Climate change poses a threat to the Earth’s ecosystems and to the global economic and social systems that are dependent on our natural environment. To meet society’s climate goals, such as limiting global warming to 1.5 degrees and achieving net-zero emissions by 2050, as outlined in the Paris Agreement, a significant global economic shift is required. However, this transition must be executed within the framework of a just transition that ensures economic and social benefits are equitably distributed, including across vulnerable populations.

A just transition entails maximizing the social and economic opportunities of climate and environmental actions. The shift towards low-carbon and sustainable economies not only holds the promise of job creation, technological innovation, and resilient societies but also requires the redirection of financial resources toward green technologies, adaptation solutions, and innovative businesses.

The financial sector, including insurers, plays a pivotal role in building resilient societies by adopting risk-management strategies that address social and environmental challenges and ensuring comprehensive coverage for all communities. At COP28 in December 2023, UNEP FI and the International Labour Organization released Just Transition Finance: Pathways for Banking and Insurance, the first roadmap for financiers implementing the just transition. The document provides guidance on the financial sector’s role in facilitating a just transition to low-carbon, resource-efficient, and resilient economies. It aims to assist UNEP FI members and the broader financial sector in integrating just transition practices into their operations, ensuring an equitable climate transition that leaves no one behind.

The UNEP FI-ILO report is a collaborative effort, developed with the support of over 40 banks, insurance companies, international financial institutions, academic institutions, and civil society organizations.