In preparation for COP31, governments, UN experts and civil society representatives from around the globe are convening in Bonn this month to advance global climate action. At the heart of these discussions is the need to deliver a fair and equitable transition for workers and communities, with particular focus on the Belém Action Mechanism (BAM). Agreed at COP30 under the Just Transition Work Programme, the BAM marks a shift from high-level dialogue toward practical implementation. Designed as a centralized hub within the UNFCCC, it will coordinate support, share technical expertise, and streamline international cooperation on just transition efforts. Given the explicit recognition in the BAM of financial barriers to implementation, the finance sector has a direct stake in how this mechanism evolves. This is a critical moment to demonstrate that private finance is not merely observing from the sidelines but actively contributing to delivery.
Financial institutions are essential for enabling a climate transition that places equity and inclusion at its core. Transition pathways and activities that create economic opportunities, respect rights, and align with social priorities are more credible, resilient, and ultimately more effective. Conversely, approaches that overlook the needs of workers and communities face growing political opposition and implementation risk, factors that are becoming material to portfolios rather than peripheral considerations. In response, the global finance sector is adapting to shifting stakeholder expectations, expanding regulatory and reporting requirements, heightened scrutiny of transition plan credibility, and the growing commercial opportunity of financing inclusive pathways.
Against this backdrop, UNEP FI convened over a dozen banks and insurers in a year-long Just Transition Pilot Programme, combining peer exchange with expert input. The initiative aimed to support early-stage implementation and document emerging practices, advancing the knowledge frontier on just transition finance while providing concrete reference points for institutions at all stages of engagement.
The programme’s findings, captured in Just Transition Finance: Case Studies from Banking and Insurance, illustrate how financial institutions are moving beyond conceptual commitments into an early phase of applied implementation. Examples include integrating just transition into enterprise-wide climate transition plan (Westpac); developing digital infrastructure to improve SME access to finance (Bank of Jiangsu); addressing human rights risks in carbon markets through multi-disciplinary partnership (Tokio Marine); strengthening SME transition support ecosystems (BANK OF AFRICA); building integrated impact measurement frameworks across Africa (Absa); engaging asset managers through dialogue (NN Group); and investing in internal capability-building as a foundation for operational integration (Aviva). What unites these approaches is not a common method but a common orientation: identifying where the social dimensions of transition are most material to the institution’s own portfolio, mandate, and client relationships, and building from that starting point. For most institutions, this required internal groundwork, including cross-functional collaboration, internal capacity building to develop shared understanding, and senior leadership to establish a clear mandate.
Progress is also visible in client-facing and product innovation. Examples include inclusive mortgage pricing linked to energy efficiency improvements (ING); affordable electric vehicle leasing and rent-to-own housing models that help build shared understanding of just transition internally (BNP Paribas); parametric insurance solutions for climate-vulnerable communities (Generali); place-based SME climate resilience tools developed through public-private partnership (Unipol); and blended finance initiatives supporting climate-resilient livelihoods in one of Latin America’s most climate-exposed regions (BNDES). Partnerships and co-creation also proved essential: nearly all case studies involve collaboration beyond the institution itself—with multilateral organizations, public authorities, peer institutions, municipalities, academia, and civil society—reflecting that the reach, legitimacy, and systemic impact required for just transition finance often exceed what any single institution can achieve alone.
Building on this evidence, the report offers ten recommendations for financial institutions at any stage of engagement. These are not sequential steps but practical entry points:
- Leverage just transition as a horizontal, integrative lens that connects climate, social, human rights, and business objectives
- Develop place-based and sector-specific strategies anchored in local realities
- Embed social dimensions systematically into transition planning
- Align institutional practice with international standards such as the UN Guiding Principles on Business and Human Rights as a floor, not a ceiling
- Engage clients as co-agents of just transition
- Invest in meaningful stakeholder engagement that extends beyond client relationships to reach workers and affected communities.
- Advance just transition through partnerships and multi-stakeholder collaboration
- Recognize the broadening scope of just transition to adaptation, resilience, and the circular economy
- Invest in governance, capacity, and cross-functional coordination to support implementation
- Develop approaches to measuring and reporting on just transition activities and outcomes
The case studies do not present a finished practice, but rather a sector finding its footing: building internal capacity, deepening client relationships, and developing the tools to act on what many already recognize. That work is underway, and UNEP FI remains committed to supporting it: through ongoing peer exchange, capacity building, and the continued development of practical guidance for financial institutions navigating this space. We invite financial institutions to join our Just Transition Community of Practice to be part of that effort.
Access our Just Transition resources here and contact Aaron Cantrell to engage with UNEP FI’s work on Just Transition finance.