and intermediary financial institutions, in understanding and managing climate and social risks in their businesses. For example, AATIF assists financial institutions to undertake a climate risk analysis of their loan books to understand the potential impacts of climate change on their loan portfolio. The goal is to develop solutions to identify, adapt and mitigate potential risks, according to the Task Force on Climate-Related Disclosures recommendations. Another example is a feasibility study that AATIF conducted to explore innovative financial incentives: offering lower interest rates as an incentive to Ghanaian cocoa and maize farmers to adopt agricultural practices that increases the household’s resilience towards climate change.

Business insurance is an important risk mitigation tool helping insured businesses remain operational, or resume business operations soon after natural disasters, thereby maintain livelihoods, employment and financial stability.

In partnership with the Munich Climate Insurance Initiative, the Climate Risk Adaptation and Insurance in the Caribbean (CRAIC) project supports countries in adapting to climate change by incorporating climate risk insurance into their disaster risk reduction strategies. The project works with the government agencies to instil risk-reducing behaviour in the communities and to link insurance with disaster risk management measures that can help in reducing risk and increasing resilience to climate hazards. A new product, the “Livelihood protection plan”, acts as a business continuity tool for small businesses and individuals by covering the risks of business interruption due to high-speed winds and extreme rainfall.

Agriculture insurance is a critical climate risk mitigation tool. Highly dependent on weather, agriculture is the backbone of many developing economies, affecting livelihoods and food security of millions of low-income households.

Supported by the Ford Foundation, the ILO and its partners promote integration of insurance strategies in rural development policies, strategies and programmes as a part of a holistic approach to agricultural development and climate risk management. In the framework of the ILO collaboration with IFAD, the partners conducted an assessment of climate insurance markets and promote insurance in rural development policies and strategies, seek to increase access to holistic insurance schemes by rural households, and develop knowledge and capacity on sustainable use. The ILO collaboration with Celsius Pro seeks to embed agriculture and climate risk insurance programmes in activities of its investees. By stimulating peer-to-peer exchanges through a combination of knowledge-sharing and capacity-building activities, including a dedicated community of practice, the project supports the development of the market for inclusive insurance.

Insurance against natural catastrophes is becoming increasingly important, as such events can severely disrupt income-generating activities and threaten the livelihoods of vulnerable communities.

The ILO has partnered with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to raise awareness among MFI clients in India about natural catastrophe insurance and a "NatCat" product. The project developed awareness raising materials targeted at MFI customers and MFI loan officers, including a training guide that MFI loan officers can use when explaining the risks of natural catastrophes to clients, as well as for handling their queries and objections. The pilot project is conceived and implemented in collaboration with the Micro Finance Institutions Network of India.

The ILO also provides assistance to households whose livelihoods have been disrupted due to climate change, helping them to cope in face of adverse events.

In Pakistan, the ILO was involved in a joint initiative with UN Women, FAO and the ILO to protect agriculture-dependent rural communities from repeated cycles of floods and drought. The project provided in-kind support to restore and protect farm production capacities and off-farm income generating activities. Along with the credit, health insurance benefits provided access to organized health facilities to prevent recipients from falling back to poverty.

In Kyrgyzstan, an ILO Social Finance Fellow is collaborating with Blue Marble, the World Food Programme, a national insurance company and other national stakeholders to develop an innovative forecast-based index insurance product tailored to pastoralist communities, with the objective of securing livestock livelihoods. The increasing frequency and severity of extreme weather events are leading to fodder shortages and threatening livestock production, with negative impacts on business continuity, employment stability and local economic growth. Timely pay-outs are critical for pastoralists and local authorities to prevent the loss of assets and livelihoods. The product is designed to provide proactive financial protection against climate-related risks, enabling livestock keepers to take early, informed action ahead of extreme weather events.