A systems approach that addresses the root causes of decent work deficits is needed for a just transition

A market systems development approach offers a critical pathway to tackle environmental challenges while advancing social justice and promoting decent job creation.

31 October 2025

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ILO’s Micro, Small and Medium Enterprises Branch, ILO's Priority Action Programme on a Just Transition and Sida on the importance of a systems approach for a just transition

GENEVA (ILO News) – As climate change accelerates, the need for creating more and better jobs is urgent. A market systems development approach (MSD) can play a vital role in achieving this, the International Labour Organization (ILO) said during a two-day learning event on 30-31 October 2025.

Hosted in collaboration with the Swedish International Development Cooperation Agency (Sida), the event convened over 100 policymakers, donors, governments, UN agencies, implementers and experts to explore ways to meaningfully advance climate action, private sector development and decent work.

Developing economies bear the brunt of the climate crisis despite contributing the least to it. The MSD approach can support countries in shifting towards environmentally sustainable economies that maximize opportunities for inclusive growth and decent work while minimizing challenges – by improving the resilience of small businesses, reducing environmental impacts at the sector level, and facilitating policy changes for wide-reaching impact.

“By 2030, an estimated 2 per cent of global labour productivity will be lost due to heat stress. This is why a just transition is imperative. We cannot advance the environmental agenda unless it delivers economic and social benefits,” said Moustapha Kamal Gueye, Director, ILO Priority Action Programme on a Just Transition. “Enterprises are crucial to this transformation, and the MSD approach has a crucial role to play in advancing sustainable enterprise development.”

The event served as a learning laboratory, drawing on evidence from more than 25 projects globally and experiences of over 30 organizations. It emphasized that linking market innovation with policy reform is critical to accelerating climate action and generating green and decent jobs in small enterprises. At the same time, achieving the just transition agenda sustainably requires rethinking our engagement with trade, finance and climate adaptation including in fragile contexts, and moving beyond narrow, quantifiable indicators to include people and nature in how impact and success are measured. Stronger collaboration, enhanced synergies, and intentional coordinated action among donors emerged as critical priorities.

More than 25 projects discussed their experience using a systems perspective to make headway on climate action, sustainable enterprises and green jobs.

“MSD can help us adapt in the current context of shifting development financing to do more with less, and drive growth and competitiveness of micro, small and medium enterprises.”, said Dragan Radic, Chief of the ILO’s Micro, Small and Medium Enterprises Branch. “By working closely with ILO’s social partners – trade unions and employers’ associations, MSD can ensure that interventions are grounded in the interests of both workers and employers.”

The ILO’s partnership with Sida, now confirmed through 2027, provides a strong foundation to identify and implement strategies in close partnership with governments, workers and employers, ensuring that the green transition is inclusive, just and human-centered.