Climate change and financing a just transition

Aligning finance with a just transition is not merely a cost but an investment in a sustainable and equitable future.

Climate change and environmental degradation pose significant challenges to economic growth and employment today – with risks expected to intensify in the medium to long term. Conversely, climate action and the transition to a green economy offer opportunities diversify economies, create decent work, and expand sustainable enterprises.  

This profound economic transformation needs to be carefully managed through a just transition approach, to equip the workforce with skills to drive the green growth and transformation, maintain productivity and competitiveness of the businesses in the affected sectors and regions, safeguard the rights of the affected and vulnerable groups, and enable all stakeholders to share in the benefits of the low-carbon transformation.  

With the financial, human, and technological resources to influence and support both individuals and companies through this transformation, financial sector actors hold a unique position in making a just transition possible. 

The ILO collaborates with pioneering financial institutions, industry networks and academia and accompanies the sector in developing and implementing just transition aligned approaches through the ILO Just Transition Finance Hub.

As central intermediaries in economic activities and risk management, the financial sector is crucial to making sure that a response to climate change accounts for social impacts and outcomes. By strategically channelling capital towards just transition-aligned initiatives, financial institutions can accelerate decarbonization while promoting economic inclusion and social equity.  

A just transition involves maximizing the social and economic opportunities of climate and environmental action, including an enabling environment for sustainable enterprises, while minimizing and carefully managing challenges.

Resolution of the 111th Session of the International Labour Conference