Bridging divides: A guide on using catalytic capital for a global just transition

Published on
1st November 2023

Achieving the transition to net zero and doing so in a fair and inclusive way is the great challenge of our era. This is particularly the case in emerging and frontier markets, where public and private finance flows remain limited.

This guide provides a roadmap for achieving a fair and inclusive transition – a just transition – to net zero in emerging and frontier markets, with a focus on the use of catalytic capital and associated instruments.

You will find guidance and case studies for catalytic capital providers, including development finance institutions, governments, philanthropic organisations, private investors, and corporations, who are seeking to mobilise private capital for a just transition that combines climate action with social justice and local development needs.

The guide pays particular attention to how catalytic capital providers can partner with local actors, such as fund managers, investees, and communities, based in emerging and frontier markets. It also looks at the use of catalytic instruments in funds and financing vehicles that are well-suited to mobilise private capital at the scale needed for a global just transition.

By reading the guide you will gain insights into;

What is the just transition?

  • Understanding the just transition: The three elements of the just transition: climate and environmental action, socio-economic distribution and equity, and community voice.
  • What a just transition entails: How to ensure that the “transitioning out” of carbon-focused economies and activities that support the “transitioning in” to a net zero world are fair and inclusive.
  • Why this matters for catalytic capital providers: The motivations of the growing number of catalytic capital providers who support a just transition, including mission alignment, reflecting the priorities of stakeholders, and the opportunity to mobilise additional private capital.

How can catalytic capital providers support a global just transition?

  • Why catalytic capital is needed: The characteristics, roles, and uses of catalytic capital and other catalytic instruments and how these might be used to support a just transition globally.
  • Problem-solving capital: The barriers faced by actors across the investment chain, how catalytic instruments can help address these to mobilise private investment, and how to partner with local fund managers, support local investees, and empower local communities.
  • Illustrative examples: Insights from real-life examples of emerging practice, showcasing different uses of catalytic instruments for a just transition.
  • Why funds matter: Why funds are a key tool in the private capital mobilisation toolkit.
  • Catalytic capital in just transition funds: How catalytic capital providers can practically increase the contribution of funds to just transition outcomes, from fund design to operations.


Related files

Bridging divides: A guide on using catalytic capital for a global just transition

File published on 1st November 2023