The Just Transition

The EU defines it as: “The Just Transition Mechanism is a key tool to ensure that the transition toward a climate-neutral economy happens in a fair way, leaving no one behind. It provides targeted support to help mobilize around EUR 55 billion over the period 2021-2027 in the most affected regions to alleviate the socio-economic impact of the transition.”¹

The ‘leave no one behind’ imperative is echoed by both the International Labour Organization (ILO) and the Intergovernmental Panel on Climate Change (IPCC). The ILO says: “A Just Transition means greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities, and leaving no one behind. It is a process toward an environmentally sustainable economy, which needs to be well managed and contribute to the goals of decent work for all, social inclusion and the eradication of poverty.” ²

The IPCC defines the Just Transition as: “A set of principles, processes and practices that aim to ensure that no people, workers, places, sectors, countries or regions are left behind in the transition from a high-carbon to a low carbon economy.’’³

The transition to a low-carbon economy is essential if the world is to combat climate change and achieve net zero emissions by 2050. Companies are stepping up their efforts to transition from fossil fuel-based and resource-depleting economies to more sustainable practices.

This is particularly true in high-emission regions like Asia, where it is said the battle against global warming will be won or lost in the years to come. Emerging markets account for over 95% of the increase in global emissions and are projected to account for 90% of global population growth, and are highly dependent on high-emitting sectors like coal mining and agriculture.

However, the transition comes at a cost for those whose livelihoods currently rely on fossil fuels and practices of the past. The UN Framework Convention on Climate Change expects 1.5 billion workers to be affected globally, led by 1 billion in agriculture and 200 million in manufacturing.

How it works in practice can be seen in three examples from Poland, Egypt and Canada. Within the EU, Poland has had to mitigate the social effects of closing coals mines which has reduced employment in the sector by 75% since 2010. The government worked with labor unions to develop a social package with the displaced mining communities.⁴

In Egypt, the government sweetened the removal of fossil fuel subsidies with financial incentives that included raising minimum wages, food stipends and more progressive taxation, promoting a message of ‘shared sacrifice’.
And in Canada, a national task force was created with representatives from coal mining communities, the energy industry and labor groups to find ways to mitigate the social consequences of phasing out coal-fired electricity.

In 2023, Robeco began a new engagement theme called the ‘Just Transition’, working with companies to try to make greening the economy as fair and inclusive as possible. The engagement focuses on sectors directly affected by the push for net zero, such as energy, utilities and mining. The first engagement with a financial institution – an Indian bank – began in the first quarter of 2025

¹https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/finance-and-green-deal/just-transition-mechanism_en
² Guidelines for a just transition towards environmentally sustainable economies and societies for all (2015)
³ https://www.ipcc.ch/report/ar6/wg3/
⁴ https://www.iisd.org/articles/just-transition-examples

See also