So far, this year’s COP27 tells a familiar story: not enough progress since last year’s gathering in Glasgow; too many pledges, and not nearly enough action; and far too little capital, both public and private, mobilised to address the climate emergency, particularly in the Global South.
African leaders voice their frustration
African leaders, like Macky Sall, president of Senegal and chair of the African Union, openly shared their frustration earlier this week. Sall said it was time for the rich nations that bear disproportionate responsibility for the climate crisis, not just to meet their pledge to mobilise $100bn of annual climate assistance for developing nations, which did not happen by 2020 as promised, but to double it to $200bn.
As UN Secretary-General, António Guterres, eloquently summarised: “We are on a highway to climate hell with our foot still on the accelerator.”
Hints of hope – growing commitment to a Just Transition
Frustration and disappointment are understandable. But there are hints of hope.
More and more participants at COP recognise the need for any transition to net zero to be a fair and inclusive one, a belief and a commitment which shapes our work at the Impact Investing Institute. On this front, there were developments this week worth marking:
- France and Germany signed $600m of concessional financing agreements to support South Africa’s shift away from coal-fired power, as part of the governmental Just Transition Energy Partnership announced at COP26.
- For financial services firms seeking more guidance on how to integrate just transition considerations into their strategies and operations, a useful tool was launched by the International Labour Organisation and the LSE’s Grantham Research Institute, our knowledge partner on the Institute’s Just Transition Financing Challenge.
Companies need to publish transition plans
And, away from Sharm-el-Sheikh, the UK’s Transition Plan Taskforce (TPT), of which the Impact Investing Institute is a member, published important consultation documents, after one of the most substantive announcements at last year’s COP – that companies would have to publish transition plans to show their progress towards net zero targets from 2023.
The TPT Disclosure Framework makes recommendations for companies and financial institutions to develop gold-standard transition plans, and the TPT Implementation Guidance sets out the steps to develop a transition plan, as well as when, where, and how to disclose it. The Impact Investing Institute co-led a working group on how to incorporate just transition considerations. We, therefore, welcome the inclusion of workers, suppliers, communities and consumers, as well as the natural environment, as key considerations for companies preparing transition plans.
A ‘gold standard’ for a Just Transition
We believe a ‘gold standard’ transition plan puts people and the environment at its centre. A successful transition to a global net zero world will minimise negative social consequences, like stranded workers and communities, and optimise opportunities, like more and better jobs and tackling energy poverty. Its delivery and success is dependent on the involvement and consideration of all elements of society – workers, communities and consumers.
Good guidance and practice already exist. The Glasgow Financial Alliance for Net Zero (GFANZ), for example, outlines how just transition considerations are paramount in the managed phaseout of high-emitting assets.
The latest report from the Grantham Research Institute, Making transition plans just, published last month, provides a comprehensive framework for companies developing just transition plans, aligned with the TPT and GFANZ frameworks.
The Impact Investing Institute remains committed to providing people, businesses and policy-makers with this kind of practical support to help us all make progress towards a just transition. Thank you, as always, for your support for our mission.