The concept of a just transition has emerged as a key pillar of climate strategy; it is crucial to understanding where the impact of policies will be felt and what policies will be implemented to ensure the transition can happen at speed and scale. It emphasises the imperative for the transition to a net-zero and resilient economy to have a strong social dimension; not only is it the right thing to do to deliver sustainable development, but it is the necessary thing to do to build broad-based coalitions for transformational change. Importantly for investors, the just transition is also the smart thing to do as it reduces systemic risk, enhances human capital, and strengthens their societal licence to operate.
As a part of the Inevitable Policy Response (IPR) project, which aims to prepare financial markets for climate-related policy risks, this paper explores the just transition in the context of long-run economic transition. It provides potential challenges and examples of transition from Germany, Canada, and South Africa.