A key element of planning for a green economic transition, in line with the Paris Agreement to keep global temperature rises well below 2°C, is ensuring it is also a just transition – one that both shares the substantial benefits of climate action and supports those who risk losing economically, whether countries, industries, consumers or workers.
The need for a just transition is set out in the 2015 Paris Agreement, whose preamble cites “the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities”. Bringing about a just transition is at the heart of the climate work being done by the multilateral development banks (MDBs) as they work together to align their activities with the long-term goals of the Paris Agreement.
The MDBs have now set out their Common Principles for MDB Support for a Just Transition for facilitating coordinated action.
The Common Principles articulate how MDBs intend to support a just transition. They provide high-level guidance to ensure that MDBs consistently, credibly and transparently contribute to the aims of a just transition, while acknowledging that there is no “one size fits all” approach, and allowing flexibility for tailored operational definitions and approaches that reflect MDB mandates and strategies, and country priorities.
At the UN Secretary General’s Climate Action Summit in 2019, the MDBs pledged to help clients move away from fossil fuel use, through support for long-term low GHG emissions and climate resilient strategies, and by developing financing and policy strategies that support a just transition.
Through 2020, the MDBs convened dialogues with a focus on building understanding of what constitutes a just transition in different country and local contexts, and on identifying the policies, instruments and partnerships that can help support it. Findings summarised in a joint-MDB memo of October 2020 identify focus areas for MDB attention ahead of COP26 including the development of the Common Principles to guide MDB action, advancing practice and peer learning, and establishing partnerships in support of a just transition.
The EBRD is working with the MDB Climate Action Group to advance international support for a just transition ahead of COP26, the 2021 global climate summit due in November.
The EBRD, which is in the forefront of climate action, resolved last year to make more than half of its financing green by 2025. Speaking at the Bank’s 30th anniversary celebrations on 15 April, President Odile Renaud-Basso raised the bank’s climate ambition further when she said the EBRD aims fully to align its activities with the goals of the Paris Agreement from 1 January 2023, if approved by the Board of Governors at the Annual Meeting in June. This would upgrade the current strategy, which commits the EBRD to dedicating most of its investments to support the transition to a green economy by 2025. Full alignment would commit the Bank to making all investments consistent with the aim of holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit that increase to 1.5°C.