CDC Group, the UK’s development finance institution; Trade and Industrial Policy Strategies (TIPS), a South African economic research institute; and the National Business Initiative (NBI), announce the launch of the ‘Just Transition Finance Roadmap’ in South Africa and India.
The project aims to accelerate stakeholder, industry and investor action to ensure the shift from fossil fuels to a more sustainable global economy safeguards workers’ and communities’ rights and livelihoods.
The shift to a more resilient, low-carbon economy will create transitional risks for workers and communities that depend on fossil fuel sectors, which, left unaddressed, threaten to reverse development progress and increase inequalities.
To achieve a fair and inclusive transition away from fossil fuels, those impacted by the shift – particularly workers and communities – need to be included in decision-making processes to ensure it is a ‘just’ and inclusive transition.
The collaboration between CDC, TIPS, and NBI aims to address these challenges and the urgent need for new and innovative financial instruments targeted at projects for communities most impacted by the transition away from fossil fuels – where there is limited access finance and social inclusion.
South Africa and India are two of the largest coal-dependent emerging economies globally. Both economies’ reliance on coal mining and coal-based energy production leaves related industries, workers and communities exposed to the risks posed by efforts to mitigate climate change.
Commitment towards the just transition
High-profile speakers and panellists opened the virtual launch with a discussion on finance’s role in enabling a just transition in South Africa and India. The envisaged roadmap seeks to create more dialogue among key stakeholders, including workers, trade unions, financial institutions, local and international investors, and beneficiaries to unite on best practices that can be shared globally.
The joint initiative will highlight where policy interventions can enable investments that support and finance inclusive growth by enhancing opportunities for creating jobs, gender equality and skills development to ensure that no one is left behind on the path to a low carbon future.
Joanne Yawitch, chief executive officer, National Business Initiative, shared remarks on the critical role of international finance in enabling a just transition in South Africa, highlighting that international partnerships between the public and private sectors and financial institutions and industry, is increasingly important.
Yawitch said: “To maximise opportunities – such as South Africa becoming the world leader in carbon-neutral fuels – the Just Transition Finance Roadmap in South Africa becomes critically important. The just transition in South Africa is an area of opportunity and not a place of threat.”
Rathin Roy, managing director for research and policy at the Overseas Development Institute, highlighted that: “The conversation is not about how much we consume or more importantly, what we consume, but how we manage to do so in a carbon-neutral way. There should be far more financial flows to agriculture, urbanisation, the built environment, biodiversity and water conservation. These areas create employment, improve welfare and benefit communities that have not gained from the inequitable consumption we are now trying to undo.”
In a fireside chat Nick O’Donohoe, the CDC Group chief executive officer, reaffirmed the DFI’s commitment to the just transition and commented: “Just transition is one of the next frontiers of climate action as we evolve from a narrower focus on mitigation towards one that includes adaption, resilience and the social dimension of climate change. CDC’s long-term capital and expertise in gender equality, job quality and skills development mean we can start to drive the just transition agenda through our portfolio in a meaningful and scalable approach.”
During a panel discussion which explored a variety of financing models and investment strategies to build new industries, create new jobs and opportunities for production, Rudi Dicks, board member, Trade & Industrial Policy Strategies (TIPS) said: “In South Africa, because of our historical circumstances, the just transition issue becomes more complex as it needs to grapple with the idea of restorative justice, and the need to make sure stakeholders and communities are not just as well off after the transition as they were before – but that they are better off than before the transition.”
The event was held in partnership with CDC Group, Trade and Industrial Policy Strategies, National Business Initiative, Observer Research Foundation, LSE Grantham Research Institute on Climate Change and the Environment, and Harvard Kennedy School’s Initiative for Responsible Investment.